Uh oh, sound the alarm bells! Appraisers aren’t aging out like everyone has been worrying about. In fact, they are being starved out – 41% say the compression of fees is propelling them to move on to a new career. Another 25% say Fannie and Freddie policies are driving them out of their appraisal career. The “aging out” issue is still nothing to take lightly, but like many other professions, folks are simply working decades later for a multitude of reasons.
Most of the comments within the “other” category related to fees, waivers, and the raising of the de minimus.
The compression of fees is an insidious problem. Not only is it forcing out existing appraisers, but the lack of opportunity to earn a living commensurate with the required education and training, is keeping new entrants away. This problem became exacerbated with Dodd Frank and the legislation push towards Appraisal Management Companies. The Customary and Reasonable (C&R) provision of Dodd Frank was supposed to correct the imbalance of power and ensure that appraisers were compensated fairly. Along came the Interim Final Rule and those protections evaporated.
I overheard a regulator state at a lunch table a few weeks ago mention that it was time to “revisit Dodd Frank and write a Final Rule for C&R.” Say what? I didn’t even know that was a possibility. Let’s hope it was a serious statement. Since there has been zero enforcement of C&R or any independence provisions, it would send a long overdue positive signal to the appraisal community.
Weakening your work force by reducing fees to an uncompetitive level is dangerous to the safety and soundness of housing finance. When the next cycle in the market begins, will lenders and the GSEs be leaning on property data collectors for their local market expertise on valuation? I don’t think so.
The “Modernization of the Appraisal Process” thus far has produced short-term thinking resulting in waivers and bifurcated appraisal experiments. Let’s hope we can attract the long-term thinkers over at FHFA who are working hard to build a world class regulator, take heed, and initiate an emergency action plan to “Rebuild the Appraisal Profession.” The profession needs a rebirth, a reinvigoration. If we don’t invest now, we will surely pay later, plus penalties and interest.
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