Federal Reserve Board Issues Appraiser Independence Regs

Yesterday, the Federal Reserve Board released an interim final rule on appraiser independence.  The much-anticipated interim final rule is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203).  In their release, the Fed states that the purpose is to “protect the integrity of the appraisal process when a consumer’s home is securing the loan.”  The interim final rule covers a host of appraiser independence issues, including reasonable and customary fees, which has been a topic of debate in the industry.

The promulgation of the interim final rule also results in the termination of the Home Valuation Code of Conduct (HVCC).  So, it shouldn’t be too surprising to see that just prior to the release of the interim final rule both Fannie Mae and Freddie Mac released new appraisal independence guidelines.  The GSE’s new guidelines look similar to HVCC but there are differences.  That said, mortgage brokers are still prohibited from ordering the appraisal.

The interim final rule is 135 pages and much of the industry is still digesting it.  Compliance to the rule begins April 1, 2011, so the industry has time to adjust.  Come back to Appraisal Insight for more information on the rule as events unfold.

  1. David

    I knew that the banks found a pot of gold taking half our money. Appraisers gave the money up but the banks would not. Last minute change dont you know from reasonable and customery to reasonable or customery. The same as the old HVCC not allowing banks to own ownership in the Appraisal Management Compaines – last minute change Banks own Appraisal Management Companies – Only the Democrats say they are for the people but stab you in the back when you are not looking. Thanks

  2. Still getting orders from AMCs asking for appraisals (often of unusual, more difficult properties) for way less than acceptable fees – the most recent disclosed the Client paid $550 for the appraisal, of which the appraiser would be paid $300.

  3. Andrea Silverthorne

    It is good to see the demise of the HVCC. I will await the actual wording. What I would like to make sure is that the banks can never, repeat, never use a valuation instead of a full appraisal which still dictates that they can not use distressed sales. I would caution Realtors to stop talking about sellers facing the reality of the market because it has no reality only the contrivance of banks trying to make an end run around not begining able to use said destressed sales. the consept on not using distress sales was intuitive devloped over 100 of years. It should never have been compromised.

    Now the The Federal goverment is looking inot the practices of banks in so called robo signing surley if they are worth anything they wil find IRS Statutes 856-859 which clear say they had no right to handle the forclosures in the first place and short sales are forbidden transactions. This will make every single foreclousre illegal and they will have ownership problems that need to be fixed by no less than legislation out of congress.

  4. Dan Wilson

    I would hope that NAR gets involved with what they think reasonable and customery is.

    This is one of the biggest Real Estate organization and need to get envolved more with the appraiser/realtors.

  5. a. Sniktaw

    The banks are simply passing the cost of appraisal ordering, processing, and review onto, you guessed it, appraisers. They continue to over compensate their CEO’s while skimming off of our fees, saving on labor by creating these AMC’s who charge the borrower $500 for the appraiser and pay the appraiser $250. What a racket ! Watch it, the banking lobbyest are “working their magic” once again. I wonder how many bankers are on the Board of Governers of the Federal reserve ? Write your congressmen and the Fed and demand we be compensated properly ! Write the Federal reserve care of Jeniffer J. Johnson, secretary. Board of Governers of the Federal Reserve System, 20th Street and Constitution Ave., NW, Washington, DC 20551