The AP recently published a fascinating article on the appraisal regulatory structure. There are countless quotes in the article that we will likely discuss in the future. However, the portion that stood out most to me is the one from Ben Henson, former Director of the Subcommittee, regarding non-recognition proceedings:
“When the agency does find a state failing to follow the law, the only tool available to force compliance is a death sentence known as “non-recognition” — a penalty that would ban all appraisers in that state from handling deals involving a federal agency.
Do you know what that would have meant? The net effect is it would have effectively shut down mortgage lending in that state,” former subcommittee director Ben Henson, who retired in December, told the AP. “To take that action would have been an unbelievable disruption to the economy. I wasn’t going to do that.”
Conventional wisdom suggests that the Subcommittee will most likely never initiate non-recognition proceedings, due to the reason Ben laid out above. However, I find it interesting to see Ben Henson admit to it publicly.