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October 02, 2019

Banking Committee Leaders Seek Answers on Appraisal Waiver

Rep. Maxine Waters, D-Calif., and Sen. Sherrod Brown, D-Ohio, on Sept. 24 submitted a letter to the Appraisal Subcommittee seeking answers about its July decision to grant a waiver of appraiser certification and licensing to the state of North Dakota. The letter expressed “surprise and concern” about the “unprecedented” waiver.
Waters chairs the House Financial Services Committee and Brown is ranking member of the Senate Banking, Housing and Urban Affairs Committee. 
“It is so concerning that the ASC, the primary federal organization with oversight over appraisal and appraiser standards, has acted to waive appraiser qualification requirements with minimal justification,” the letter stated, noting that appraisals are essential to safety and soundness and consumer protection. The letter explains that the move is unprecedented because the ASC has not granted any waivers since the Federal Financial Institutions Examination Council first fully implemented appraisal rules. In granting this one, the ASC ignored the objections of the North Dakota Real Estate Appraiser Board.  
The letter directs the ASC to answer the following questions:
What types of data does the ASC consider when granting a waiver under Title XI? Has the ASC established a policy to determine minimum standards for reliability for any data submitted to be considered as part of the ASC’s waiver consideration? If not, should the ASC establish such standards?
  • In the event there is a conflict between data sets submitted in official comments on a waiver request, how does the ASC resolve such conflicts?
  • Do any ASC member agencies have access to data that could inform deliberations about granting a waiver under XX? If so, did any of the agencies supply such data in the process of deciding whether to grant or deny this waiver request? If not, should any of the ASC member agencies maintain such data?
  • The median sales price of a single-family home was $238,800 in the Bismarck, North Dakota, market, the most expensive in the state, according to the National Association of Realtors. The approved waiver would impact single-family home transactions below $500,000, more than twice the median-home value. What percentage of North Dakota federally related single-family transactions do you expect to be eligible for the waiver? Did the ASC consider market prices and the percentage of exempt transactions when setting the waiver terms?
  • What percentage of North Dakota federally related commercial transactions do you expect to be eligible for the waiver? Did the ASC consider market prices and the percentage of exempt transactions when setting the waiver terms?
  • Does the ASC expect that appraisals performed by individuals who are not licensed or certified appraisers will still be compliant with the Uniform Standards of Professional Appraisal Practice and meet any other standards established by regulators?
  • Will consumers, financial institutions and regulators have the same oversight and recourse available if their appraisal is performed by an individual who is not a certified or licensed appraiser as they would have if their appraisal were performed by a certified or licensed appraiser? If not, how will any oversight or recourse differ?  
The Appraisal Institute raised these concerns with Waters, Brown and their Republican counterparts as soon as a temporary waiver request was made by Tri-Star Bank in Tennessee in March 2018 (and denied in April 2018) — more than a year before the North Dakota request. The letter could serve as a first step in closing the temporary appraisal qualification waiver loophole.

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