Well, it’s been a dry spell since things that make me crazy have shown up. But at IBS, the Exec Committee was given a report, “State Appraisal Regulatory Board Best Practices”, on a GAO publication (Government Accountability Office) entitled ‘Real Estate Appraisals – Appraisal Subcommittee Needs to Improve Monitoring Procedures’. Huh?
Background: After the messy housing recession, the Dodd-Frank Act required the GAO to report on appraisals. The purpose was to determine the ability of the Appraisal Subcommittee (ASC) to monitor and enforce state and federal certification requirements and standards, and to determine if the activities of the ‘Appraisal Foundation’ are consistent with statutory mandates.
My first thought was, “What? Who?”
Then NAHB decides to partner with the Association of Appraisal Regulatory Officials (AARO) to survey state appraisal boards to identify best practices in their member jurisdictions.
I was confused so I started some Google research to figure out who the ASC, Appraisal Foundation, and AARO are and how are they interrelated.
So it appears the ASC (Appraisal Subcommittee) provides federal oversight of appraisal programs and is the monitor for the Appraisal Foundation. The ASC was created by the FFIEC (Federal Financial Institutions Examination Council) – so many acronyms! – which sets uniform principles for examination of federally regulated institutions….ok? Now the Appraisal Foundation is financed with grants from the ASC to defray costs of creating standards and qualifications. And then…get this….. the Appraisal Foundation has another 3 boards.
1) Appraisal Practices Board – provides voluntary guidance on methods and techniques
2) Appraisal Qualifications Board – develops/amends ‘Standards’ of appraisals
3) Appraisal Standards Board – establishes education, experience and exam requirements for licensing
Are you still with me?
And the AARO (Association of Appraisal Regulatory Officials) create state licensing agencies to issue licenses to individuals.
Is it any wonder that no one can figure out whom to tackle about the problems with appraisals??? State officials point to national and national points back saying “it’s a state issue”.
So the findings of the NAHB report are nothing short of UTTERLY AMAZING and must have taken sheer genius to figure this out [sarcasm]:
1) State boards oversee many other professions and therefore do not have enough resources.
2) State boards lack governance for disciplinary actions
3) State boards have no standard for oversight
4) State boards have no clear communication with the Appraisal Qualifications Board.
At the recent BAM board meeting in Saint Paul, the appraisal issue was discussed. To no one’s surprise, concern was expressed from all areas of the state about appraisals being a huge problem. Your voices were heard and the state president, Chad Kompelien and EVP, Remi Stone are putting this on the list of pressing state issues.
NAHB’s Single Family Finance committee is coordinating local HBA’s in evaluating the effectiveness of each state’s appraisal regulator. If you are interested in helping with this solution, please contact Chad or Remi.
We, alone, cannot fix the appraisal system but we can get a seat at the table so our voices will be heard. Even if we are totally confused as to how the process works!
Kathe Ostrom, your NAHB MN State Rep