Appraiser Background Check Requirements

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

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Appraiser Background Check RequirementsThe info below from AI’s Appraiser News OnLine is about the action taken by the AQB at their recent meeting in Seattle, WA, which I was unable to attend. It’s still unclear if “existing license holders” must undergo a background check at the time of their license renewal. Apparently that’s determined by individual states.

And it’s still difficult to get all the multiple clients appraisers deal with, to accept “one” background check performed in a state or by a separate organization. So appraisers are sometimes faced with having to spend money to provide different background checks to individual clients.

Frankly, it’s not an efficient system in place at present, even with the various entities who claim that if you “sign up with them” all clients can then have access to “their” background check.

The fact is most individual clients, lenders and AMCs, have their own policy and procedure regarding background checks as a result of the Dodd-Frank Law. And they demand appraisers comply with those individually, often at separate costs, with no guarantee that assignments will follow.

If mortgage loan officers / originators / brokers can figure out how to make a NATIONAL REGISTRATION SYSTEM work, why can’t the mortgage lending entities do the same for appraisers? Maybe it relates back to appraisers lack of organization, and fragmentation.

AQB Adopts New State Background Check Requirements

The Appraiser Qualifications Board on March 20 adopted significant changes to the background check requirements of the Real Property Appraiser Qualification Criteria. The new requirements are modifications to original background check requirements adopted by the AQB in December 2011, which never took effect. The new requirements will take effect Jan. 1, 2017.

The new requirements state, “All applicants for a real property appraiser credential shall possess a background that would not call into question public trust.” Applicants will be required to provide state regulatory agencies with all information and documents necessary for the jurisdiction to determine an applicant’s fitness for licensure or certification. Applicants who have been convicted of or pleaded guilty or nolo contendere to a crime that would call into question the applicant’s fitness for licensure with the five-year period immediately preceding the date of the application for licensing automatically would be disqualified from obtaining an appraiser credential.

Importantly, these new requirements provide states with much more flexibility in how they determine whether or not an applicant has a background that would call into question the public trust. The original requirements adopted in 2011 required all candidates for a real property appraiser credential to undergo “background screening” and to provide fingerprints to the state appraiser licensing and certification agency for submission to the Federal Bureau of Investigation (or other government agency) to utilize in connection with a state and national background check. Under the new requirements, states are not required to perform formal background checks and can instead satisfy the minimum AQB criteria by asking appraisers if they have any events in their past that may disqualify them from obtaining an appraiser credential.

Unfortunately, the impact of these new requirements on the state background checks that appraisers are required to undergo likely will be limited because most states (42) enacted their background check requirements prior to the AQB’s requirements. Many of these state laws contain provisions that were consistent with the 2011 criteria and require appraisers to submit fingerprints and to undergo formal background checks by a state or a federal law enforcement agency.

The AQB also adopted a new “AQB Guide Note (GN-9)” that gives states additional guidance on how to evaluate an applicant’s background, including “Examples of Issues to Consider” and examples of elements of an applicant’s background that have a “Substantial Relationship” to the qualifications, functions and duties of an appraiser. The Guide Note also suggests that state appraiser licensing agencies “should consider all evidence related to the extent an applicant is rehabilitated.”

In a letter to the AQB last July, the Appraisal Institute requested that any background check requirements be made applicable only to new appraiser credential applicants who currently are not credentialed in another state. AI also requested that any background check requirements exempt existing credential holders and applicants for a credential via reciprocity or a temporary practice permit.

Read the new background check requirements as they were proposed in the Fifth Exposure Draft of a Proposed Revision to the 2015 Real Property Appraiser Qualification Criteria and Guide Note 9 (GN-9).

AQB January 2015 Exposure Draft – Appraiser Background Checks

Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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9 Responses

  1. Angry Soon to be Retired Appraiser says:

    Damned government and banks making an already ruined industry that much worse.

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  2. bubba jay bubba jay says:

    i understand the need to make sure appraisers are not felons, sex offenders, etc, and i agree with that. AMC’s however should be required to accept a background report from ANY company we as appraisers use to verify our background, and we shouldnt have to get a new background check report for every AMC that requests one like we do now.

    what scares me though is, we work in a “nothing is ever good enough” environment. right now, we are being asked to report whether or not we are a felon, sex offender, etc.. but what happens down the road? will we eventually be required to report a speeding ticket? jaywalking? not recycling aluminum cans?

    lets hope not, but nothing would surprise me anymore.

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  3. bubba jay bubba jay says:

    i understand the need to make sure appraisers are not felons, sex offenders, etc, and i agree with that. AMC’s however should be required to accept a background report from ANY company we as appraisers use to verify our background, and we shouldnt have to get a new background check report for every AMC that requests one like we do now.

    what scares me though is, we work in a “nothing is ever good enough” environment. right now, we are being asked to report whether or not we are a felon, sex offender, etc.. but what happens down the road? will we eventually be required to report a speeding ticket? jaywalking? not recycling aluminum cans? forgot to put the toilet seat down?

    lets hope not, but nothing would surprise me anymore.

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  4. Baggins Baggins says:

    Most appraisers miss the most vital point regarding private company record checking. It’s a data brokerage game. They sell your data. Your personal information has value, and higher value than a regular customer. It’s saleable. That’s why I don’t give up data for records checking to private groups. They sell the data and you sign away any privacy, when you supply them with personal information. EIN# is your front line of defense, your second is absolutely refusing to give your SS# to anyone. I am verifiable as having passed a federal level records check, at the CO DORA website. I refuse service to clients who don’t think that’s good enough. This one amc guy from a popular Canadian amc, you know the one, argued with me about the records check a few months back. Although they were paying for it, I still refused to comply. It went something like this: Me: “Have you gone through a similar records check?” amc rep: “Yes, of course.” Me: “Where can I go online or to a public records data base and verify that?” amc rep; (redirect) Me: “I thought so. Because you can verify I’ve ALREADY passed a records check, at the CO regulatory agency public web site.” rep; end of call. / Obviously, it’s about acquiring data, not verifying it. Get a clue people. Stop giving away your personal data to anyone who asks for it. Pick up the DCentral1 FutureTense app, lock down your SS, only furnish an EIN, and refuse service to data brokers. It’s not rocket science. But it is illogical to think they won’t sell your data in this day and age. Data brokerage is a huge industry, to the tune of billions yearly. You’re not protected under any of those borrower privacy laws, so get your head out of the clouds and start acting like a 1099 worker, instead of an employee.

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  5. TOM D says:

    A required mental assessment of the rule makers might stop the madness. Let’s call it “The high & mighty, never been in our business, compulsive behavior new rules fixation.”

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  6. bubba jay bubba jay says:

    i had an idea recently about this problem and i wanted to share.

    again, i agree that every appraiser should have a background check, i am all for that. but how about doing it this way – every appraiser gets ONE semi-annual background check, that every appraiser gets and pays for on their own, from any company they choose, and that background check gets sent in to that appraisers state licensing board, along with all their license renewal documentation.

    that background check would be the one every amc would be required to use. thats it. no longer would an appraiser be required to pay for multiple background checks for every amc that an appraiser does business with.

    makes sense doesnt it?

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  7. Marion says:

    RESPA (Reg X if you can’t remember) Title 12 ? Chapter X ? Part 1024 ? Subpart B ? §1024.14 says:

    (b) No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in §1024.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.

    (c) No split of charges except for actual services performed. No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section. The source of the payment does not determine whether or not a service is compensable. Nor may the prohibitions of this part be avoided by creating an arrangement wherein the purchaser of services splits the fee.

    HOLY COW BATMAN! ARE ALL AMC ORDERS IN VIOLATION OF RESPA???

    Discounts are a “thing of value” and a RESPA issue if you have to give up a thing of value to get an assignment.

    You can not violate RESPA when doing GSE work, as RESPA is part of the laws and regulations that pertain to GSE lending work, see AO 30 in your USPAP along with the Competency and Ethics Rules in USPAP

    §1024.14 Prohibition against kickbacks and unearned fees

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    • JH JH says:

      Nice post Marion.  Would it fit the definition of irony, that amc’s whom are imposed into the process in order to bolster compliance with ethical and regulatory rules, actually broke a very important rule from the start, and continue to do so?  How can ethical appraisers and lenders alike place faith in a company whos core business models may revolve around a constant disregard for valid and long established business model prohibitions?  Amc’s who do not bill separately for their services, as well as direct distributors whom have co mingled billing, all claim unfair advantage through unethical business structure, because the cost savings discount of lower priced appraisal services is not returned to the consumer.  This results in a constant industry wide assignment pattern where the least worthy appraiser, is given the highest volume of assignments.  Also promoting unethical appraisers who would claim unfair business advantage over their peers, by enticing assignment companies to send them more assignments with a thing of value, never demanding separation of the billing.  Instead this surplus which would otherwise and is already legally identified as a junk fee or unearned fee, is held as a variable opportunistic profit gained by selecting the appraiser based on fee, instead of more important appraiser selection factors.  The result is an industry wide suppression of appraisers fees.  Amc’s have a lot of great things to say about their success and growth, while appraisers often understand such growth resulted in direct losses to appraisers.  There is no sales pitch or solicitation method or even track record of professionalism, or accreditation which can trump the financial incentive to drive down appraisal fees for variable opportunistic profit.  Only a rare few amc’s have cost plus billing, and even for those who do, the market standards for regular appraiser compensation have been stifled so severely by most amc’s and direct distributors whom do not have cost plus billing, the entire industry has lost sense of what a fair appraisal fee should be.  So like a substantial real property valuation question where current data is unreliable, the answer to the question of what is a fair appraisal fee, is answered through historical data with adjustments for time and economy.  If the standard fee was $400 20 years ago, it stands to reason that $600-$800 or more should be the current fee to the appraiser.  Actually that is a common current fee range to consumers.  The problem is that middle managers keep the difference, what ever that may be.

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    • Baggins Baggins says:

      Update: Industry heads and participators continue to ignore this simple rule. Amc’s are now even advertising profit sharing with lenders. Look it up yourself on any regular sampling of amc home base web sites. It’s true.

      Marion, stop spending so much time on the AF and post here more often. You’ll be searchable on google.

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Appraiser Background Check Requirements

by Dave Towne time to read: 3 min
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