Appraisers resist HUD proposal
September 25, 2002
Oppose initiative that would measure appraisal quality based on closed mortgage claims
Inman News Features
Appraisal societies yesterday urged the Department of Housing and Urban Development to abandon the proposed Federal Housing Administration Appraiser Watch Initiative and focus instead on systemic problems in HUD's appraisal programs.
The initiative, proposed this past summer by HUD, aims to establish a performance standard for FHA-approved appraisers based on the rate of defaults and claims on closed mortgages linked to the appraiser.
The group, calling themselves the National HUD Task Force, is comprised of members of the Appraisal Institute, National Association of Realtors Appraisal Committee, American Society of Appraisers, National Association of Independent Fee Appraisers, American Guild of Appraisers AFL-CIO and National Association of Master Appraisers.
The task force contends that there is no research indicating defaults are a relevant measure of the quality of appraisals, according to the Appraisal Institute. It also contends that the initiative fails to address important issues that have a negative impact on the quality of appraisals performed for the Federal Housing Administration.
National HUD Task Force member Thomas Munizzo said that the initiative, "overestimates the correlation between the appraisal and the borrower's ability to pay the mortgage."
In addition, members of the Appraisal Institute wrote and delivered more than 300 letters of opposition to HUD, pointing out specific problems the proposal does not address. Problems mentioned were poorly performing appraisers whose loans do not end up in default, lender accountability over appraisals or inappropriate client pressure on appraisers and consistent failures in HUD's management systems, according to the Appraisal Institute.
The opposition letters proposed that, as alternatives to measuring an appraiser's accuracy based on default rates, HUD should strictly review appraisers based on the quality of their appraisals, enforce lender accountability and establish strict policies prohibiting client pressure on appraisers, according to the Appraisal Institute. The letters also suggested that HUD remove unqualified appraisers from the FHA roster, address high-volume appraisers and increase FHA-specific education and qualification requirements.
Copyright: Inman News Service