NAR Supports Appraiser Independence in Recent Testimony

The 2009 National Association of Realtors President, Charles McMillan testified before the House Financial Services Committee on HR 1728, “the Mortgage Reform and Anti-Predatory Lending Act of 2009” last week. While discussing the legislation, Mr. McMillan specifically addressed Title VI – Appraisal Activities saying “H.R. 1728 strikes an appropriate balance by strengthening the accountability and oversight of appraisers while also creating new consumer protections.”

In his testimony, Mr. McMillan also referred to NAR’s Responsible Lending Policy, which recommends the following measures to strengthen the appraisal process:

1) Require lenders to inform each borrower of the method used to value the property in connection with the mortgage application, and give the borrower the right to receive a copy of each appraisal.

2) Establish enhanced penalties against those who improperly influence the appraisal process. Those with an interest in the outcome of an appraisal should only request the appraiser to (1) consider additional information about the property; (2) provide further detail, substantiation, or explanation for the appraisal; and (3) correct errors.

3) Provide federal assistance to states to strengthen regulatory and enforcement activities related to appraisals.

4) Support enhanced education and qualifications for appraisers.

HR 1728 was introduced by Representative Brad Miller (NC) on March 26, 2009.

  1. David

    For the record appraisers have elected to give away over 3 billion dollars over the next year to AMCs and the corporate owners of AMCs. All of this money thrown away because appraisers are too lazy to fight for their fee.
    Now that HVCC is operational they have only one way to fight it. By promoting a long term national strike against AMCs. They can accept any other type of appraisal order. If they will simply undertake the challenge there is no way it can fail.

  2. I think this is a great idea, but let me know what ya’ll think.
    Hello everyone, just wanted you to know that the HVCC (Home Valuation Code of Conduct) is a reality and you need to take control now in your SALES CONTRACTS.
    If you have never heard of HVCC…You are in for a rude awakening!
    In a nutshell, this new HVCC law starts now in May, so Mortgage Brokers, Realtors, Buyers and Sellers will have NO control over the appraisal process. Brokers can no longer order appraisals directly from appraisers. Realtors, Buyers and Sellers can no longer order an appraisal and then bring it to their lender or bank for a loan!
    Banks are the only ones who can order the report directly from the appraiser or a third party will do the ordering hired by the Banks. These third parties are what we call Appraisal Management Companies (AMC’s). The banks are hiring these companies to puts a layer in between the banks and the appraiser for more independence and less lender pressure on the appraisers to “make the value”.
    **Any of the above individuals CAN order an appraisal directly from the appraiser if their reason for the report is not for a LOAN, IE; to determine a listing or sales price, to obtain current value, a divorce, estate, tax rebuttal appraisal, PMI removal, etc. That is NOT prohibited and is actually encouraged in this ever changing market ***
    But here is where REALTORS, buyer and sellers DO have control. Just the other day I was talking to an appraiser at Lake Lanier property in GA, she told me a condition that they add in the sales contract under the special stips page was the following statement ( change the language to suit your area then pass it on to other realtors):
    “Buyer shall have all the rights and provisions manifested by the Appraisal Contingency provided that the appraiser the buyers lender selects has COMPETENCY to perform an accurate Lake Royale Property appraisal and has completed at least 10 appraisals on Lake Royale waterfront properties within the past 3 years. Said qualifications of any and all appraisers hired shall be provided to the Listing Agents in writing upon request.”
    This is an awesome idea! I would suggest SELLERS rights are also protected in the contract, by stating that if the buyer signs an appraisal contingency in the contract, they should also REQUIRE an experienced appraiser in the property be it Lake, Golf Course, even a particular neighborhood. I would also suggest that in the case of a special property like Lakefront that the experience be even greater at least 10% of their work is completion of this type of appraisal over the past 1 year, not 3 years as things have changed over the last year as you well know. Many lenders are requiring that the property appraised by the appraiser is no more than 30 miles from the appraiser’s office. I would suggest that you narrow that down and state that the appraiser must live in the SAME COUNTY as the property being appraised.
    I can’t tell you how many times a lender sends someone from Raleigh to Lake Royale to appraise a property, and unless they have considerable experience on this lake, which most do not as their primary work is somewhere else, then you have a disaster waiting to happen when it comes to the appraisal!
    So you DO have control and you need to start adding this type of language to every sales contract and making sure the banks comply because it is in the binding sales contract. Trust me when I tell you that Banks and especially the Appraisal Management Companies do not care about competency of the appraiser. They select the one that can do it the quickest and the cheapest and if that happens your DEALS will fall apart on a regular basis.
    Please pass this along to every Realtor you know, repost it, blog about it NOW. If you do then you can take control back on this HVCC law when it comes to appraisals on your sales deals.
    If you have any questions about this new law, let me know, it is time to take control of your profession back and make sure competent appraisers are used!.

  3. Michael

    The appraisal management companies are trying to blackmail the appraisers. They are offerin 1/2 price to do complete appraisals and if you would work for that fee, the keep going to others until they find the least experienced and desperate appraiser that will full full appraisal for 1/2 price. I thought going to management companies was supposed to make appraisals arms lenght from the lender. The way it is working with only the appraiser willing to work for 1/2 fee is getting work.

  4. jill kent

    I applied for a multi-family loan and had to submit $7,200 just to start the process. Since the property was legal non-conforming as indicated by the appraiser, FANNIE MAE rejected my application. I was charged $3700 even though I did not cancel the loan,and the appraiser charged me even though I never received a completed appraisal. Wasn’t there a law created regulating up-front application fees .

  5. Steve T. Christensen

    The mortgage meltdown we are experiencing now was not the fault of appraisers and the appraisers will not have any effect on whatever might happen in the future. In the meantime we chug along with this antiquated and meaningless step in the home buying process, trying to fool all of us and all in the transaction that for what ever reason the appraisal means something. It doesn’t.

  6. Nancy Friedl

    I recently had an appraisal astonish me, the listing agent, the buyer’s agent, and the sellers and buyers. The house was listed at 219,900. Two buyers put their houses on the market in hopes that their houses would sell and they would be able to purchase this house. A third party put in an offer that was accepted – $215,000. The appraisal came in at $200,000. Even the buyer’s agent encouraged a re-evaluation. In real estate we’ve said that a house is worth what someone is willing to pay for it. This house was certainly worth $215,000. But the Seller’s were forced to let it go for $200,000. This is not a good way to get the economy turned around. We need to somehow sort out the short sales and foreclosures from the comps on homes so people are willing to pay what is a reasonable price for a home, except those who are fortunate enough to cash in on someone else’s woes.