A glance at the 108th Congress

On Jan. 24, 2003, the Appraisal Institute, American Society of Appraisers and the National Association of Realtors sent a joint letter to Sen. Richard Shelby, R-Ala., Chairman of the Senate Banking Committee, calling on him to include appraisal regulatory oversight and reform in the agenda for the 108th Congress. The three groups contend that Title XI of FIRREA produced inconsistencies among the states regarding licensing requirements, which, combined with lax federal oversight, has left the appraisal professional and the consumer at the mercy of lenders and others with a financial interest in the transaction.

The letter was sent in advance of a report to be released to Congress by the General Accounting Office on the effectiveness of the appraisal regulatory structure in preventing appraiser involvement in mortgage fraud. The report is expected to be released this spring, and with real estate settlement reform, mortgage fraud and predatory lending still on the minds of many members of Congress, it is likely that the findings and recommendations will be highly scrutinized via various hearings.

The Senate Banking Committee and the House Financial Services Committee would lead such hearings. Since former Banking Committee Chairman Sen. Paul Sarbanes, D-Md., now the ranking member of the Committee, called for the GAO report, any Senate hearings will likely involve him. Thus far, Sens. Shelby and Sarbanes have shown a cordial relationship and appear willing to work together on a number of issues.

The House Financial Services Committee is less likely to hold a hearing, simply because the GAO report was called for by members of the Senate, and the House has been less willing to look into cases of mortgage fraud and predatory lending. However, the Committee still does have jurisdiction over the GAO's findings and Chairman Oxley and ranking member Rep. Barney Frank, D-Mass., would oversee any proceedings.

Although no legislation has been introduced on appraisal reform, the release of the GAO report and the continued findings of problems with the current appraisal regulatory structure could draw Congressional attention, during which testimony from individuals and organizations that can help shed light on this public policy issue may be sought.

Ban on inappropriate client pressure

Related to the issue of appraisal reform is the issue of inappropriate client pressure of appraisers. During the 106th and 107th Congress, Rep. Jan Schakowsky, D-III., introduced legislation that would outlaw the coercion of real estate appraisers. Although the legislation has failed to pass during either session, Schakowsky will likely reintroduce such legislation during the 108th Congress, possibly co-sponsored by a Republican member of the House of Representatives.

One proposal that has been discussed in early 2003 would allow for the preemption of state and local predatory lending laws, while requiring the registration of mortgage brokers. This action would come in response to cities, counties and some states passing and considering local predatory lending ordinances. Rep. Bob Ney, R-Ohio, plans to introduce legislation that would preempt such local laws and mandate registration of mortgage brokers. A section addressing appraiser coercion would seem to be a natural fit for this type of legislation.