Call to Action: Comments Needed

By | December 8, 2018
4 Comments

The OCC, Board, and FDIC (collectively, the agencies) are inviting comment on a proposed rule to amend the agencies’ regulations requiring appraisals for certain real estate-related transactions. The proposed rule would increase the threshold level at or below which appraisals would not be required for residential real estate-related transactions from $250,000 to $400,000. Consistent with the requirement for other transactions that fall below applicable thresholds, regulated institutions would be required to obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices. The proposed rule would make conforming changes to add transactions secured by residential property in rural areas that have been exempted from the agencies’ appraisal requirement pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act to the list of exempt transactions. The proposed rule would require evaluations for these exempt transactions. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed rule would amend the agencies’ appraisal regulations to require regulated institutions to subject appraisals for federally related transactions to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice.  Read the entire proposal and comment here. 

4 thoughts on “Call to Action: Comments Needed”

  1. Wayne Collier

    Effective oversight and meaningful education, for both appraisers and mortgage lenders, is needed, not more politically motivated regulations. Real reform has never been implemented. Too many incompetent appraisers, underwriters and originators! Get rid of AMC’s and stop allowing Fannie Mae and Core Logic to dictate everything from “big data” to UAD. Most appraisers are “form-fillers”. The current UAD report forms need to be scrapped and replaced w/ a simpler, more effective report format, one that requires an appraiser to think rather than check boxes. The primary qualification for HUD and investors shouldn’t be the level of licensure ie licensed vs certified. The additional hours of education and passing a test doesn’t make a better appraiser. Honesty, ethics and market knowledge are more important.

  3. Elisabeth Bernhart

    I am wondering why I have tried so hard to remain the only objective voice in real estate transactions, when it appears that soon a random person will do an “evaluation” without ANY objectivity? This will not reduce burden, as mentioned, but create confusion and is not in the public’s interest. An appraisal fee is one of the lowest fees a borrower incurs during a purchase or refinance.

    Changing Title XI to using an evaluation that is sufficient “to support” the financial institution’s decision already sounds like a conflict of interest. My job, as an objective appraiser, is not to engage for the purpose of supporting a contract price, or any other predetermined number.

    Regarding the, “Cost and burden of an appraisal – which is passed on to the consumer and can delay the closing of a transaction when the appraiser cannot complete the appraisal on the preferred schedule and increase the consumer cost.” – if a consumer cannot afford the still very reasonable fee of $350 to $400 for an objective opinion, he or she should not be purchasing a home. The AMC companies take approximately 20% to 30% of our fees, which is an entirely different issue, but the time schedules that most appraisers work with are extremely fast and flexible. I work evenings, all weekends, and holidays to help out those who have complicated work schedules. I meet with brokers when they are available, and like most appraisers I finish reports in a very timely manner.

    Saying that a consumer can purchase an appraisal on their own is not likely as the appraisal clearly wouldn’t have the same weight in determining a purchase price if not ordered by a lender. Countless times my appraisals have not agreed with the purchase price and weeks later I am asked to do an addendum to acknowledge that the seller and buyer negotiated or reduced the purchase price. This would not happen if an appraisal was not necessary.
    In the last five years, many brokers are raising purchase prices to allow borrowers to receive “concessions” sometimes upwards of $8,000 to $10,000. When a computer algorithm sees a sales price it does not factor in the amount of a concession. The concession is typically used to pay a borrower’s closing costs, etc., however the seller is receiving less than the purchase price indicates. This is another reason that an evaluation, or even an AVM, is not able to comprehend what a trained appraiser can. An evaluation that is not in-depth, or a computer generated module, will mislead the public if this amount is routinely ignored.

    To say that an evaluation will provide an estimate of the market value of real estate but is not subject to the same requirements as a Title XI appraisal sounds as though an evaluation will waste the consumers money. To target the appraisals as being burdensome and slow, and replacing it with a evaluation that will be quick and fast, is NOT CONSISTENT WITH SAFE AND SOUND BANKING PRACTICES. To leave it to the institutions to make “prudent decisions” of “how and when” is what has lead to disaster for consumers in the past.

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