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Regulators Show Interest In Reducing Appraisal Requirements

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Mike Kennedy

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Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Regulators Show Interest in Reducing Appraisal Requirements
Federal bank regulatory officials in recent testimony before Congress and in public presentations have signaled an intent to pursue proposals that would increase appraisal threshold levels and potentially establish new exemptions from appraisal requirements.

Federal Reserve Chair Janet Yellen told the House Financial Services Committee Sept. 28 that federal banking agencies have identified a need to reduce appraisal requirement burdens. The finding followed a review by the agencies of the Economic Growth and Regulatory Paperwork Reduction Act to find outdated, burdensome or unnecessary provisions. Among the issues identified were a need to streamline the Call Report, reduce examination frequency, raise long-standing dollar-based thresholds for appraisals and reduce the complexity of capital requirements for smaller banks.

Jerome Powell, governor of the Federal Reserve Board, mirrored Yellen’s comments in a Sept. 29 speech before the Conference of State Bank Supervisors where he indicated that efforts were underway to “reduce burden associated with our real estate appraisal requirements.”

The agencies are in the process of finalizing a report on their Paperwork Reduction Act findings, and any proposals would most likely follow shortly thereafter and could be released by the end of the year.

Another variable that may be addressed in future proposals is the qualification requirements for individuals performing evaluations. Earlier this year, the agencies released guidance on Supervisory Expectations for Evaluations. Evaluation quality is likely to be heavily scrutinized under any plan to reduce appraisal requirements.

The Appraisal Institute hosts an Appraisal Threshold page devoted to this issue, in anticipation of proposals that would negatively impact safety and soundness.
 

J Grant

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Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Evaluation quality is likely to be heavily scrutinized under any plan to reduce appraisal requirements.

So if they reduce appraisal requirements and substitute an evaluation and heavily scrutinize the evaluation, sounds like appraisers will be doing evaluations instead of appraisals...because who else can stand up to that kind of scrutiny? Banks would want to cover their *****ets in an evaluation that is scrutinized by the Feds ( of course if appraiser completes it with a value it is an appraisal)
 

SpartanAG

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Feb 12, 2008
Professional Status
Certified General Appraiser
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Arkansas
Banks are already doing evaluations in-house....and lots of them. Some banks are farming the evals out to third-parties like CVC. The regulators aren't being too picky with evals right now since they are usually for loans under $250,000 and by the time the regulator looks at the eval, the money is already out the door. When the market crashes, I expect evals to receive more scrutiny, especially the ones for loans that are in trouble.
 

djd09

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May 20, 2009
Professional Status
Licensed Appraiser
State
Ohio
Not likely until the market crashes, IMHO.

That is not far away. I see prices higher then 2002-2006 era. Oh i thought those were over valuated back then. I guess not. The AMC buddy system is working well.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
I saw that both AI and NAR were against raising the $250,000 threshold. Funny, one agency want less appraisals, TAF wants lower standards and more appraisers at cheaper fees, along with AMCs. I guess the brilliant people in Congress will churn the butter and get lots of people to give them campaign money and either see more risk or less risk, in the public's best interest.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
to third-parties like CVC.
Who is owned by an MAI and whose "evaluators" are ill-trained and use MLS printouts that have the name of the MLS member blanked out... meaning they are accessing the MLS without paying for it...has anyone complained? See if you can find any evaluator who is a paying member of CARMLS or Metro/Northwest AR MLS
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
Federal bank regulatory officials in recent testimony before Congress and in public presentations have signaled an intent to pursue proposals that would increase appraisal threshold levels and potentially establish new exemptions from appraisal requirements.

big deal. loans under $250,000 make up more than 50% of my residential lending work as it is and they are not "required" to have an appraisal performed. FNMA won't buy any loan without an appraisal.
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
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