July 21, 2010 by Coester

via the American Bankers Association

14.7.     Appraisal Activities. Title XIV also establishes new appraisal requirements for certain mortgage loans deemed to be higher-risk by the Act.

14.7.1.     Property Appraisal Requirements and Independence Standards.           Property Appraisal Requirements. Creditors providing higher-risk mortgages must obtain an appraisal before they extend mortgage credit. [§1471] The Act specifies appraisal requirements, including a physical property visit and a second appraisal in some circumstances. Creditors must provide the borrower with a free copy of the appraisal, and creditors cannot charge the borrower for the cost of the appraisal.  Willful failure by a creditor to obtain an appraisal as required will result in liability for the creditor to the consumer of $2,000.

Regulations for these appraisal requirements will be jointly issued by the Fed, the OCC, the FDIC, the NCUA, the Federal Housing Finance Agency, and the Bureau. The agencies may exempt a class of loans from the appraisal requirements.           Appraisal Independence Requirements. Those with an interest in the underlying transaction of the appraisal may not bribe, coerce, extort, or otherwise inappropriately influence the appraiser. [§1472] Appraisers may not have a financial interest in the transaction involved in the appraisal. Those with an interest in the transaction may not mischaracterize the appraised value of the property.         Mandatory Reporting. Various entities, such as a mortgage lender or broker, involved in a real estate transaction involving an appraisal must report to the appropriate state licensing agency any violations by an appraiser of the Uniform Standards of Professional Appraisal Practice.

The Fed shall within 90 days of enactment of the Act provide interim final regulations defining violations of appraisal independence.

Apart from the Fed’s interim regulation, the Fed, the OCC, the FDIC, the NCUA, the Federal Housing Finance Agency and the Bureau will have the authority to issue rules and interpretive guidance regarding appraisal independence.

14.7.2.    Appraisal Subcommittee of the FFIEC. The Financial Reform, Recovery, and Enforcement Act of 1989 (FIRREA) is amended to provide the Appraisal Subcommittee of the Federal Financial Institutions Examination Council (FFIEC) with a consumer protection mandate. [§1473] The Subcommittee will audit state appraiser regulatory activities.           Annual Report. The Subcommittee must send an annual report to Congress detailing its activities and disapproved actions and warnings taken in that year. The Subcommittee may also prescribe regulation in limited areas.           Regulations. The Subcommittee may issue limited regulations involving appraisal standards. [§1473(d)]

14.7.3     Supervision of Third Party Providers of Appraisal Management Services. The Fed, the OCC, the FDIC, the NCUA, the Federal Housing Finance Agency, and the Bureau shall jointly establish minimum requirements for states to apply for the registration of appraisal management companies. Mandated requirements include compliance with the Uniform Standards of Professional Appraisal Practice. States may impose additional requirements in addition to the federally mandated standards. States may not register any appraisal management company owned any person who has had an appraiser license or certificate refused, denied, cancelled, or revoked. Supervision of State Oversight by the Appraisal Subcommittee. The Board of Governors, the OCC, the FDIC, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau of Consumer Financial Protection will also issue regulations for reporting the activities of appraisal management companies to the Appraisal Subcommittee. The Appraisal Subcommittee will have the responsibility to monitor each state appraiser certifying and licensing agency to ensure that those agencies have policies and practices consistent with federal law that they process complaints on a reasonable basis, among other requirements.         Reporting Requirement. State agencies dealing with the registration of appraisal management companies are required to transmit reports on the issuance of licenses and certifications, as well as sanctions, to the Appraisal Subcommittee.         Registration Requirement.  Three years after the regulations are published, an appraisal management company may not perform services in a federally related transaction without being registered in that state or subject to oversight by a Federal financial institutions regulatory agency. The Appraisal Subcommittee may extend the three year period by an additional 12 months.

14.7.4.  National Appraisal Complaint Hotline. The Appraisal Subcommittee must also establish a national hotline to receive complaints of non-compliance with appraisal standards 6 months after the date of enactment, if such a hotline does not exist at that time. [§1473(p)]

14.7.5.  Quality Controls for Automated Valuation Models. Automated valuation standards must adhere to quality control standards designed to protect against the manipulation of data, avoid conflicts of interests, require random sample testing, and any other requirement determined by the agencies drafting the standards. [§1473(q)] These standards will be regulated by the Board of Governors, the OCC, the FDIC, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau of Consumer Financial Protection.

14.7.6.    Broker Price Opinions. Broker price opinions may not be used as the primary basis in determining the value of a piece of property in regards to a mortgage loan secured by that property. [§1473(r)]

14.7.7.    Comptroller General Study on Appraisal Process. The Comptroller General is required to study the effectiveness and impact of appraisal methods and other aspects of the appraisal process due no later than 12 months after the date of enactment of the Act. A preliminary report to the House Financial Services Committee and Senate Banking Committee is due 90 days after enactment. [§1476]


  1. [...] Appraisal Section of New Dodd Frank Bill « AppraisalNEWSCAST.com [...]

    Pingback by Appraisal Management Company Directory 2009 | Uncategorized | Information about Social Bookmarking Software, Social Bookmarking Tool — July 24, 2010 @ 4:46 pm

  2. I appreciate that you have taken the time to snip out the sections of the Dodd-Frank Act that pertain to the appraisal industry. The next 90 days are going to be interesting and I hope you’ll keep us posted on the progress of the new regulations.

    Comment by Alison Shuman — July 26, 2010 @ 3:45 am

  3. It is NUTS to keep Dodd in charge of anything, he is one of the THREE main reasons for the current real estate market crash and the recession which started with the collaspe of the real estate market. I just don;t trust anyone that got a direct loan from the CEO of a company and said he did not know he got special treatment, even though they paid his mortgage down by about $50K so he would not need a jumbo loan. Smells like poo-poo!

    Comment by Michael Cooper — August 4, 2010 @ 11:46 pm

  4. Thanks for the info. Both Dodd and Frank should be in jail for what they did to the mortgage industry. It was their leadership that bought us down. The Act, along with HVCC puts to much power in the AMC’s hands. Licensed certified apprasier’s have lost all professional standing and are treated poorly because AMC’s can do it their way or the highway. If appraisers really united they can again creditability; imagine if we stated the proper turn time and reasonable fees or keep the job……..just one man’s opinion.

    Comment by Frank — August 5, 2010 @ 12:13 am

  5. The Dodd Frank bill is a beginning. It does not have the teeth necessary to stop the abuse of the HVCC. The bill should eliminate the HVCC, all black lists, all AMC’s and return the profession to the level it once had. The banks are doing their best to eliminate the appraiser and force their own demands on the public. Lenders, ( banks, saving and loan, mortgage brokers, mortgage bankers, etc) should be required to assign appraisals to a rotating list of licensed and/or certified appraisers. All lenders and/or AMC’s should be barred from placing an order with someone out of the area. As an example, Appraiser from San Diego receiving an assignment in East Los Angeles.
    Lenders should be barred from dictating the fee for service. Lenders shuld be barred from owning or having a relationship with any entity that is appraisal related.

    Comment by Stuart Groten — August 5, 2010 @ 2:53 am

  6. Dodd and Frank belong in jail.

    Comment by Mark Scully — August 5, 2010 @ 3:19 am

  7. Why is it the only player in the mortgage game that isn’t licensed or regulated is the AMC? The fox was put in charge of the chicken coop, and the now the quality of appraisal work is poop.

    Comment by John Mar — August 7, 2010 @ 12:16 am

  8. thanks for the update, and yes dodd and frank do belong in jail.

    Comment by Emily Yanez — September 21, 2010 @ 7:13 pm

  9. If we (appraisers) would stop accepting business from amc’s who are taking advantage of us. (all of us). That would be the end of them. But were too afraid. We fight for the scraps they give us and under cut each others fees. I guess were not as smart as we think we are.

    The banks think they can continue to drive prices down sending there business to amc who search for the lowest price. Eventually they will drive many qualified appraisers into other professions where they can make a decent living. What will they do when there is no one still in business who will take there crap. I guess there not as smart as they think they are ether.

    Tell your kids to become stock brokers or government workers with health insurance and big fat pensions.

    They will thank you some day.

    Comment by Dan — December 23, 2010 @ 2:51 am

  10. What slays me is that during the mortgage meltdown – realtors walked away without even a slap on the wrist despite their huge role in trying to sway appraisers & inflate values. Everything was blamed on those “unscrupulous brokers” & mortgage professionals who were “trying to take advantage of the poor, misguided consumers…”

    Comment by Donna — December 31, 2010 @ 5:16 pm

  11. Thank you for the excerpts from the Dobb-Frank Act regarding appraisal and appraisal management. 2011 will be a telling year for the appraiser and the appraisal management companies.

    Comment by Amelia Hyden — January 5, 2011 @ 2:35 pm

  12. It’s just sad that all of the relationships my company had with the local banks, credit unions, and mortgage companies are gone. As far as I know, appraisers are the only industry than can not market their services to their clients. There were enough good lenders that we could pick and choose who to have as clients. Now we are just subcontractors of AMC located in most cases hundreds of miles away. In Feburary of 2010 FHA said all appraisals must be paid 30 days net. How often does that happen with a AMC who is holding the appraisers fee for 60 to 90 days. A lot of the AMC say they hire appraises on their knowledge of the area and quality of reports. Then whats with the shotgun approach some use when ordering appraisals. Lowest fee and quickest turn time wins every time. My only true clients are the lawyers I work for in divorce & estate cases. Fees have not gone up, expences have not gone down (except my income) Appraising use to be fun. Now we are just jumping through hoops & loops like a trained dog.

    Comment by Joe Ferriell — January 5, 2011 @ 8:05 pm

  13. The Banks are trying to eliminate appraisers and doing a good job.
    They hire idiots to badger us with unreasonable, time consuming “corrections” I have been told to Review Legal Documents and comment on them, Review and use different Comps that were 15 miles away in the city, Taken off a list for not putting down negative conotations in Rittenhouse Square (one of the best areas of the City) Punished for 3 months at a time for not putting the area is decling because they say they have “other
    sources” that we don’t have and of course not given. Told that I was wrong when I measured a property because Public Record had a different GLA and had to prove they were wrong. If you rebut something and they don’t agree ,the 3 month punishment starts over. This is of course Bank of America’s Landsafe (who they own)
    I have a 6 inch file of absolutely incredible letters including their insistance that we send transcripts of school taking courses on appraising. I am also sure a lot of the Reviews they do are done by computer so it depends on who sets the computer how bad they are but always wrong. We are treated like scapegoats.
    If there is any probelm, it is the appraisers fault. The schools are empty for appraisers and noone in their right mind would want this job. This way the banks can do what they want with their AVM’s and we are out of the picture. I couldn’t have done worse in Communist Russia in the 50′s the way I am treated. The Banks are running and ruining the world. Bank of America got bailed out, didn’t pay taxes and ready to need more money (for their executives) which they give us the bill for their corrupt dealings
    It is unreal how they can just teach employees to lie. They tell us every property is going to settle tomorrow to push us to go faster not giving us time to concentrate properly. Who ever runs these places should be arrested. Another example of how they are killing the middle class. Are we a third class country yet? Keep it up, we will be. All freedom has been taken away from the appraiser. This is a good beginning.

    Comment by Joan Huhn — January 31, 2011 @ 7:55 pm

  14. It seems to me that AMC’s should be reported to the appropriate State Agency dealing with the registration of the AMC (see para If we prepared a bad report, we’d be turned into the State Board, investigated, fined and/or had our license suspended/revoked. Maybe with more, and constant exposure to the state level, the AMC’s may be compelled to change their ways and pay what we’re worth.

    I also noticed there is also nothing in this section regarding customary and reasonable fees. Anybody else notice that?

    Comment by Gary — March 31, 2011 @ 3:48 am

  15. I have been reported because I would not reduce the value of a property because Streetlinks claimed I should use a property that they felt was good when in fact the seller reduced the price for emergency reasons from 353 to 120 not as good a sale as the three I used which were sold within 2 weeks and no longer than 79 days all rehabbed all 2 units. There position was that the property was not worth that much because as they put it ( It was is that neighborhood.

    Comment by Jim — April 23, 2011 @ 1:10 pm

  16. We should unionize. Only by banding together will be be able to survive, be paid fair fees and have recourse against the AMCs. Union plumbers, union carpenters, union electricians, UNION APPRAISERS.

    Comment by RWG — May 31, 2011 @ 12:51 pm

  17. Forget about unions and spending money. Search for National Appraisers Boycott and join forces with appraisers who have had enough of the Rape.

    Comment by Retired Appraiser — June 28, 2011 @ 9:58 pm

  18. Evidently, we can’t form a Union, or could if we do NOT establish a fee, since we are independent Owners and would be “Price Fixing”. However, I notice the “Price Fixing” appears to be on the Lender’s side of the fence, and nothing done about it. I’m sure the AMA tells Doctors what is a “good fee” per hour to get, for particular services. Who regulates them ?

    Comment by Ron — January 12, 2012 @ 9:22 pm

  19. Our appraisal came out 18,000.00 lower than the county appraisal. Because of this, I can;t afford to refinance my home. When the underwriter chooses the appraiser and you don’t. YOU ARE SCREWED. I bet money, Dodd invested in the AMC companies before the bill was signed.

    Comment by Charlie — July 27, 2012 @ 2:44 am

  20. Mortgage Broker and weak lending laws created this mess by allowing Sub-Prime loans to be made. Dodd-Frank is a work in progress effort to repair that mess. Its the best effort yet. Dodd Frank did not go far enough. Requirements for Mortgage Brokers and Bankers is still weak. Dont kid yourself they started this.

    Comment by Dave — January 26, 2013 @ 2:01 pm

  21. Take the real appraisal on your house and get the tax value lowered. The appraiser did not make your home value go down. He just told you about it. Your problem is the economy

    Comment by Dave — January 26, 2013 @ 2:03 pm

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