By James Baumberger, CEO at First Choice and Certified Residential Appraiser
Appraisers are the most qualified professionals to protect the public trust, strengthen credit quality, and safeguard the real estate wealth of Americans by performing Evaluations in addition to Appraisals.
Almost all Evaluations in America today are performed by non-appraisers. Appraisers must be empowered to perform Evaluations NOW! That is a bold statement to some. If you did not read Part I, you can find the supporting rationale for this bold statement here:
The GSE’s beta-testing of alternative valuation services – especially a bifurcated or hybrid process with third-party property inspectors combined with Appraisers developing desktop opinions of market value – are going well. Sooner, rather than later, secondary market investors will begin accepting alternative valuation services, which will decrease some of the demand for traditional appraisal products.
One likely scenario is that the GSE’s will apply Appraisal Waivers for approximately 10-15% of their loans, perhaps use Desktop Appraisals for another 25-35% of loans, and only require traditional appraisal products for 50-65% of saleable loans. Considering today’s lower mortgage lending volume, can you imagine our industry if appraisal demand was reduced by 50%?
In addition, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have released proposed Rulemaking to increase the residential De Minimus – the threshold below which appraisals are NOT required – from $250,000 to $400,000:
This proposed rulemaking would also modify the rural Appraisal Exemption in Section 103 of Senate Bill S.2155 – Economic Growth, Regulatory Relief, and Consumer Protection Act (05/24/2018) – to require Evaluations when such exemptions are applied. This rule will likely be approved. These two changes combined – Evaluations allowed up to a $400,000 threshold plus Evaluations being performed in cases of appraisal exemptions – will increase market demand for Evaluations thereby lowering demand for traditional appraisal products.
Non-appraisers are performing virtually all of the Evaluations in today’s nearly $8 Billion evaluation space. There are no defined educational or experience requirements for Evaluation Preparers, no code of Ethics, and no signed Certifications of competency, independence, or objectivity. There are no defined standards for Evaluation Preparers either. In addition, there is a valid concern regarding real estate marketing professionals, untrained in the Cost, Income and Sales Approaches, preparing Evaluations when their primary sales’ roles might also create bias.
It is reasonable to foresee significant adverse impacts to the public trust, credit quality, and real estate wealth of Americans in a system relying more frequently upon Evaluations performed by untrained, inexperienced Evaluation Preparers. Do you agree? If so, here are some ACTIONS you can take before the exposure period expires on February 5, 2019 for this proposed rulemaking:
SEND an Email to: firstname.lastname@example.org with Subject Line: Real Estate Appraisals | Docket ID OCC-2018-0038 to express your concerns and to advocate for the rulemaking to include a “USPAP-exemption for Appraisers performing Evaluations” in accordance with Interagency evaluation guidelines.
SEND a Letter expressing your concerns and advocating that the rulemaking should include a “USPAP-exemption for Appraisers performing Evaluations,” referencing Real Estate Appraisals | Docket ID OCC-2018-0038 to:
Legislative and Regulatory Activities Division
Office of the Comptroller of the Currency
400 7th Street SW, Suite 3E–218
Washington, DC 20219
SEND a Fax expressing your concerns and advocating that the rulemaking should include a “USPAP-exemption for Appraisers performing Evaluations,” referencing Real Estate Appraisals | Docket ID OCC-2018-0038 to: (571) 465-4326.
JOIN C.O.R.E.A. (Coalition of Oregon Real Estate Appraisers) to add your support for a
USPAP Carve-Out to empower Appraisers to perform evaluations in Oregon, as a handful of other states have already done! Introducing such legislation is the first item on COREA’s Action Plan for the 2019 legislative session and has the full support of First Choice. Please join our cause, lend your voice, and help us protect America’s real estate wealth and shape a positive future for Appraisers.
COREA’s website: http://www.coreappraisers.com
Thank-you for reading!