The American Society of Appraisers (ASA), the American Society of Farm Managers and Rural Appraisers (ASFMRA) and the National Association of Independent Fee Appraisers (NAIFA) have filed written comments with the federal bank regulatory agencies which “strongly object” to the proposed federal Interagency Appraisal and Evaluation Guidelines.
The three professional appraisal organizations told the agencies that their proposed collateral valuation requirements “actually weaken, rather than strengthen, the safety and soundness of real estate loans made by regulated institutions”; and, they urged that the proposal be withdrawn so it can be greatly strengthened.
The proposed guidelines establish when a professional appraisal is required in connection with mortgage and other loans collateralized by real estate (Title XI of the federal Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 established the basic requirement for the use of professional appraisers in certain federally-related transactions).
ASA, ASFMRA and NAIFA were specifically critical of the fact that the Guidelines exempt a dozen categories of real estate lending transactions from the Title XI requirements; and, permit the use of “untested and unreliable alternatives to appraisals (i.e. automated valuation models; broker price opinions; and, property tax assessment valuations) to substitute for the opinions of individuals who have been Certified and Licensed as appraisal professional by the 50 states and territories.
“We believe the approach to valuation issues reflected in the Guidelines is fundamentally flawed; and is inconsistent with the bank regulatory safety and soundness reforms promised by the incoming (Obama) Administration,” the joint letter states. The three professional appraisal organizations also commented that while they would oppose the Guidelines even during “normal” times, the banking agencies’ preoccupation with exempting lenders from professional valuation requirements was “particularly troubling” coming at a time when there is enormous stress on the banking system and mortgage markets, when the real estate markets are in an extreme state of flux and when the government’s loan modification programs for troubled mortgages, are so dependent on accurate valuations of collateral properties.
The three organizations concluded by stating that because of the “many exceptions to and exemptions from reliance on professional appraisals”, the Guidelines are a regulatory “step backwards” that causes us to oppose them.
The comments were delivered to the Office of the Comptroller of the Currency, the Federal Reserve System, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration. To view the complete contents of the January 20, 2009 comment letter, visit www.appraisers.org.
CONTACT: Ann Susko, IFA NAIFA Liaison to the Appraisers Coalition News release drafted by Peter Barash, Lobbyist for ASA
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