Appraisal Scoop

Appraisal Practices Board (APB) to Commence Work in July 2010 - New Independent Board

Washington, DC, November 5, 2009 — The Appraisal Foundation, a Congressionally authorized non-profit organization dedicated to promoting professionalism in appraising through the establishment of appraisal standards and appraiser qualifications, announced today the establishment of a third independent board, the Appraisal Practices Board (APB).

Earlier this year, the Foundation Board of Trustees established a Task Force to study the issue of how to best address a void in the marketplace related to guidance on appraisal methods and techniques that would be available to all appraisers practicing in the United States.  This guidance will cover all valuation disciplines, with a focus on emerging issues.

With the unanimous consent of The Appraisal Foundation Board of Trustees, it was agreed that a new board be established, similar in structure and composition to the already existing independent boards, the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB).

The purpose of this third board is to issue voluntary timely guidance to appraisers on emerging valuation issues that are occurring in the marketplace. This guidance will be of assistance to appraisers, appraiser regulators and educators. The new Board will enlist the help of market surveys to identify issues that need to be addressed and will empanel small groups of volunteer Subject Matter Experts (SMEs) to draft the guidance for review and approval by the Board.

The need for this type of guidance was underscored with the onset of the declining real estate market. Many appraisers had not previously faced this type of market condition and the impact of foreclosed properties and short sales. Because a majority of state licensed and certified real estate appraisers do not belong to a professional society, they had limited access to guidance.

“In unanimously supporting this concept, the Board of Trustees strongly believes that this is the best avenue for issuing voluntary guidance to appraisers,” said Paul Welcome, Chairman of The Appraisal Foundation Board of Trustees.   “We believe that this is the right thing to do for the profession, that it is the right time to do it and that we are the right organization to undertake the task,” added Welcome.

Those interested in serving on the Appraisal Practices Board should consult The Appraisal Foundation’s web site (http://www.appraisalfoundation.org/) for more details after the first of the year. Applications for qualified candidates will be solicited in the Spring of 2010, with the new Board to be constituted and commencing work in July 2010. We anticipate that selection of SME panels will follow in the latter part of 2010.

Contact: Paula Douglas Seidel, 202.624.3048, paula@appraisalfoundation.org

Agencies Release Revisions to Interagency Questions and Answers and Proposed New Questions Regarding Flood Insurance

The federal bank, thrift, credit union, and Farm Credit System regulatory agencies today released revised interagency questions and answers regarding flood insurance and requested public comment on several new ones.

The Interagency Questions and Answers Regarding Flood Insurance (2009) supersedes the 1997 interagency questions and answers document and supplements other guidance or interpretations issued by the agencies and the Federal Emergency Management Agency (FEMA). The Interagency Questions and Answers Regarding Flood Insurance (2009) consists of 77 questions and answers, which were revised based in part on comments received during the public comment period.

The agencies are also proposing for public comment five new questions and answers on determining insurable value in calculating the maximum limit of coverage available for the particular type of property and the timing of force placement of required flood insurance by lenders. After receiving and considering public comment on the five new proposed questions and answers, the agencies intend to incorporate them into the Interagency Questions and Answers Regarding Flood Insurance (2009).

The Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Farm Credit Administration invite comment on the five proposed questions and answers and, more generally, on other issues and concerns regarding compliance with the federal flood insurance statutes and regulations.

Comments specific to the proposed questions and answers regarding determination of insurable value and force placement of required flood insurance are requested by September 21, 2009. The Federal Register notice is attached with instructions on how to submit comments.

UPDATE: Illinois Appraisal Bill" HB 1015 - Makes Appraiser Licensing/Certification MANDATORY in Illinois

Thanks to Scott W. DiBiasio, Manager, State and Industry Affairs, of the Appraisal Institute for this UPDATE on Illinois Appraisal Bill" HB 1015 Passes Unanimously.

"Thanks for the information on Illinois HB 1015 in Appraisal Scoop. It is something that we have been following very closely. I think you did a nice job summarizing the provisions of HB 1015. However, I think you missed one of the MAJOR components of the legislation…the fact that it makes appraiser licensing/certification MANDATORY in Illinois, rather than voluntary."

Previously, licensing/certification was only mandatory in connection with federally related transactions. It will now be mandatory for any appraisal service.

Here is the section from the law that makes this change.

Old law

Sec. 5-5. Necessity of license; use of title; exemptions. (a) Beginning July 1, 2002, it is unlawful for a person to act, as a real estate appraiser, to engage in the business of real estate appraisal, to develop a real estate appraisal, to practice as a real estate appraiser, or to advertise or hold himself or herself out to be a real estate appraiser in connection with a federally related transaction without a real estate appraiser license issued under this Act. A person who violates this subsection is guilty of a Class A misdemeanor.

New law

Sec. 5-5. Necessity of license; use of title; exemptions.(a) It is unlawful for a person to (i) act, offer services, or advertise services as a State certified general real estate appraiser, State certified residential real estate appraiser, or associate real estate trainee appraiser, (ii) develop a real estate appraisal,(iii) to practice as a real estate appraiser, (iv) advertise or hold himself or herself out to be a real estate appraiser, or (v) solicit clients or enter into an appraisal engagement with clients without a license issued under this Act.  A person who violates this subsection is guilty of a Class A misdemeanor for a first offense and a Class 4 felony for any subsequent offense.

Scott W. DiBiasio

Manager, State and Industry Affairs

Appraisal Institute

122 C Street, NW, Suite 360

Washington, D.C. 20001

T  202-298-5593
F  202-298-5547
sdibiasio@appraisalinstitute.org
www.appraisalinstitute.org

MBA Calls for Uniform National Regulation of Mortgage Lending - FMRA - Federal Mortgage Regulatory Agency

WASHINGTON, D.C. (March 24, 2009) - The Mortgage Bankers Association (MBA) sent a letter today to the Chairmen and Ranking Members of the House Financial Services and Senate Banking Committees calling for legislation that would establish a tough, new federal regulatory framework for mortgage lending to protect borrowers nationwide. In the letter, MBA offered an outline of proposed legislation, titled the Mortgage Improvement and Regulation Act (MIRA), that would establish new uniform national lending standards to replace the current patchwork of state and federal lending laws and that would also establish a new federal regulator to implement and enforce these standards.

"In order to restore confidence in the housing and mortgage markets, we need to ensure that many of the excesses that led to the current crisis aren't repeated," said John A. Courson, President and CEO of MBA. "For this reason, we are calling on Congress to create a new national regulatory framework to regularize the mortgage market and better protect consumers."

MBA's plan is centered on the creation of new lending standards and a new regulator, the Federal Mortgage Regulatory Agency (FMRA). MIRA would establish, and FMRA would be responsible for implementing and updating, the new mortgage lending and servicing standards as well as regulating independent mortgage bankers and mortgage brokers in partnership with state regulators.

"Under our proposal, we are calling for one federal regulator to implement the standards and oversee all mortgage bankers and brokers," said Courson. "That regulator would work with the appropriate federal and state regulatory bodies to effectively enforce these tough new requirements."

 Among the components that MBA is calling for in the new national lending standard are:

• Many of the recently promulgated HOEPA regulations, including those requiring a determination of a borrower's ability to repay, documentation of income and assets, limits on prepayment penalties and establishment of escrow accounts for borrowers' tax and insurance payments; 
• Improvements to the mortgage origination, servicing and appraisal processes some of which had been included in H.R. 3915 (which passed the House of Representatives in 2007);
• A new duty of care for mortgage bankers and mortgage brokers to assure that consumers get the facts they need to know about the loan options available and the costs of their loan transaction, including compensation to the mortgage broker; and
• A requirement that a borrower affirmatively opt-in, in writing, to a nontraditional mortgage product.

 "MBA has long advocated for uniform national lending standards to protect borrowers coast to coast. One standard for all borrowers to learn and understand, and one standard for all lenders to follow will offer much better protection to consumers in every state and will help to lower costs. It will also significantly cut down on the confusing and often contradictory patchwork of state laws and regulations," added Courson.

As part of MIRA, HUD and the Federal Reserve would be required to work together in consultation with the new regulator to develop greatly simplified consumer disclosure forms, including combining Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures to help consumers better navigate the mortgage process. Additionally, MIRA would increase resources for investigating and prosecuting mortgage fraud and establish a national financial literacy and counseling program. As part of that program, MBA suggests there should be pre-purchase counseling required on certain mortgage products, primarily for first-time homebuyers.

A copy of the letter and an executive summary of the bill, as well as a more detailed outline, can be found at http://www.mortgagebankers.org/MIRA

Source: MBA Calls for Uniform National Regulation of Mortgage Lending