North Dakota Appraisal Waiver Granted
News ‘hit the fan’ a few days ago that the Appraisal Subcommittee (ASC) granted the requested waiver to North Dakota, but only for ONE YEAR, not the FIVE that was requested.
What does this mean?
- A. It does not apply to ‘all’ appraisals.
- B. It applies to portfolio (in-house) loans granted by lenders, NOT to loans which eventually will be re-sold to the GSE’s or other agencies – which will require a fully compliant appraisal signed by a licensed appraiser.
- C. The ND ‘waiver’ appraisals still must comply with USPAP, but the appraisal does not need to be signed by a licensed/certified appraiser. I’m still trying to wrap my head around this aspect. I guess this means the lender can use people who do their EVALUATION reports – who don’t comply with USPAP, but will have to with these ‘waiver’ assignments.
- D. These ‘waiver’ appraisals apply to only residential properties.
The above synopsis was written after reviewing other comments posted to another forum I read.
As of the time of this writing, the ASC web site has not been updated to disclose the actual waiver implementation process or allowance(s) granted.
If you want to see the original waiver application info in the Federal Register, use this link.
The email message below is from Scott Dibiasio, Manager of State and Industry Affairs, Appraisal Institute, who sent me this additional info which clarifies how the North Dakota waiver is to be applied. I was given permission to share this with others.
FRT means Federally Regulated Transaction – primarily mortgage loans originated by Federally Regulated Institutions. (Definition: For purposes of the Agencies’ appraisal regulations and these Guidelines, an institution that is supervised by a Federal financial institution’s regulatory agency. This includes a national or a state-chartered bank and its subsidiaries, a bank holding company and its non-bank subsidiaries, a Federal savings association and its subsidiaries, a Federal savings and loan holding company and its subsidiaries, and a credit union.)
An item that Scott reveals is an apparent impending raising of the De Minimis mortgage appraisal transaction amount from the present $250K to $400K. Since he’s on the ‘inside’ more so than most others in our profession, this is important to track and be aware of.
Scott Dibiaso email message:
From: Dibiasio, Scott
Sent: Thursday, July 11, 2019 9:26 AM
To: Dave Towne
Subject: RE: North Dakota appraisal waiver granted
You are correct in all aspects of your analysis of the ND appraiser waiver except letter “D”. The waiver of the requirement to utilize a licensed or certified appraiser to obtain a USPAP compliant appraisal applies to both residential and commercial FRTs in ND.
In fact, the bigger impact will be on the commercial / agricultural / mineral rich side. Most residential FRT transactions in ND are already exempt from the appraisal requirement via the $400K rural appraisal exemption (with caveats) that was enacted via S. 2155 in 2018. I believe that almost all of ND is categorized as a “rural” area for purposes of the exemption. Of course, financial institutions still have to try to get an appraisal between $250K and $400K before they can invoke the exemption. If not already exempt, those transactions below $400K that are not in rural areas will likely be exempt soon when the residential de minimis is increased to $400K. So, the only residential transactions that will be impacted by the waiver are transactions with a transaction value over $400K that are held in portfolio. I believe that most residential mortgage lending transactions in ND have a transaction value less than $400K.
Most bankers in ND don’t realize that nearly all residential and many commercial transactions already fall outside of the appraisal requirements anyway. I’m guessing that most of the transactions where they cited unreasonable delays getting an appraisal didn’t require an appraisal in the first place.
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So they are not waiving the appraisal requirement just the licensing requirement? If those signing are not licensed then why would they have to comply with USPAP??
Does the ND appraisal board have any jurisdiction over non-appraisers?
Fifty years ago I was young and naive as I attempted to decipher the meaning of the song “One Toke Over The Line”. I now realize that it was written about the citizens of North Dakota.
If a licensed or certified residential appraiser, or certified general appraiser, can be sanctioned, or even lose their license to practice for not adhering to USPAP, what will be the recourse for the state for the same or similar infractions for a report that is completed by a non-licensee?
In these cases who is protecting and responsible to the public? Since ND requested the waiver then the state should be held responsible. When this all goes south I hope all ND appraisers line up and join in with the lawyers when the lawsuits start flying. Maybe the banks will bail the state out…lol
What a great time to stack up the risk.
Did you know that FDIC insurance program is only required to maintain somewhere around 1.4% of funds insured, in terms of actual cash on hand? “FDIC insured lender” really means nothing except that FDIC insured lenders have a mainline into taxpayers pockets as a result of participation.
When defaults do happen, someone will be covering the other 98.6%. It will be a miracle if lenders are allowed to fail and are forced to be held responsible. Taxpayers will be on the hook, whether those taxpayers fell for predatory lending schemes or not. If there was not a promise of taxpayer backing. History repeats. This is but a glimpse into the new ‘global economy’. Love it or leave it.
It’s not people whom need access to lenders, but rather the lenders whom desire access to the rural people that is primarily driving this.
Let’s see…how does this work? There are no mandatory background checks on these evaluators, nor any required education. Are they able to get E & O insurance? Would any insurance company write an E&O policy for a person like this? There is no disciplinary process – they have no license to revoke or suspend. I wonder if a disgruntled borrower could sue a bank that hired an unqualified evaluator to evaluate a property?
They’d better not be insured under group coverage along with appraisers. This is a key focus point we appraisers should pay attention to. Any insurer whom includes non appraisers into group pooled coverage should be switched out for ones whom do not immediately. Licensed appraisers should not be sharing the cost of risk via insurance dues with non appraisers. Great point there Will, does anyone have current information on this?