Real estate appraisal provisions in the final version of the Dodd-Frank Wall Street Reform and Consumer Protection Act, completed by Congress, should mean more reliable home appraisals for consumers, said the Appraisal Institute. The full House and Senate are expected to vote this week on HR 4173, which the House-Senate Conference Committee on Financial Regulation finished revising last week. The measure is the first modernization of U.S. real estate appraisal regulations since the Financial Institutions Reform Recover and Enforcement Act (FIRREA) was enacted in 1989.
“We applaud the conference committee’s efforts and urge Congress to pass HR 4173,” said Appraisal Institute President Leslie Sellers, MAI, SRA. “We are extremely pleased that this bill will protect consumers by encouraging the use of highly trained and competent real estate appraisers with much-needed resources for oversight and enforcement.”
In addition to authorizing grant funding for state oversight and enforcement, HR 4173 would require that “reasonable and customary” fees be paid to appraisers. Appraisers have complained that with the growth of appraisal management companies since the Home Valuation Code of Conduct’s (HVCC) implementation in May 2009, they have experienced sharply reduced fees from appraisal management companies (AMCs). “Reasonable and customary” fees will reflect what the appraiser would typically be paid for the assignment absent the involvement of an AMC, with violations subject to severe penalties under the Truth-in-Lending Act (TILA).
“This is extremely important for consumers and mortgage lenders,” Sellers said. “With distressed sales prevalent in the market, it is critical that highly trained appraisers be actively involved in the mortgage market. In recent years, the inability to earn customary and reasonable fees has been a significant obstacle for many highly trained appraisers, whose experience is badly needed to assist with the economic recovery.”
Additionally, the measure would:
►Establish a federal appraisal independence standard, sunsetting the HVCC.
►Require AMCs to register with state agencies.
►Enhance appraiser competency provisions, including clarification regarding consideration of professional appraisal designations.
►Provide financial resources for oversight and enforcement.
►Separate AMC and appraisal fees on the HUD-1 Statement.
“The Appraisal Institute has been in the forefront of promoting these provisions, and we’re pleased to see them in the final version of the bill,” Sellers said. “We strongly urge members of Congress to vote in favor of HR 4173.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act is aimed at overhauling the U.S. system of financial services regulation with new controls on large and systemically significant institutions. It also would create a new agency to oversee consumer banking transactions and would shine a light into shadow financial markets that thus far have been exempt from the oversight of regulators.
To see the full text and all Congressional action on HR 4173, click here.
For more information, visit www.appraisalinstitute.org.