Tuesday , 27 October 2020
Regulations

Appraisal Independence

I know appraisers must be weary of hearing about new rules and regulations that will arrive onto the scene and save the day. If appraisers aren’t already, all the government intervention has been enough to convince anyone to become a Libertarian or maybe even an Anarchist. There is nothing worse than the unfulfilled expectation that Dodd Frank would save the day with appraisal independence requirements.

Why bring this up now, you say? We just collated the results from our annual Collateral Risk Network Lender Survey. Over 65% of the lender chief appraisers surveyed believe appraisal independence remains a problem. Appraisers we recently polled share much the same experience with a small percentage, just under 7%, stating that pressure to inflate values has actually increased.

Those survey results speak volumes about the ineffectiveness of Fannie Mae and Freddie Mac’s AIR (Appraisal Independence Requirements) as well as the reluctance of the banking regulators to enforce Dodd Frank. Do you remember the hotlines set up? Anyone ever dialed in? I wonder if you get a dial tone or some offshore answering service. Any reports from the GSEs (Government Sponsored Enterprises) on enforcement activities? Hello? Anyone there?

Have you noticed virtually no grumbling from the mortgage broker community any longer about controlling the appraisal process? The silence is deafening. Give that considerable thought.

The Home Valuation Code of Conduct dropped like a grenade in our midst during the housing crisis. Appraisers had been loudly proclaiming for years that the pressure to inflate values was unbearable. Something had to give and it did. Andrew Cuomo, the then New York Attorney General, was holding the grenade launcher.

Like any good diversionary tactic, we seemed to have moved on to other conversations—the so-called shortage of appraisers, customary and reasonable fees, quality, and a whole host of other skirmishes. Yes, these are all very real issues. Please don’t do a lot of hand wringing over the future of Dodd Frank. It is anyone’s guess when housing finance reforms will be considered.

Our 4th edition of the Appraisal Buzz magazine should be arriving this week. On the cover, we feature, CHANGE. It is coming for sure. I just don’t know what it will look like or when it will arrive. Stay tuned.

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About Joan Trice

Joan Trice
Joan N. Trice is the founder and CEO of Allterra Group, LLC, publisher of Appraisal Buzz, and host of the annual Valuation Expo, the largest conference for the valuation community. Joan also hosts the Collateral Risk Network, a members-only group of more than 500 dedicated chief appraisers, collateral risk managers, regulators, and valuation experts who are focused on resolving the many challenges facing our profession.

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