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Appraisers Win (Finally!) With New Legislation

July 19th, 2010 by Bill Collins Leave a reply »


President to Sign Financial Reform into Law Wednesday with Appraiser Friendly Provisions

On Thursday, the Senate passed the Dodd-Frank bill by a 60 to 39 vote, sending this appraiser-friendly measure to the President for his signature, which will occur on Wednesday.

This bill appears to have provisions which promise to improve the working conditions and financial prospects for many appraisers.  The significance of this bill makes it worth repeating much of the information from our last newsletter since many readers may have missed it while on vacation or ignored it figuring that some last minute change would make it less appraiser-friendly (we do have skeptics amongst us after these last several years).

Good news is worth repeating, so here it is.  Besides, who wants to read all the troubling new predictions for the residential and commercial real estate markets anyway on a nice summer day?  Well, we won’t totally ignore the flurry of bad reports but we’ll place them at the end of the newsletter!

Here is a link to the Dodd-Frank bill, all 2,319 pages worth.  Dodd-Frank Wall Street Reform and Consumer Protection Act

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Higher Appraisal Fees!

The congressional bill appears to take some of the language from the FHA (see FHA Mortgagee Letter 2009-28) regarding appraiser compensation and expands upon the mandates of that letter. It includes the following language on page 2215:


“Customary and Reasonable Fee:

IN GENERAL—Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.”

The bill, however, goes further than the FHA mandate in describing manners in which customary and reasonable fees are to be determined:

“Evidence for such fees may be established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management companies.” Please note that we have added italics to this last sentence to emphasize its importance.

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Valuation 2010-say yes if you literally want the t-shirt! Luxor Las Vegas, NV – November 8-10 –

All early registrants will get an amazing early-early bird rate and the “I am a real estate appraiser and it’s not my fault” t-shirt. In order to qualify email us your name and phone number to

HVCC to End!

Page 2216 in the bill has this to say about the HVCC:

“SUNSET. Effective on the date the interim final regulations are promulgated pursuant to subsection (g), the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.”

What does this mean exactly? It doesn’t mean very much as many of the provisions of the HVCC are included in this bill.  But, there are many pro-appraiser provisions in this bill which is something we haven’t had many opportunities to say during recent years.  We have been most interested in the bill’s impact on appraisers and have not analyzed it carefully as to its impact on other industry groups such as mortgage brokers and AMCs but it does not appear as though these two groups will find much to like about it from their vantage point.

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Not just for FHA Appraisers – Connect with over150 AMCs with updated information.

New Regulations for AMCs!

Page 2223 of the congressional bill contains the following language regarding Appraisal Management Companies:



(a) IN GENERAL.—The Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau of Consumer Financial Protection shall jointly, by rule, establish minimum requirements to be applied by a State in the registration of appraisal management companies. Such requirements shall include a requirement that such companies—

(1) register with and be subject to supervision by a State appraiser certifying and licensing agency in each State in which such company operates;

(2) verify that only licensed or certified appraisers are used for federally related transactions;

(3) require that appraisals coordinated by an appraisal management company comply with the Uniform Standards of Professional Appraisal Practice; and

(4) require that appraisals are conducted independently and free from inappropriate influence and coercion pursuant to the appraisal independence

standards established under section 129E of theTruth in Lending Act.”

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Appraiser News is always a FREE publication. Please support our sponsors by clicking here.

Not just for FHA Appraisers – Connect with over150 AMCs with updated information.

Limitations on BPOs!

While this does not go far enough and excludes many current uses of BPOs, the congressional bill contains the following provision regarding Broker Price Opinions on page 2241:


(a) GENERAL PROHIBITION.—In conjunction with the purchase of a consumer’s principal dwelling, broker price opinions may not be used as the primary basis to
determine the value of a piece of property for the purpose of a loan origination of a residential mortgage loan secured by such piece of property.

(b) BROKER PRICE OPINION DEFINED.—For purposes of this section, the term ‘broker price opinion’ means an estimate prepared by a real estate broker, agent, or sales person that details the probable selling price of a particular piece of real estate property and provides a varying level of detail about the property’s condition, market, and neighborhood, and information on comparable sales, but does not include an automated valuation model, as defined in section 1125(c).’’

Once again, we at Appraiser Help want to note our support for the positions taken by the four appraisal organizations which authored the March 8th and April 20th letters that we have previously discussed opposing the use of both BPOs and BOVs (Broker Opinions of Value of Commercial Real Estate).  Links to these two letters are here:

Letter Regarding BPOs.

We also again request that Andrew Cuomo take one final action as Attorney General, before his coronation as Governor of New York, to read our letter dating back to August 4, 2009 (go to to see) and use the powers at his disposal to help bring an end to these unseemly financial practices.

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The Bottom Line

After the President signs the bill into law Wednesday it appears likely that many of the appraiser friendly provisions will begin to take effect before the end of the year.  Other parts of the bill, such as the AMC registration, will not be fully implemented for an extended time.

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What Should Appraisers do Right Now to Take Advanage of the Upcoming Changes?

As always, a diversified real estate appraisal practice is the goal and marketing your services to attorneys, accountants, property owners, municipalities, etc. for private appraisal business is recommended along with efforts to build a better mortgage appraisal business. It is too early to predict how the flow of mortgage appraisals will change and who will win and lose amongst the AMCs but appraisers should consider introducing themselves to some new AMCs with the prospects of better fees on the horizon.

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FHFA Issues 64 Subpoenas Seeking Loan Documents in Mortgage Fraud Investigation

The New York Times first reported on July 12th about the efforts being undertaken by the FHFA to recover some of the losses taken by Fannie Mae and Freddie Mac and followed up this article with another on July 16th in which they stated that there was now a “…strong cop on the Fannie and Freddie beat…”.  This second article reported that the subpoenas

“…went to companies that act as trustees for mortgage pools or that service the loans in them. The housing finance agency wants to see loan files and transaction documents related to those pools, including mortgage applications and property appraisals. Recipients of the subpoenas have 30 days to produce the requested documents. Additional subpoenas may follow…”

Links to these articles are found here:

Gov’t Tries to Recoup Some Fannie, Freddie Losses

Holding Bankers’ Feet to the Fire

It seems as though there may be an increasing need for retrospective appraisals in the coming years…

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Troubling Housing News

Ahead of Commerce Department data due out today, Bloomberg News reported on July 18th that the housing market retrenched in June as construction and purchases dropped.  Bloomberg News cited growing pessimism in July as reported by the National Association of Home Builders/Wells Fargo confidence index along with a decline of 11% in Standard & Poor’s supercomposite homebuilders index.  A link to the Bloomberg News story in its entirety is found here:

Housing, Leading Index in US Probably Slumping in Sign Recovery Slowing

On July 14th, the New York Times reported on the decline in homeownership rates nationally as foreclosures have risen and a link to this article is found here: A Falling Homeownership Rate

What about homeowners who are better off than the average middle class subdivision dweller? On July 8th, the New York Times reported that one out of every seven homeowners with a mortgage over $1 million is seriously delinquent, according to CoreLogic.  A link to this article is found here: Biggest Defaulters on Mortgages Are the Rich

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Rates and Dates

Freddie Mac reported that rates for 30-year fixed-rate mortgages remained at the previous week’s rate of 4.57% for the week ending July 15th.

The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending July 9th reported an average rate for 30-year fixed-rate mortgages of 4.69%, essentially unchanged from the prior week’s average of 4.69%.

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey – PMMS – Freddie Mac

Additional information from the Mortgage Bankers Association can be found by going to their site at: Mortgage Bankers Association Research and Forecasts

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Ask Angie

We want to congratulate our most recent winner: Marvin Kaleky, a Certified Residential Appraiser with Able Appraisals, in North Lauderdale, Florida.

Today’s question:

Who said: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

1. Timothy Geitner

2. Barney Frank

3. Kenneth Feinberg

4. Upton Sinclair

5. None of the above

The first person to respond with the correct answer wins a choice of either:

One Free Trade Show Pass or $199 off a Full Conference Pass to Valuation 2010 or

A Free Copy of the Directory of Appraisal Management Companies for FHA Appraisers

Angie’s Hall of Fame: Those who have been crowned winners more than once during the past two years and who have been retired from competition for the rest of 2010:

Suzanne Fahien

Pat Reass

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: with your thoughts!

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at


Bill Collins, Appraiser Help Inc.

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