The Appraisal Institute has put out legislative action link that will let you communicate with your representatives on the federal level. Follow the link to make your voice heard
Urge the Federal Banking Regulators to Protect Consumers and Safety and Soundness!
The Federal bank regulatory agencies have proposed to increase the residential appraisal threshold level from $250,000 to $400,000, exempting nearly three quarters of residential real estate related financial transactions from appraisal requirements.
In 2017, the exact same proposal was evaluated and answered as part of the federally mandated EGRPRA (regulatory relief) process – a process that encompassed four different notice and comment periods and six public hearings. From that process, the same agencies decided it “would not be appropriate” to increase the threshold from $250,000 based on safety and soundness and consumer protection considerations.
Now, in an apparent attempt to pacify rural community banks, the agencies will increase the threshold unless they hear convincing comments and evidence from stakeholders, including consumers and appraisers. Standing unified in opposition to the proposal, a coalition of nationally recognized professional appraisal organizations will be submitting comments on the proposal. These organizations encourage all appraisers to do the same by the February 5th comment deadline.
To comment, simply fill in the boxes below, and hit submit. Then, a page will be displayed with talking points provided for you. Feel free to edit them, and/or add personal anecdotes, observations, and evidentiary materials as you see fit.
Read the Federal Banking Agencies’ proposed rule.
Valuation Nation 
The proposal to increase the threshold from $250,000 to $400,000 is made with no rationale other than it may help small lenders facilitate financing faster and at a lower cost to a borrower ($400-$500). What is the need for speed?
This is a pittance of a savings when compared to the closing costs for title insurance, loan fees, Realtor commissions and Legal fees.
Loan loss ratios reported by small lenders are low by comparison to larger Lenders. Small Lenders attribute that to their credit underwriting prowess. How do we know this is not a result of using professional appraisers to analyze the real estate asset as opposed to claims of superior credit underwriting?
An obvious similarity of the past two Financial crises (S&L crisis in the mid to late 1980’s and 2007 – 2010 mortgage meltdown) were the relaxation of Federal Regulatory Lending Practices. History repeats itself and this proposal appears to be similar to the the types of changes in Lending Practices that led to the past two Financial crises.
Please reconsider this proposal. Title XI of FIRREA was put in place and amended by the Dodd Frank Act to protect Federal Related Transactions and the public. This proposal does the opposite.
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I have been an appraiser for almost thirty years. We knew that 2008 was going to happen in 2004. There was nothing we could do about it. I know many appraisers that were screaming about the lack of sustainability in the market. However, banks, realtors and loan officers were giving money to millions of people who could not afford to repay it. They KNEW that when they did it. The only person in a transaction that has no stake in the game is the appraiser. You have a system that is selling mortgage loans to foreign entities. Does it ever occur to anyone that when foreign governments hold the paper on trillions of dollars of United States real estate that there could be many consequences? You are raising a limit that will remove the appraiser from the process of most of the loans in this country, taking away a level head and/or someone who may spot fraud. While I understand real life and that the banks have all the money and the lobbyists, you are opening a gate that this country may not be able to close when the rampant greed goes unchecked for any amount of time.
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the fraud always starts with the lenders. consumer protection should be paramount on this issue.
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I have been an appraiser since 1990 and currently live and work in small population state with many small lenders. The county I reside in was labeled as the “epicenter” for the 2009 recession for the state of Montana. Underwriting standards for development properties were greatly relaxed in the years leading up the recession. All of my lender clients experienced financial distress during the recession due to these relaxed underwriting standards. The toxic loans due to relaxed underwriting rippled through the area economy and devastated many area small businesses. Lax underwriting standards (including high appraisal valuation thresholds) are not healthy for rural communities. We cannot allow lenders to regulate themselves in small rural markets as the past has indicated that the profit motivation exceeds the desire to be good stewards of rural communities.
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Please reconsider this proposal. Title XI of FIRREA was put in place and amended by the Dodd Frank Act to protect Federal Related Transactions and the public. This proposal does the opposite. If you need to take action, abolish the Appraisal Management Companies (AMC).
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It would be VERY unwise to roll back regulation with regard to collateral valuation as this would lead to another mortgage crisis. The argument is most likely surrounded by inflation as the threshold appears “outdated” in terms of current costs. The fact is that now we need consumer protection of collateral now more than ever. Appraisers are the ONLY party involved in real estate transactions that do not have a monetary interest with closing the deal. Our only interest is maintaining public trust. There is not a threshold, AVM, artificial intelligence, or evaluation that can replace the appraiser’s job. If we are eliminated who will carry the liability of these transactions? Why are the GSE’s even allowed to propose deregulation since funded and/or backed by American tax payer dollars? This and other deregulation proposals are setting the economy up for failure once again. We do not have a chance at a second recovery if our banks fail again.
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