Congresswoman Biggert promotes Appraisal Independence

In her Op-Ed piece for The Hill newspaper, Congresswoman Judy Biggert (R-ILL) argues for housing reform, including greater support for key appraisal legislation.

Additionally, Congress must address the shortcomings of the home-buying process that have contributed to the rapid rise in fraud and predatory lending. Without greater transparency and independence in the appraisal process, consumers will continue to be targets, and investors will continue to lack confidence in the value of financial products like mortgage-backed securities. When the integrity of the appraisal process is in question, everyone loses.

To address this issue, Rep. Paul Kanjorski (D-Pa.) and I have joined with Sens. Bob Casey Jr. (D-Pa.) and Mel Martinez (R-Fla.) to develop a bipartisan, bicameral proposal. H.R. 3837 and its companion S.2860, the Fair Value and Independent Appraisal Act, will add important disclosure requirements, prohibit deceptive practices and improve appraisal standards. The Senate should quickly act on this proposal, which passed the House on Nov. 15 as part of H.R. 3915.

While it is unlikely that Congress will act on this legislation by the end of the year, it is not out of the realm of possibility. And with housing still a top issue for the nation, I suspect there will be some activity in the coming months. The extent of that activity; however, remains to be seen.

  1. Don Silva

    I am a real estate apppraiser, and have been for 16 and a half years. I was also a real estate agent for 6 six years, and was a mortgage originator for 2 years.
    Events of the past few days are the result of “”GREED””. Greed from many years of investors pushing the envelope in “hitting the numbers”” better return and higher volumes of loans made. Don’t pay attention to common sense of the old days in borrowing. Don’t vertify income-don’t verify assets-don’t verify credit history-push it to the limit-everybody else is doing it.
    No , its not the appraiser, no its not the realtor, no its not underwriting, its the government regulators who are charged with the responsiblity of regulating the industry that refused to do their jobs and protect the consumer and the industry.
    We need to bring back the small companies, independents, not mega coprporations like A.I.G.-Bears Sterns-Leham-when a company is so big that it can affect the world economy, than we do have a bigger problem.
    We need the small company, competition is so great and is the backbone of American business-not Mega Corp.Big companies need to be Down sized and broken up into small segments. Remember the telephone company-Big Oil.
    American business independence is the America of yesterday and is the future of tomorrow.
    Don Silva
    Silva Associates
    A husband and wife-two person small busineess who believe in America and believe in small business.

  2. Thank you, thank you. I think it is time for our financial communty to understand how important it is to establish the importance of safe and sound practice of the appraiser and there opinion. My thoughts are that all federal transactions should reguire bonified appraisal practice and standards. I have been an appraiser since 1985 and designated SRA member through the Appraisal Institute as well as haviving a BBA in Real Estate. I know the hard work it takes to be a proffesional in this field. Thank tou again.

  3. Doug Quenzer

    As an appraiser I’m all for independence. The problem is that independence has led to dependence upon AMC’s that cut fees and make it very difficult to make a living. I’m doing appraisals for the same fees I did 10 years ago when I work for AMC’s. That’s ridiculous. Yet my costs have gone up 50%. The best and brightest surely aren’t going to enter a business with that kind of economic return. If the FED wants quality then they need quality people. If a bill forces AMC’s to be the conduit, then I believe the bill should also give appraisers the ability to set fees through agreements. If we take the competitiveness out of one side of the market, then we should take it out of the other side as well. Fair is fair.

  4. Events of the past few days are the result of “”GREED””. Greed from many years of investors pushing the envelope in “hitting the numbers”” better return and higher volumes of loans made.
    I agree that greed played a large part in our current crisis. However, capitalism is based on “greed”. And Americans have always been greedy to an extent. So, I tend to think that “greed plus stupidity” is what really got us into this mess.

  5. My thoughts are that all federal transactions should reguire bonified appraisal practice and standards.
    I agree and would only ad that greater enforcement of current appraisal standards would also go a long way in preventing banks from losing money.

  6. If a bill forces AMC’s to be the conduit, then I believe the bill should also give appraisers the ability to set fees through agreements.
    I don’t believe the bill forces AMC’s to be the conduit for appraisers. However, appraisers should be more willing to charge more for their work.
    And the question to me is, “If AMC’s are paying such low fees, then are they really producing quality appraisals?” I would suggest they’re not.
    A lot of this comes back to the marketplace. Lenders and clients need to start valuing and paying for quality appraisals.
    And from a purely anecdotal standpoint, I believe this is happening. Lenders are beginning to take a real close look at the appraisal. So, I think one positive of this crisis is that it is putting a higher premium on the appraisal, and forcing lenders to pay more for quality appraisals.

  7. Right On ! GREED….GREED
    I have been an Appraiser for the past 16 years, mortgage originator for almost 5 years before that and had a realestate license prior to that along with working in the financial planning field. I have seen it all. I can’t tell you the number of times I was asked to cheat, lie, manipulate and most of all push value way beyond the point of ridiculous. From loan officers to realestate agents pushing value higher then listing price then offering high concessions or seller seconds that you know are being torn up after closing all in order to beat the system to get 100% or more financing. I lost many of clients because I would not bow to thier high pressure demands. Where are these loan officers and realestate sales people today? OUT OF BUSINISES. Who suffered… the buyers of these homes. But on the same note there were bad appraisers out there making these deals work along with title companies and other people involved in the transaction. All leads back to GREED the love of the almighty dollar. One more last note, how come mortgage loan officers are not State Licensed with hours and hours of schooling and 2000+ hours of training and then state tested? They come in and make alot of money then leave town oweing us money and the lender they work for is left holding the bag of garbage, but they too close-up shop and leave town or start up another company and do it all over again. Thanks for letting me vent. I could say alot more but I think you understand my frustration.

  8. Rod Jones

    I have been in the real estate business for over 30 years, 15 years as an appraiser. If AMCs are the vehicle for independance then there must be a new definition for independance of which I am not aware! AMCs are a part of the problem not a part of the solution. Having spent a number of years as a review appraiser one of the biggest problems I have seen are appraisers who are just filling out a form and not having or taking the time to develope a defendable opinion of value. When lenders through the AMCs control the fees that appraiser’s can charge and the time we can spend, we all loose. Appraisers must take the time to develope a defendable value. Our time is our money, and I am for any system that gives appraisers a way to make a decent living and to do a good job at the same time. The days of “gun slinger – do it fast and hit the value” appraisals should be over. Hopefully the lenders have learned their lesson. We must have quality over quantity to return market confidence to our profession!

  9. Brian

    I have been in this industry for just over 5.5 years, and knew that it would all come down to this! What the hell did they think would happen? Deregulate; smaller government, bigger private entities, let the market dictate the results! Ah, the sound of a 27 year-long train coming to a smashing halt!
    Yes, this is the result of irresponsibility- a fiscally irresponsible administration who choose to deregulate the market for the sake of economic stimulation to make it appear as if the economy was strong; a fiscally irresponsible populous that couldn’t do the simplest math to figure out their personal monthly expenditures and whether or not they could actually afford a mortgage; deceptive and predatory lenders and walk-in LO’s who completely abandoned their fiduciary and humanitarian obligations to ensure that their clients knew what they were getting into. The irresponsibility is mutually shared, however when your own nation systematically dissects the bones of an economy while urinating on the heads of it’s people and calling it “trickle-down” economics- well, you can’t blame people for striving for a piece of the elusive “American Dream.” Indeed, this county is built off of capitalism, however capitalism is only successful when properly governed and regulated, and moreover WHEN IT SUSTAINABLE!!! History teaches this, if you want to get down to it! I still can not believe they let China host the Olympics, what a slap in the face!
    It was amazing working over these last years. I never gave into the pressures of these corrupt loan-practitioners. There was so much business to go around, one could weed through that cronyism to find the legitimate transactions, and still manage to make a good living. But now; psffff! Talk about turning off the facet! Credit crunch, stagnant listings, and these schmoes still think they can get top dollar value on appraisals! It is worst than ever. Consequently, I’m about out of a job and about to loose my house because I was one of the unpopular appraisers who maintained dignity and integrity. This mate goes down with the ship! At least I have my soul!
    So, hell yeah; I’m for appraiser independence! But just as I have exclaimed to my states attorney general, AMC’s are the root cause of the problem! Has anyone noticed that they same idiots that caused this nation market mess are the same schmuck’s that are initiating these AMC’s?? Unreal! Does it ever end? Have we not learned our lessons from the past…? Deja vu; October 19, 1929….

  10. TJ

    The repercussions should NOT be on the appraiser, but on the loan officers, mortgage people and others involved in the lending process, including underwriters (who at this point typically have no clue about appraising, but follow “rules” about what is supposed to go in each blank on a particular form). These are the people who need additional training — like having to take and pass the USPAP course (meant for appraisers), so that lenders know what the rules are the appraisers play by. The lenders would not ask for appraisals with predetermined values, push the value, etc. If, as appraisers, we were able to report those loan officers who do not follow the rules and there would be enforcement of the “rules”, I believe appraiser independence would not be an issue. This whole condition is not an appraisal issue! Supposedly that is why we have licensing and different levels of licensure, participation in appraisal organizations, etc. I truly believe most appraisers take their careers very seriously — it is the few who break the rules and are like the bad apple in the barrel that spoil everything for the rest in the business/barrel. After 25 years in this business, I do not foresee HVCC improving appraiser independence. I do foresee small companies as mine being eliminated from any lender work, however. Of course, bigger is always better — not!

  11. D. David Thomas

    To avoid the risk of reiterating what has already been stated, quite well by most, the most obvious answer to me is that we as Appraisers show our angst toward AMC’s by simply refusing to support them. They cannot exist if we do not allow them to. Realistically, we all have bills to pay but just how much are we making now and how much are we going to decimate our profession by succumbing to what they will pay as a means to support our financial responsibilities. I for one am not willing to take less than what I charge as an Independent Fee Appraiser so you can understand why I have a full time job in the construction field. No company that wants profit is willing to let integrity stand in the way and they will take from both ends to pad their accounts and throw you under the bus at any sign of trouble in order to protect those profits. I do not believe “Greed” is the culprit for the demise of integrity as much as I believe it is everyone’s lack of fortitude to stick to principles, morals and integrity. It is, at best rare, that individuals will do or make the right choices as long as the mentality of, “It’s not illegal, immoral or just plain wrong if nobody see’s you do it or catches you!” From the Government and its officials on down, this is the message that is constantly published in the papers, broadcast in the news and consequently taught to children with even the simplest of mentalities. You cannot get the populace to vote out the criminals, you cannot get them to be responsible for their own actions and you cannot get them to raise their children as people instead of electronic junkies that cannot even carry on a conversation because their skill set revolves around texting. I’m 45 and I will never fear for lack of employment with the talent pool that has been generated. It is these same people that will support AMC’s since the AMC’s will solicit them so they don’t have to work to hard to market themselves. The best I can hope for is that maybe the Government will create a division that handles Appraisers the way that HUD/FHA used to. You get on the list of approved and you get appraisals as they rotate through. If you do bad work, they review and tell you why and you completely redo your appraisal, not correct it and you don’t get back into the rotation until you have a defendable appraisal. I might also mention, you never talk to anyone that has a vested interest in the outcome of value and you are always allowed an independent report that is a reflection of Highest and Best Use Value and that is it. I want to be an Appraiser for another 20 years, and I will be, I just am not sure if I can afford to do so without having another job at the same time.
    Good Fortunes to us all!!

  12. Bernie Rowe

    I’ve been an appraiser for 24 years, and have also sold real estate. Now with the value of almost all real estate dropping rapidly, there is still pressure from the AMCs to appraise all property at a higher value than the sales indicate. If you come up with the actual value, it usually isn’t enough to refinance, so after a few nasty communications with the AMCs, they are never heard from again. Meanwhile the appraisers that give in and come up with a higher value than the data indicates from the normal methods of appraising will eventually be reviewed by a competing appraiser, who often will try to shed the worst possible light on the appraisal. To show the errors on the appraisal is what a review is for. To unjustly make it appear worse than it is is dishonest, and should be considered by the state board of appraisal as an attempt to put the competition out of business, and carry its own reprimand. We need to get those appraisers that are participating in fraudulent appraisals out of business, but find a way to review their work without another appraiser using this as an opportunity to thin out the competition. Maybe some of the retired appraisers should be called upon to do the reviewing, that have no axe to grind.


    More words from Politicians that will evaporate in the Halls of Congress. I remember 1985 when the testimony on Capitol Hill by Continental Bank of Chicago was ” the appraisal is a stumblng block towards making a loan. Congress didn’t bat an eye at that statement.
    Then came the first inkling that the system was corrupt. All of a sudden it was the appraiser and bad appraisals that was the cause.
    USPAP is crap. Only a means for trapping an appraiser.
    The Appraisal Foundation knows it. Congress knows it. And appraisers know it. That’s why there is a thing called Liability Insurance. I was an active appraiser for 44 years. I still have a license but do very little. I would do more but I saw this mess coming around the bend three years ago and scaled back to keep from dealing with the corrupt lenders and agents and having to compete with appraisers more than willing to be a part of the corruption.
    I pissed off more than a few people. If I have to work at Wal Mart or pump septic tanks it is still a higher calling than the Real Estate Industry.
    Put crooks in Private Industry with crooks in Congress and Government agencies and you get Franklin Raines hauling off $100 million, Jamie Garelick, $75 million and Johnson another ton of money. Jessie Jackson getting 1.5 million in contributions from Fannie mae and the beat goes on.
    Good Luck on this thing being cleaned up. No one is going to go to jail , no one is going to be fined. But! They’ll find some obscure Appraiser somewhere and put his or her ass in the fire.
    Johnny Mac Chinn

  14. Carolyn Earley

    I have been a licensed Realtor for 31 years, and do feel that needs to be tighter controls. When this problem with non-conforming loans began, there was no place that I could turn to to complain about appraisors using ALL comps outside the subdivision. That was truely the beginning of the problems we are now having with real estate and overinflated values of real estate.

  15. Just for a point of clarification, the legislation Congresswoman Biggert is promoting is different than the Home Valuation Code of Conduct which is being promoted by NY Attorney General Andrew Cuomo. And for what it’s worth, at this point, neither initiative has been enacted into law.

  16. T

    I have only been involved with Real Estate for 6 years. The two questions I have always asked about appraisals is: WHY DOES THE APPRAISOR NEED A COPY OF A CONTRACT? WHY DO THEY NEED TO KNOW WHAT HAS BEEN OFFERED FOR A PROPERTY?
    In my opinion they should NOT have any idea what the offered price is, and certainly should not have a copy of the contract. They should go out and appraise the property and come up with a price and report it.
    If it is high it is high if it is low it is low.
    I have had so many that came in within a $1,000.00 of the offered amount it is too good to be true.

  17. Joe Traynor

    “I have only been involved with Real Estate for 6 years. The two questions I have always asked about appraisals is: WHY DOES THE APPRAISOR NEED A COPY OF A CONTRACT? WHY DO THEY NEED TO KNOW WHAT HAS BEEN OFFERED FOR A PROPERTY?”
    There are several reasons why an appriaser needs a copy of the purchase agreement. The first one is it is required by USPAP. Standards Rule 1-5 (a) states: “Analyze all ageements of sale, options, and listing of the subject property current as of the effective date of the appraisal”
    The second reason for this is that is the most current market data that is available to the appraiser, particularly in a market like this. The more information that an appraiser has, the better the result.
    I don’t know the statistics, but I suspect that a lot of the lending trouble that we are experiencing is as a result of refinainces as opposed to sales. Perhaps Justin or Jerry, you guys might have some stats on this.

  18. J

    A big haluluyah to all of the comments! I have been in the appraisal business for 6 years and I saw this coming a mile away.
    Everyone is wanting to blame the appraiser, or the loan officer, but what about the homeowner? Are they not grown adults capable of making an informed decision? Just because a person can get a loan for a $1,000,000 doesn’t mean they should. I think the homeowners made bad decisions, they were greedy and wanted to live in a $400,000 house when they can really afford a $100,000. Not that loan officer’s aren’t dirty pigs, but I think many homeowner’s made bad decisions and now want to blame every one else. Or, the greedy who pulled out all of their equity at the top of the market and are now upside down on their mortgage and are now getting bailed out by the government. It’s crap!
    Next, my solution for the whole hitting the value issue. I think the loan process should BEGIN with an appraisal.