Appraisal Reform Is Necessary. Lenders and Realtors have been asking for Appraisal Reform since the creation of the Home Valuation Code of Conduct (HVCC) in 2009. HVCC opened the door to major appraisal issues, and even thought it has been revised since 2009, the revisions have not addressed the issues that Lenders and Realtors continue to experience. Apparently now others are also beginning to realize the same thing, and are also asking for Appraisal Reform. This month the National Association of Home Builders (NAHB) has also called for changes in the Appraisal Process. Hopefully the NAHB will get more attention on their call for Appraisal Reform than the Lenders and Realtors have gotten.
The main changes that the NAHB is calling for deal with "Streamline and coordinate the current regulatory framework and devote adequate resources to ensure effective oversight and enforcement." By doing the following:
- "Create a real estate data superhighway with a national real property registry and supporting networks.
- Reaffirm and streamline the key residential appraisal principles contained in the Uniform Standards of Professional Appraisal Practices (USPAP).
- Establish uniform credentialing standards that are specific to each area of residential appraisal practice and create clear education and career paths for residential appraisers.
- Establish a single, consistent set of rules and guidelines for residential appraisals.
- Urge residential appraisers to consider all three valuation approaches-cost, income and sales comparison-- in estimating values, and ask them to report a range rather than a single point value.
- Set standards and processes to ensure the engagement of the best residential appraiser for the assignment.
- Establish workable procedures for expedited appeals of inaccurate or faulty residential appraisals."
I agree with most of the Appraisal Reform that the NAHB is calling for, especially the last suggestion to establishing a "workable procedures for expedited appeals of inaccurate or faulty residential appraisals." But I don't agree with their first suggestion to "Create a real estate data superhighway with a national real property registry and supporting networks." We have enough government agencies already, and I do not agree that another one is needed.
The NAHB does however state that "states should retain primary responsibility for certifying and overseeing appraisers and the quality of their work". But the new Federal Regulatory body would "dictate that disciplinary actions are meted out in a consistent manner."
I am not aware of any provision in the existing Appraisal Guidelines that has established a provision for "overseeing appraisers and the quality of their work". If one does not exist, I feel that one should be created, as well as the authority to discipline, and to issue fines if it is determined that the Appraiser has not done his/her job correctly. One of the major problems that we have today is that Appraisers do whatever they want, with little to no ability to challenge their work.
Appraisal Reform Is Necessary, and I hope that the NAHB is successful in their efforts to bring it about.
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George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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