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Appraisers Oppose Increased Liability

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Julio E. Sune Jr. (FL)

Senior Member
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Jan 16, 2002
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Certified Residential Appraiser
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Florida
Appraisers Oppose Increased Liability

In a coordinated government relations effort, the Appraisal Institute and American Society of Appraisers expressed opposition to a provision considered by a House subcommittee giving federal bank regulators new enforcement powers over contractors, such as real estate appraisers, in essence, treating them like inside bank officials or employees. On April 8, the groups sent a letter to Rep. Spencer Bachus, R-Ala., and Rep. Bernie Sanders, I-Vt., chairman and ranking member of the House Financial Services Subcommittee on Financial Institutions in opposition to Section 614 of H.R. 1375, the Financial Services Regulatory Relief Act of 2003. That section would repeal a provision of Title IX of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), which "knowingly and recklessly" established a standard for banking agency administrative actions against "institution affiliated" parties believed to have violated safety and soundness requirements.

The Appraisal Institute and American Society of Appraisers believe that enactment of Section 614 would establish an unjustifiable equivalency, for banking agency law enforcement purposes, between bank insiders on the one hand (such as senior executives and members of the board of directors) and outside contractors on the other (like appraisers), who have no knowledge about and no control over internal bank underwriting and operational decision-making. In addition, the two groups expressed concern that Congress would make such a dramatic change without hearings and a detailed and convincing record evidencing a clear need to do so.



Although H.R. 1375 was approved by the Subcommittee on Financial Institutions on April 9, Bachus expressed his deep concern that Section 614 would actually increase regulatory burdens, which is in opposition to the spirit of the legislation - regulatory relief. "This legislation is intended to eliminate layers of regulation that are costly and don't have any benefit. This provision (Section 614) is adding new regulation and it is not clear that it will provide any added benefit,” Bachus said.



Bachus remarked that there had been no hearing held regarding the need for Section 614 and expressed concern that the provision could slow down what is bi-partisan effort. "Section 614 is an example of something that will add more controversy," Bachus concluded.



The legislation now moves to the full Financial Services Committee, and it is expected to be considered in the coming weeks. For more information on the legislation, contact Don Kelly, Vice President of Public Affairs at 202-298-5583, [email protected].


A copy of the AI-ASA letter can be found on the Appraisal Institute Web site at: http://www.appraisalinstitute.org/govtaffa..._AICPA_2003.pdf. A copy of H.R. 1375 can be found at http://thomas.loc.gov - type in "HR 1375" in the box entitled, "Bill Number."

:angry:
 
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