ASA, Other Professional Appraisal Organizations, Urge More Effective Federal and State Enforcement in Response to Press Reports

Business Wire, August 21, 2008

HERNDON, Va. -- The American Society of Appraisers (ASA)--together with other professional appraisal organizations--this week urged the U.S. Senate to act on and approve House-passed appraisal reform legislation following a recent Associated Press (AP) study that found serious weaknesses in the regulation of residential real estate appraisers.

In a letter sent to the U.S. Senate Banking Committee, ASA urged legislators to modernize Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which established the existing federal and state regulatory structure for real estate appraisers. Title XI resulted from the federal Savings and Loan bail out of 1989. It mandated the licensing of residential real estate appraisers by the 50 states and territories; recognized the Appraisal Foundation as the legitimate source of appraisal standards and appraiser qualifications; and, established the federal Appraisal Subcommittee agency to oversee the system.

The letter urged the Senate to adopt Title VII of the Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915), which passed the House of Representatives by a large margin in December. The legislation gives the Appraisal Subcommittee additional authority to oversee state appraisal licensing boards and authorizes additional financial resources for states to enforce their licensing laws and sanction appraisers who do not comply.

The AP study appearing in media outlets this week reported that mortgage brokers and others in the real-estate industry frequently pressure appraisers to inflate fair market values in order to complete a residential mortgage transaction. The report faulted appraisers and regulatory agencies for failing to crack down on this pressure. Lax enforcement has led to some collusion between lenders and appraisers to inflate real estate prices for the sellers' gain.

ASA and the other professional appraisal organizations have been fighting for years for federal and state laws that prohibit and punish the act of pressuring appraisers. The organizations were pleased that the Federal Reserve Board, in amendments to the Truth in Lending Act prohibited such pressure and Congress did so as well with respect to loans under the new Hope for Home Ownership Act. ASA applauded the agreement recently reached between New York Attorney General Andrew Cuomo and Fannie Mae and Freddie Mac prohibiting the purchase of mortgages from lenders who fail to ensure the independence of appraisers.

"Notwithstanding these positive developments, the appraiser regulatory system needs strengthening and therefore, the Senate must adopt the legislation approved by the House that would accomplish this strengthening," said ASA International President Ronald M. Seaman, FASA.

ASA also recommends:

* Stricter state enforcement of appraiser professionalism and more effective federal oversight of the system;

* That professional appraiser organizations re-emphasize the ethics requirements of membership and discipline members who fail to meet those standards;

* That those who hire residential appraisers recognize that individuals with designations from professional appraisal organizations like ASA have credentials superior to those required under state certification and licensing.

The joint letter to the Senate Banking Committee was signed by ASA, the Appraisal Institute, the American Society of Farm Managers and Rural Appraisers and the National Association of Independent Fee Appraisers. To view the complete contents of the letter click here. ASA members who wish to write their legislators may visit the Legislative Affairs tool bar on the ASA website.

ASA is an international valuation association that teaches, tests, accredits and refers professional appraisers. ASA is the oldest and only major organization in the United States representing all disciplines of appraisal specialists, originating in 1936 and incorporating in 1952. ASA's headquarters is located in the metropolitan Washington, D.C., area. To locate an accredited ASA appraiser, go online to www.appraisers.org (and click on Find an Appraisal Expert) or call (800) 272-8258.