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Spring 2022 Washington Report

The Appraisal Institute’s Washington Report and State News quarterly e-newsletter summarizes AI’s recent federal and state legislative, regulatory and related activities in representing the interests of Designated Members, Candidates for Designation, Practicing Affiliates and Affiliates.

  1. PAVE Plan Released; AI President Testifies Before House Committee
  2. Appraisal Institute Among Organizations Supporting Senate Conservation Easement Hearing
  3. CFPB Begins AVM Quality Control Process, Releases Outline of Proposed Rules
  4. AI Seeks Extension for Comment Period on DOL Proposal for ERISA-prohibited Transactions
  5. Illinois Creates Valuation Task Force to Identify Racial Disparities in Appraisals
  6. Virginia Requires Mandatory Fair Housing, Valuation Bias Continuing Education
  7. West Virginia to Inform Individuals Why Appraiser License Application or Renewal was Rejected
  8. Wisconsin Adopts Statute of Limitations on Civil Suits Against Appraisers
  9. 32 States Indicate Acceptance of PAREA to Satisfy Appraisal License Requirements
  10. State Legislatures Consider Numerous Valuation Issues

ON THE HILL                                                                                

March has been an active month relative to housing equity and diversity issues, with the March 23 release of the Property Appraisal and Valuation Equity (PAVE) Task Force action plan and the Senate and House holding immediate oversight hearings on the matter. The Appraisal Institute sent a letter to President Joe Biden in response to the action plan, and AI President Jody Bishop, MAI, SRA, AI-GRS, testified before the House Committee on Financial Services on March 29. 
More information is available on AI’s PAVE resources page
The House oversight hearing included a discussion draft bill that would make significant changes to the appraisal regulatory structure. During his testimony, Bishop expressed concern about some provisions in the discussion draft but noted that AI continues to support previously introduced legislation that would authorize the establishment of a Portal for Appraisal Licensing (HR 5756), which was also discussed during the hearing. 
Looking ahead, the Appraisal Institute anticipates an active regulatory environment as agencies work to implement recommendations from the PAVE action plan, including providing guidance on the reconsideration of value processes and procedures and establishing quality control standards for automated valuation models. 
Some movement may be possible on these issues during this session of Congress, so AI professionals are encouraged to remain active and involved. 
The Appraisal Institute on April 26 joined the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers and multiple conservation organizations in supporting a request from Sen. Steve Daines, R-Mont., for the Senate Finance Committee to hold a hearing on easement-related issues.
Daines made the appeal at a Finance Committee hearing in support of the Charitable Conservation Easement Program Integrity Act, legislation that he and Sen. Debbie Stabenow, D-Mich., have introduced to curb abuses in syndicated conservation easement arrangements. The Senate Finance Committee has not yet scheduled a hearing on easement issues, but may do so in the coming months.  
IN THE AGENCIES                                                                       
The Consumer Financial Protection Bureau in late February took the first step in its long-awaited process to implement quality control standards for its automated valuation model, which was mandated by the Dodd-Frank Act of 2010. 
The CFPB on Feb. 23 released an outline of its proposed rules to a Small Business Review Panel, as required under Federal law when a program could have a significant effect on a substantial number of small entities. The outline contains a series of questions to AVM users and stakeholders. The Small Business Review Panel is considering the responses it received by the May 13 comment period and then will release the proposed rule on an interagency basis to the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., National Credit Union Administration and the Federal Housing Finance Agency.
The Appraisal Institute on April 11 sent a letter to the Department of Labor urging it to extend the comment period for responses to its proposed rule Procedures Governing the Filing and Processing of Prohibited Transaction Exemptions Applications.
AI asked for the comment period to be extended from 30 days to 60 due to the rule containing “myriad provisions that raise novel legal and policy issues for all parties involved in these transactions, including appraisers.” Among the concerns is how the proposed rule would redefine the term “qualified independent appraiser,” stating that an appraiser would not be independent if he or she receives more than 2% of their annual revenue from parties involved in the exemption transaction. AI expressed concern that the final rule could lead to increased liability costs and prevent appraisers from the performing these types of services. 

IN THE STATES                                                            

Illinois Gov. J.B. Pritzker on May 27 signed HB 4410, legislation creates a real estate valuation task force charged with identifying causes of racial disparities in appraisals and evaluating whether barriers to entry to the valuation profession disproportionately affect minorities. Additionally, it would establish specific definitions for limited or inactive housing markets in which comparable sales are limited or unavailable and would provide greater flexibilities and guidance for appraisals conducted in such markets — such as allowing appraisers to consider market evidence for similar properties in other geographic areas.
Virginia Gov. Glenn Youngkin on April 6 signed SB 284, making the state the latest to require appraisers to take continuing education related to fair housing and valuation bias. California, Minnesota and New York have similar requirements.
The law will take effect July 1, 2023, and thereafter appraisers will be required to complete at least two hours of continuing education in fair housing or valuation bias courses as a condition for renewing their license every two years. 
West Virginia Gov. Jim Justice on March 30 signed HB 4285, legislation that makes technical changes to the state’s Real Estate Appraiser Licensing and Certification Act. Now, the state appraiser board must provide to individuals whose initial license application or renewal was rejected a written statement within 15 days explaining what qualifications or requirements they failed to satisfy. If an initial license was rejected due to an applicant’s failure to comply with the Uniform Standards of Professional Appraisal Practice in their reports submitted for experience review, the board must provide written guidance regarding the deficiencies and give applicants 60 days to remedy them.
Wisconsin Gov. Tony Evers on March 18 signed SB 341, which imposes a time limit on civil suits against real estate appraisers. The new law took effect March 20, and applies only to appraisals delivered after that date. 
The legislation requires that any action to recover damages from a real estate appraiser for an act or omission in the performance of a real estate appraisal be filed within five years of the date the appraiser submitted the appraisal report to their client. It also provides that if another, shorter statute of limitations applies to the type of claim being pursued, then that shorter statute of limitations applies. Claims of fraud or concealment are excluded from the limitations.
The Appraisal Institute’s Wisconsin Chapter strongly advocated for the passage of this liability protections for appraisers.
Thirty-two states have indicated that they will accept completion of an Appraiser Qualifications Board-approved Practical Applications of Real Estate Appraisal Program, known as PAREA, to satisfy all or part of the experience requirements for individuals to become licensed residential or certified residential appraisers. 
PAREA provides another pathway for aspiring appraisers to fulfill their experience requirements by offering practical experience in a virtual environment that combines appraisal theory and methodology in real-world simulations. Current state actions include:
  • Nebraska Gov. Pete Ricketts on April 18 signed LB 707, legislation that authorized PAREA. 
  • Louisiana is considering SB 367, a bill that would authorize the acceptance of PAREA and also reestablish the state’s licensed residential appraiser credential.
  • Colorado, Maine, Montana, Ohio and Oklahoma have indicated that they will accept PAREA. 
  • Arkansas, the District of Columbia, Florida, Iowa, Kentucky, New Hampshire, New Mexico, North Carolina, Pennsylvania, South Dakota, Utah and Washington are either actively debating PAREA or drafting proposed rules to authorize its full acceptance.
  • Arizona, Michigan, Minnesota, Mississippi, New Jersey, North Dakota, Rhode Island, South Carolina, Tennessee, Texas and Vermont fully incorporate the Real Property Appraiser Qualification Criteria into their statutes and regulations. Because PAREA is now part of their criteria, it should be an acceptable path in these states. However, several “incorporation states” are conducting additional discussions regarding PAREA. It’s worth noting that the District of Columbia, Louisiana, Montana, North Carolina and Oklahoma incorporate the criteria, but also have adopted or proposed additional rules or legislation regarding PAREA. 
  • California and Kansas have indicated that they will accept completion of PAREA, but only to satisfy 50% of the experience requirements for licensed and certified residential appraisers. 
The legislatures in 30 states, the District of Columbia, Guam, the Northern Mariana Islands and the U.S. Virgin Islands are currently in session. The Appraisal Institute’s Washington office continues to work with its chapters, regions and state coalitions to help shape public policy affecting AI professionals and the valuation profession. 
  • Colorado is considering HB 1216, legislation that would extend its Board of Real Estate Appraisers for nine years, and would also authorize appraisers to perform evaluations. 
  • Maryland Gov. Larry Hogan is reviewing HB 1097, a measure that would create a task force on property appraisal and valuation equity to study the undervaluation of and valuation errors with property owned by minorities. 
  • Minnesota is considering HF 3784 and SF 3503, companion bills that would enable appraisers to receive continuing education credit for classroom and synchronous distance education completed out of state when the offering has not been approved by the Minnesota Department of Commerce but is approved by appraiser regulators in at least one other state. The bills also would authorize appraisers to complete minimum damage acquisition assignments, known as MDAs, which in Minnesota are akin to valuation waivers that are authorized in federal regulations for obtaining the value of low-dollar-value parcels being acquired through eminent domain. 
  • New Jersey is considering AB 1518 and AB 1519, legislation that would reemphasize the fact that appraisers are prohibited by law from engaging in discrimination on the basis of a buyer’s or seller’s race, creed, color or national origin. It also would require appraisers to provide a property seller with a document informing them on how to report an appraisal they believe to be discriminatory. A similar document would be provided by brokers and salespersons to property buyers. 
  • North Carolina is nearing completion of rulemaking that would adopt PAREA, allow aspiring appraisers to take their first 75 hours of qualifying education online rather than in a classroom and reduce the minimum length of a continuing education offering from three-and-half hours to the Appraiser Qualifications Board minimum of two hours. It also would reduce by half the number of assignments (from 50 to 25) or experience hours (1,500 to 750) where a supervisor must accompany a trainee during an inspection. Additionally, it would allow trainees who are authorized to perform solo inspections to do so on properties farther than 50 miles from the supervisor’s office; currently they must be accompanied by a supervisor on assignments outside a 50-mile radius. Lastly, the rules would implement the AQB’s latest changes regarding distance education. 
  • South Dakota is considering a set of rules that involve the adoption of PAREA and implementation of an experience training program that provides an alternative path for trainees to obtain their required appraisal experience while working under the supervision of a state-employed lead trainer. The proposed rules also would create a NFRT License that would allow a licensee to perform appraisals in instances where a state-licensed or certified appraiser is required — except for federally related transactions. Appraisals completed by a NFRT-licensed appraiser could not be used for experience credit to become licensed or certified. Appraisals for which an applicant wishes to receive experience hours must be performed while the applicant is a state-registered appraiser working with a supervisor. 

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The Appraisal Institute's Washington office wants to know if AI professionals have relationships with critical policymakers, or are aware of a burgeoning issue of opportunity or concern. Please contact any member of the AI Government Relations Committee or Washington office staff with more information.    












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