A proposed rule from the Consumer Financial Protection Bureau should require appraisal management companies to follow minimum standards when performing appraisal reviews, according to the National Association of Realtors.
In a letter to five federal agencies, including the CFPB, the 1 million-member trade group said lenders and AMCs must have a system in place to judge the quality of the appraisals being received.
Appraiser image via Shutterstock.
“At present, appraisal reviews can range from sending work overseas with a checklist, which does not qualify as a review, to full Standard 3 field reviews that cost hundreds of dollars. There is no standard procedure,” wrote NAR President Steve Brown.
“NAR believes that there should be qualified appraiser oversight of all review processes that meet USPAP (Uniform Standards of Professional Appraisal Practice) review guidelines.”
While computer-generated materials and checklists can complement an appraisal review, they should not act as substitutes for a licensed or certified appraiser’s opinion, he added.
The trade group noted, however, that setting minimum standards for appraisal reviews “could significantly delay implementation of standards for a critical piece of the appraisal process.”
NAR counts about 30,000 licensed and certified appraisers among its members.
The trade group also asked the agencies to not consider an appraiser part of an AMC’s panel of appraisers until that appraiser had completed two work assignments for the AMC in a given year.
As proposed, the rule would require AMCs to pay registration fees for appraisers even if they are considering them only for work assignments and would therefore discourage the use of specialty appraisers who may be needed infrequently, according to NAR.
The proposal could also lead to appraisers being dismissed in order to manage the size of a panel and avoid registry fees, the trade group said — a move that could stigmatize those dismissed.
“Many AMCs, other clients and errors [and] omissions insurance providers require appraisers to disclose removal from approved lists or panels,” the letter said.
“If the AMC dismisses an appraiser, it could result in a severe career impediment to many innocent and qualified appraisers even if the dismissal was not due to substandard or noncompliant work.”