Legislation (H.R. 3044) that would impose an 18-month moratorium on the Home Valuation Code of Conduct was introduced in the House of Representatives last week in an effort to lift new requirements temporarily for valuations and the way appraisals are ordered.
The bill’s cosponsors – Reps. Travis Childers, D-Miss., and Gary Miller, R-Calif., both serve on the House Financial Services Committee, where the bill has been referred. According to Ben Lincoln, legislative director at Childers’ Washington, D.C. office, Childers introduced the bill after local appraisers contacted his office saying the Code negatively impacts their business. Furthermore, he said, it affects consumers due to the Code’s inference that an appraisal management company is required in mortgage transactions. Such a requirement is one of the myths exposed in the Appraisal Institute’s recent comment on the HVCC, available at www.appraisalinstitute.org/newsadvocacy/downloads/HVCC_myths.pdf.
Richard Maloy, MAI, SRA, chair of the Appraisal Institute’s Government Relations Committee, which is reviewing the legislation, said: “We applaud the appraiser independence provisions of the HVCC, yet we are concerned with the unintended consequences relating to lenders and management companies and their role in the ordering process. We are working with Congress, the bank regulatory agencies, and other interested parties to advance comprehensive reforms to strengthen our system of mortgage finance.”
Maloy added, “We want our members to know that the Government Relations Committee is actively engaged in seeking long term solutions that protect the integrity of the appraisal profession while ensuring the economic livelihood of our members. It’s our goal to bring balance back into the system.”
Bill Garber, Director of Government and External Relations, noted the concerns regarding the business practices of many appraisal management companies, which have existed before the implementation of the HVCC. “We have testified before Congress twice this year that, too often, appraisers are being hired not for their competency and qualifications, but for their turnaround time and price. Today, many communities are facing material changes in market conditions and these conditions make for complex appraisal assignments which should be prepared by only the most qualified appraisers,” commented Garber.
By focusing on a broad structural solution, the Appraisal Institute believes the concerns expressed by many appraisers, consumer groups, real estate agents, and builders relating to AMCs can be addressed by requiring the use of qualified appraisers – those with the experience and training necessary for complex assignments. Consumers, real estate agents, builders, and others can help mitigate potential valuation related problems by demanding and using qualified appraisers.
In advocating for appraiser independence the Appraisal Institute has consistently called for use of designated and qualified appraisal professionals. Suggesting that consumers should demand that their lender utilize the services of the most qualified professional is part of that broader strategy. “While real estate agents, builders, and others should not select or compensate the appraiser, they too can demand lenders hire only qualified appraisers, such as those that have earned a professional appraisal designation from the Appraisal Institute or one of the other nationally recognized professional appraisal organizations,” said Garber.