NAR response to GAO questions - August 2002

[Steve Owen]

There were several interesting responses, but the last one was the most interesting:

Miscellaneous
16. What, if any, other real estate appraiser related issues would be useful additions to our study?

As previously noted, NAR is concerned about the direction and purpose of the Appraisal Foundation, the Appraisal Standards Board and the Appraiser Qualifications Board. We question the propriety of a private organization promulgating standards for appraisals and qualifications of appraisers, which must be adopted and enforced by State Regulatory Agencies. Some states have indicated that these standards and criteria have the effect of law but have been adopted completely outside the State legislative process. Appointed individuals without any type of Government control or oversight have promulgated them. Even though the standards and criteria are put out for public comment, they are nonetheless discussed and debated behind closed doors in non-public meetings in direct contradiction to some state laws.

NAR is also concerned about the lack of responsiveness and accountability from the Appraisal Foundation, the Appraisal Standards Board and the Appraiser Qualifications Board to the professional association sponsors. We are concerned about the concentration of significant power given to a relatively small number of individuals where the sponsoring organizations have no means of appointing or providing oversight. For example, we have sought in vain for several years to limit the Uniform Standards of Professional Appraisal Practice to "Appraisal Practice." In other words, we have made pleas for the removal of Standards 4 and 5 from the document because we believe, along with other groups, that Title XI pertains to APPRAISALS, not consulting assignments. The mandate to the states in Title XI was to license, certify and regulate appraisers, not counselors.

Some States have informed us that the Appraisal Foundation, the Appraisal Standards Board and the Appraiser Qualifications Board has exceeded their authority and have, in effect, acted as regulatory bodies over the State regulatory agencies. For example, the AQB, over the past year, has shut down the licensing authority of at least one state and has demanded the disapproval of a number of State-Approved Pre-licensing and Continuing Education Courses because of minor technical differences with arbitrary criteria.

The Appraiser Qualifications Board has adopted a number of arbitrary requirements, which could be construed as conflicts of interest. For example, the National USPAP Course required by the AQB requires either AQB approval or use of their course and examination with a royalty to be paid to the AQB. The National USPAP Update Course and Examination has a similar approval structure. Also, the AQB will soon require all USPAP Instructors to meet their standards and only Instructors taking an Instructor Certification Course can meet the standards. The only approved course is presented by the Appraisal Standards Board and taught by Appraisal Standards Board Members.

Rather than providing control and oversight of the Appraisal Foundation, the Appraisal Standards Board and the Appraiser Qualifications Board, and protecting the public, appraisers and instructors from these conflicts, it appears that the Appraisal Subcommittee stands silent and thus conveys the impression that they are working in cahoots with The Appraisal Foundation and the members of its ASB and AQB. NAR has proposed on more than one occasion that an appeal process to an independent third party, or approval process of courses and instructors by either the State Licensing Board or the AQB be implemented.

Finally, NAR is concerned about the fact that Federally Regulated Lenders, Fannie Mae, Freddie Mac and HUD are questioning the qualifications of appraisers while simultaneously taking steps to exempt the bulk of their mortgage lending activity from the safeguards installed in law because of the lessons learned from the Savings and Loan debacle of the late 1980's.

 

[Joe Birrell (NY)]

Sounds like a politically correct and long winded way of saying "let's get the AF abolished" - sounds good to me, I've been in favor of eliminating these people since the idea was first conceived in the 80's.