Yesterday, the US Government Accountability Office (GAO) released their report on real estate appraisals “Appraisal Subcommittee Needs to Improve Monitoring Procedures” as required per Dodd-Frank. GAO was tasked with 1) determining how the Appraisal Subcommittee (ASC) is carrying out its Title XI responsibilities, 2) ASC’s plans to implement Dodd-Frank provisions, and 3) regulatory dollar thresholds for determining when an appraisal is required.
GAO reports that one of the challenges faced by ASC is in the area of resources and planning. GAO cites the creation of a national hotline as one example of a Dodd-Frank requirement that could strain the ASC’s resources. ASC has noted that the number of appraisers is trending downward, which will inevitably impact the agency’s $2.8 million budget. The report also discusses the $250,000 regulatory threshold. While some debate the need to change the threshold, GAO states that it has little impact on the proportion of mortgages with appraisals because the Federal Housing Administration and the government sponsored enterprises (GSE) make up most of the market and require appraisals regardless of price. However, this could change with a more privatized market.