In an effort to benefit U.S. consumers, the Housing and Insurance Subcommittee held a hearing on Nov. 16 to hash out changes necessary for the appraisal industry.
Among the issues brought to the table were the industry’s regulation model, potential advancements, as well as the cause of the declining number of professional appraisers. One of the major concerns voiced by Rep. Blaine Luekemeyer (R-MO), the subcommittee chairman, was that current practices governing the industry are outdated.
“Appraisals are one of the cornerstones of the home-buying process,” Luetkemeyer said. “Issues that impact appraisers also impact nearly every American buying or selling a home, in rural and urban areas; in high- and low-income neighborhoods. Yet when it comes to the regulatory regime surrounding appraisals, it seems we’re stuck in 1989.”
What that has led to, by his estimation, is an unnecessarily complicated system which causes delayed closings and increased costs. Under specific fire was the Dodd-Frank Act, with claims the act had failed to enhance the system for appraisers, consumers and stakeholders alike.
“Dodd-Frank benefited consumers by requiring lenders to provide a copy of the appraisal that was utilized in underwriting a loan,” David Bunton, president of The Appraisal Foundation, said. “Unfortunately, many borrowers were simply confused when receiving this information prior to closing. Some wondered why certain products reflected one opinion of value, while a different product showed another. And how was the appraisal fee the borrower paid actually applied to these various products?”
In addition, the declining number of real property appraisers in the U.S. was cited as a growing concern reflective of burdensome qualifications and the changing nature of the marketplace. The general consensus? The appraisal regulatory structure needs to examine advancements in alternative home valuation methods.