President Obama signed into law on July 21st financial services reform legislation, which contains comprehensive real property appraisal modernization provisions. ASA has been deeply involved in the development and approval of these provisions, which are authored by Rep. Paul Kanjorski (D-PA). The provisions work on a number of levels to protect appraisers from coercion or abuse, and to increase the use of appraisals in real property transactions. Some of the effects of the bill include: Requiring that appraisers be paid a “reasonable and customary” fee by lenders (and their agents) , based on third party research, academic studies, and federal agency fee schedules; Makes appraiser independence requirements a part of federal law, and creates civil money penalties for violating appraiser independence; Mandates that appraisals be used in certain higher-risk mortgage-backed real estate transactions, and prohibits exclusive reliance on broker price opinions in all loan originations; Ensures that consumers receive a free copy of the appraisal no later than three (3) days prior to closing; Requires regulation of appraisal management companies at the federal and state level, and; Creates transparency and reliability thresholds for automated valuation models. Now that the bill has been signed, the first round of regulatory rulemaking starts almost immediately. Regulators must enact interim final regulations for appraisal independence requirements no later than 90 days from the date of enactment. ASA is contacting the regulators and will be actively involved in this and all other rulemakings that affect the final implementation of the appraisal modernization provisions.
To read ASA’s comprehensive review of the impact of appraisal modernization legislation, which apepared in last month's Capital Action, click here. To see Title XIV of the financial services bill, click here.