Housing Subcommittee Discusses Modernizing Appraisal Industry

November 17, 2016

The Housing and Insurance Subcommittee held a hearing on Wednesday to discuss necessary changes to the appraisal industry.

“Appraisals are one of the cornerstones of the home-buying process.  Issues that impact appraisers also impact nearly every American buying or selling a home, in rural and urban areas; in high- and low-income neighborhoods,” explained Subcommittee Chairman Blaine Luetkemeyer (R-MO).  “Yet when it comes to the regulatory regime surrounding appraisals, it seems we’re stuck in 1989.”

The hearing gave the subcommittee an opportunity to examine the past and look to the future of appraisal standards. According to Luetkemeyer’s office, these were the key hearing takeaways:

  • The current appraisal regulatory regime is stuck in a 1980s model and does not reflect the advancements of a 21st century marketplace.
  • The appraisal regulatory structure should take advantage of advancements in alternative home valuation methods.
  • The Dodd-Frank Act’s impact on the appraisal industry has not enhanced the system for appraisers, consumers or stakeholders.
  • The decline in the number of professional appraisers is reflective of burdensome qualifications and a changing marketplace.

During the hearing, David Bunton, president, The Appraisal Foundation, said that Dodd-Frank has benefited consumers by requiring lenders to provide a copy of the appraisal that was utilized in underwriting a loan. Additionally, he said the CFPB went a step further and required lenders to provide borrowers with copies of all valuation products that were considered in conjunction with the loan application.

“Unfortunately, many borrowers were simply confused when receiving this information prior to closing,” he said. “Some wondered why certain products reflected one opinion of value, while a different product showed another.”

Joan Trice, chief executive officer and founder of Clearbox, described the regulatory regime for the appraisal industry as “outmoded” and “entirely dysfunctional.” She said it’s “time for a big and bold plan to overhaul the system.”

Bill Garber, director of government and external relations for the Appraisal Institute, told the subcommittee that the number of appraisers in the United States is declining.

“What is clear is that all appraisers are being choked by rules and regulations in nearly every facet of their business,” he added.

Contact ALTA at 202-296-3671 or communications@alta.org.