Tuesday, June 29, 2010

The financial reform bill and appraisers

The "Dodd-Frank Wall Street Reform and Consumer Protection Act" passed a joint House/Senate conference committee was sent to Congress for voting.

Hopefully, the bill will be approved by Congress this week. The bill makes changes to FIRREA, RESPA, and other regulations. In particular, an amendment backed by the Appraisal Institute and its partner professional appraisal organizations was accepted by the House-Senate Conference Committee last week that effectively defines “cram downs” of appraiser fees as an “unfair and deceptive” practice under the Truth in Lending Act. Under the amendment included in the final Conference Report, evidence of “customary and reasonable” fees would include government fee schedules and independent studies that exclude appraisal orders from known appraisal management companies.

Other significant provisions within the Conference Report include:
• Establishment of a federal appraisal independence standard, sunsetting the HVCC
• Provisions to separate AMC and appraisal fees on the HUD-1 Statement
• State AMC registration requirements
• Enhanced appraiser competency provisions, including clarification regarding consideration of professional appraisal designations
• Financial resources for oversight and enforcement

Click here to read the full Dodd Bill (appraisals start on page 2205)