NAR Statement on Appraiser Independence

Next week, the National Association of Realtors meets in Washington, D.C. for their Mid-Year governance meetings. The NAR Appraisal Committee will meet on Wednesday, May 11, 2011 at 8:00 A.M. We will meet in the Virginia Suite A and B in the Marriott Wardman Park Hotel.

The agenda is full, and it will be a challenge to cover it all in the 2 hours allotted, but we will do our best. One item, not on the agenda, but sure to be a topic of discussion, is the recently released Statement on Appraiser Independence.

NAR Statement on Appraiser Independence

April 2011

"In recent months interference in the appraisal process has unnecessarily put at risk a sustainable housing recovery. Our member appraisers are dealing with changes in the real estate market due to economic conditions in the country, their long time business relationships with market participants have been destroyed and their business models have been shattered. The latest blow is their enduring the consequences of the implementation of aspects of the Dodd-Frank Act.

Appraisers are being asked to include distressed transactions as comparable sales, to complete the appraisal in an unreasonable and unrealistic short time span, and to comply with a scope of work not justified by the fee being offered. In some situations appraisers are required to provide as many as eight comparable sales and/or listings. NAR believes this is interference in appraiser independence, causing harm to the real estate recovery, and harmful to consumers.

This month, compliance with the Federal Reserve's interim final rule amending Regulation Z (Truth in Lending) became mandatory. Early reports indicate that some appraisal management companies may be misinterpreting the reasonable and customary fee requirements of the statute and the interim rule. Although NAR has not commented on the customary and reasonable fee language of the statute or the interim rule, we are concerned that unfair treatment of our member appraisers will further erode their businesses and impact the quality of appraisal reports, adding risk for consumers and lenders.

NAR 2010 President Ron Phipps said "asking for up to 10 comps, reducing turnaround times, and expanding the scope of the assignment without appropriately adjusting the fee is adding unnecessary risk to an already fragile mortgage market system. We must maintain an environment where our independent appraisers are treated fairly as they are the lynchpin of the mortgage transaction." NAR has long advocated for an independent appraisal process and enhanced education requirements to promote public trust in the appraisal profession. NAR wants to ensure the consumer is provided the service bargained for along with a well-supported, credible opinion of value."

Much more will be discussed. If you are a member of the National Association of Realtors, and happen to be attending the meetings, or are in the DC area, stop by. We encourage your participation.

NAR Legislative Meetings - Appraisal Committee

The National Association of REALTORS® meets in Washington, D.C. May 10 - 15. This is the 2010 edition of their Annual Legislative Meetings and Expo. The NAR Appraisal Committee will meet on Wednesday, May 12th. In addition, Appraisal Committee Leadership has a couple of extra meetings planned to advance the interests of appraisers within the NAR family.

Monday afternoon, Appraisal Committee Chairman Mack Strickland and I will meet with NAR 2010 President-Elect Ron Phipps. There are a number of issues we plan to discuss. Among them are REALTORS Property Resource and the REALTOR Valuation Model, NAR Legislative and Regulatory priorities with an effect on appraisers and valuation, and the NAR Appraisal Designation Program.

The Appraisal Committee has a full agenda. An overview of the agenda, along with that of all the NAR Public Policy Committees and Forums is available here. (See page 4).

In addition, on Wednesday afternoon, Mack Strickland and I will meet with the Leadership and other representatives of the NAR Professional Standards Committee. In addition to opening up a dialogue concerning Article 11 of the Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS®, we will initiate an effort to more fully embrace appraisers in the wording of the Code. We will also propose that NAR develop a Quadrennial REALTOR® Ethics Training specifically for valuation professionals.

Both Mack and I will attend the Public Policy Coordinating Committee on Thursday, and will discuss legislation pending in Congress that affects the appraisal profession. I will be part of the NAR Board of Directors meeting on Saturday, in the event any appraisal related issue is to be decided.

There's much on our plate. I'll do my best to update you all when I return to the Sunshine City.