Appraisal

Dodd-Frank and FIRREA guide appraisers and help determine how they get paid.

February 8, 2012

Post-TransactionPre-Transaction Return to Index Page Earnest Money Appraisal Insurance Loan

 

  Dodd-Frank

Summary:
Appraisers are to be compensated at a rate that’s reasonable and customary for appraisal services in the market area of the property being appraised. A subprime mortgage requires a written appraisal of the property to be mortgaged. Applicants are entitled to one free copy of the appraisal and must be notified that the appraisal is prepared for the sole use of the creditor.  It is unlawful to coerce, extort, collude, instruct, induce, bribe, or intimidate an appraiser in an attempt to influence the independent judgment of the appraiser. When setting property value, an appraiser may consider additional, appropriate property information including additional comparable sales to support an appraisal, provide further detail, or correct errors. Requires lenders, brokers, appraisal management companies (AMCs) and others involved in real estate transactions to report any appraiser who is believed to be violating appraisal standards under the Uniform Standards of Professional Appraisal Practice (USPAP).

Regulators:
Federal Reserve
Consumer Financial Protection Bureau
Other federal banking regulators

Original statutory authority:
“The Dodd–Frank Wall Street Reform and Consumer Protection Act,” Public Law 111-203

Penalties:
Civil penalties can be imposed of up to $10,000 per day for first violations and $20,000 for subsequent violations.

More information:
NAR Dodd-Frank page on REALTOR.org

This summary is not a comprehensive analysis of how the law applies to you.  Consult a qualified real estate attorney to determine how the federal law and laws in your state impact you in this area.

 

  Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

Summary:
Appraisers must be licensed and their appraisals must meet standards. Appraiser licensing is by state, but minimum licensing requirements (made mandatory by Dodd-Frank) are set by a national board called the Appraiser Qualifications Board, which receives input from another national board, the Appraisal Subcommittee, whose members are appointed by federal mortgage regulators. Appraisal standards are set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), which is promulgated by the Appraisal Foundation through the Appraisal Standards Board, which, like the Appraiser Qualification Board, receives input from the federally appointed Appraisal Subcommittee.

Regulators:
Federal Financial Institutions Examination Council (FFIEC)
Federal Deposit Insurance Corporation (FDIC)
Other banking regulators

Original statutory authority:
“Financial Institutions Reform, Recovery, and Enforcement Act of 1989,” Public Law 101-73

Penalties:
Institutions and institution-affiliated parties, including staff appraisers and fee appraisers, may be subject to removal and/or prohibition orders, cease and desist orders, and the imposition of civil money penalties.

More information:
FDIC appraisal rules page

This summary is not a comprehensive analysis of how the law applies to you.  Consult a qualified real estate attorney to determine how the federal law and laws in your state impact you in this area.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.