Dangerous Pending Bill in US Senate
Appraisers, If you work in Rural Areas [that definition is referenced in (b)(1) below], your appraisal livelihood is threatened by this pending bill in Congress.
This bill, if signed into law, will allow lenders to bypass appraisals for any property with a ‘transaction value’ of $400,000 or less (this is moving the de minimus goal post) if the lender was unable to find an available appraiser to complete an appraisal “within a reasonable amount of time”… that time frame apparently as determined by a regulator agency with jurisdiction over the lender. The bill shows ‘exceptions’ to this as per other laws.
Appraisers working in rural areas who are affected by this bill should IMMEDIATELY start communicating with your state Senator. Plus, you should continue to monitor the bill process in Congress.
This is the link to the bill, which was introduced on 11/16/2017 by Senator Mike Crapo [R-ID].
A hearing was held on 1/30/2018 by the Committee on Banking, Housing, and Urban Affairs. The web site does not show what action was taken at this hearing, or the current status of the bill.
The text of the portion of the S. 2155 bill affecting EXEMPTIONS FROM APPRAISALS IN RURAL AREAS:
(I have added red type and underlines to key points – although the Yahoo forums won’t display this)
SEC. 103. Exemption from appraisals of real property located in rural areas.
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by adding at the end the following:
“SEC. 1127. Exemption from appraisals of real estate located in rural areas.
- “(a) Definition.—In this section, the term ‘mortgage originator’ has the meaning given the term in section 103 of the Truth in Lending Act (15 U.S.C. 1602).
- “(b) APPRAISAL NOT REQUIRED. — Except as provided in subsection (d), notwithstanding any other provision of law, an appraisal in connection with a federally related transaction involving real property or an interest in real property is not required if —
- “(1) the real property or interest in real property is located in a rural area, as described in section 1026.35(b)(2)(iv)(A) of title 12, Code of Federal Regulations;
- “(2) not later than 3 days after the date on which the Closing Disclosure Form, made in accordance with the final rule of the Bureau of Consumer Financial Protection entitled ‘Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)’ (78 Fed. Reg. 79730 (December 31, 2013)), relating to the federally related transaction is given to the consumer, the mortgage originator or its agent, directly or indirectly —
- “(A) has contacted not fewer than 3 State certified appraisers or State licensed appraisers, as applicable; and
- “(B) has documented that no State certified appraiser or State licensed appraiser, as applicable, was available within a reasonable amount of time, as determined by the Federal financial institutions regulatory agency with oversight of the mortgage originator, to perform the appraisal in connection with the federally related transaction;
- “(3) the
balance of the loantransaction value is less than $400,000; and
- “(4) the mortgage originator is subject to oversight by a Federal financial institutions regulatory agency.
- “(c) Sale, assignment, or transfer. — A mortgage originator that makes a loan without an appraisal under the terms of subsection (b) shall not sell, assign, or otherwise transfer legal title to the loan unless —
- “(1) the loan is sold, assigned, or otherwise transferred to another person by reason of the bankruptcy or failure of the mortgage originator;
- “(2) the loan is sold, assigned, or otherwise transferred to another person regulated by a Federal financial institutions regulatory agency, so long as the loan is retained in portfolio by the person; or
- “(3) the sale, assignment, or transfer is pursuant to a merger of the mortgage originator with another person or the acquisition of the mortgage originator by another person or of another person by the mortgage originator.; or
- “(4) the sale, loan, or transfer is to a wholly owned subsidiary of the mortgage originator, provided that, after the sale, assignment, or transfer, the loan is considered to be an asset of the mortgage originator for regulatory accounting purposes.
- “(d) Exception. — Subsection (b) shall not apply if —
- “(1) a Federal financial institutions regulatory agency requires an appraisal under section 225.63(c), 323.3(c), 34.43(c), or 722.3(e) of title 12, Code of Federal Regulations; or
- “(2) the loan is a high-cost mortgage, as defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602).
- “(e) Anti-Evasion.—Each Federal financial institutions regulatory agency shall ensure that any mortgage originator that the Federal financial institutions regulatory agency oversees that makes a significant amount of loans under subsection (b) is complying with the requirements of subsection (b)(2) with respect to each loan.”.
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Any bank that does this will screw themselves
So…..if a bank utilizes an AMC. And said AMC sends out an email, perhaps offering $300 for what should be a $600 appraisal report. And no appraiser responds………
You should always respond with your fee and turn time. Ignoring the requests only gives the amc more data they could not find an appraiser. By responding to every request with a fee and turn time, you also are providing data supporting there is no appraiser shortgage.
Does that Idaho senator realize that the appraiser coach lives in his state. He does 4 to 9 appraisals per day with only chopsticks, and zip ties while only being in the office on Mondays. Seriously though, this is an issue.
Thanks Bill. You have an open invitation to come to Idaho and see my chopsticks, and zip ties firsthand. Oh, you forgot about the duct tape.
In all seriousness, I have been into the “Honorable” Mike Crapo’s (be careful how you pronounce that) office and called on this as well. Doubt he will listen to someone who is “only in the office on Mondays,” but we shall try.
Dustin, Are you in a position to hand carry letters from individual appraisers as well as organizations directly to Member Crapo? Alternately can you obtain and post an email for him that is not one of those House “Constituents-Only Zip Code-restricted ” emails so we can communicate with him directly?
This is a serious issue. Im sure advocates that got him to propose the Bill told him its for consumer benefit and convenience (and ‘only coincidentally’ to facilitate lending) never told him all the other things a professional appraisal includes.
Such as analysis of legal ownership interest(s) that exist or that are being conveyed; and the impact of any restrictions; localized market conditions that may suggest risk or stability that an owner has a right to know about, external factors relative to the competitive market area. This could be especially critical in rural areas where once a certain value threshold is reached it may become disproportionately difficult to sell a property or take incrementally longer.
Externalities such as drainage, flood prone conditions outside of designated flood zones; earthquake faults, known adverse geologic or soil conditions, contamination issues, or nearby adverse uses (such as a hog farm), rendering plant, certain crops and or limitations on governmental services, distance to schools, hospitals and shopping. All these are in addition to site specific conditions that may exist which need to be addressed.
Depriving consumers of impartial third party inspections and analyses is far worse than whether they may have to wait a couple weeks for an appraisal of the biggest asset most will ever own or want to buy.
I doubt seriously that Member Crapo wants to become known as the Chris Dodd-Barney Frank-Maxine Waters replacement of the 2000 “teens”. This steady erosion of FIRREA MUST stop before the entire economy of the USA is once again put at risk due to under collateralized bundled securities.
We already know that rating agencies are understating risks associated with assets over valued hybrids and evaluation products. Allowing commissioned based finance participants to guess at property values is a huge mistake.
Proponents of increase will argue that the deminimus level hasn’t been increased since 1989. Opponents to increase will remind the Congressman that the original deminimus was ten times higher than proposed in the original legislation! DeMinimus for res. 1-4 units was proposed at $25,000; NOT $250,000.
A quarter of a million dollars is a huge amount of money to most Americans. Just because it is hardly enough to notice in Washington DC does not mean it is a safe amount to loan without adequate collateral.
I’m sure reader-appraisers will have many more reasons why this is a bad idea.
I live 15 miles from Sen. Crapo’s main office. He is obviously never there, but it would be my pleasure to hand deliver a pile of papers to his office.
I think they’d probably arrive by email. Is that a problem?
Do you want me to print them and walk them in? I don’t have any super secret special email for him.
If possible – hand carry. Has more weight.
Does this mean if the lender holds the paper, it is o.k. to proceed without an appraisal ??? Or does this mean they can sell the loan??? Who would buy it, especially being a rural property ???
Anyone would buy it. If FNMA, YOU guarantee the loan. Toss on some insurance; and a rating agency that routinely underestimate securities portfolios and presto! Everyone wins except the taxpayer.
Write your Senator right now through their website! I did.
Beth while it sounds like a great idea in theory, we’ve found that unless they are actually on a related Committee it usually just results in a form reply and a pat on the head.
Writing the originator also limited benefit since he’s now vested in the legislation, but f we can show benefits to reversing his course or problems for taxpayers that could arise if he doesn’t – sometimes that can work.
Doing BOTH could be helpful, and as the Bill moves forward if we can find out which committee it is at that’s helpful too.
withdraw this bill and address the REAL PROBLEM- the appraisal management companies !
Yes, I am in total agreement with that. AMC’s have been an issue since day one of its origination ! How can an AMC rep from, well let’s say California know or possibly understand “rural” in, well let’s say North Dakota ? Mississippi, Alabama ??? We need to educate those who are in these positions proposing these changes and allow for them to realize what the consequences would be if this bill were to pass. I clearly do not see the benefit of this proposed change for anyone involved.
This reminds me of the inmate that decided to amputate one body part every 6 months and mail it to his wife. Eventually, he managed to escape from prison without being caught. Quite honestly it’s laughable that they’ve managed to creep the de minimus as high as it is without being held accountable. Eventually they’ll have it $5,000,000 and appraisers will never know what hit them.
This is a payoff to the voters who elected trump and other republicans who just passed a very unfair tax bill, calling it “reform”. The current administration and all their republican enablers are going to bankrupt our country and whoever else they are selling derivatives like they did in 2008. When you consider there are few jobs in rural parts of the country, it is rare to find homes selling for over $400K unless they have a lot of acreage and you can use it for agriculture, so this is a free ride to remodel your 60 year old farmhouse into a mini-mansion with granite countertops and heated marble floors and other luxury items when the property value is not justified. This will make those trump voters re-elect him in 2020. The GOP who support him and his completely corrupt policies will kiss his ring if they vote something that was a freedom caucus or evangelical idea, but don’t take away their guns, or restrict who can buy them or obstruct legislation to make schools safer with common sense gun legislation by ridding us of those AK war machine guns. Of course there will be a big bill for the deficit caused by the tax bill, the uneven distribution of wealth and the loopholes. Getting appraisers out of the business because we are a necessary cost of doing business is the big lender’s goal. They think our work can be better done with artificial intelligence! I say when computers start buying homes then this may be a good approach, but it is a sales pitch probably made by lobbyists pushing this crap that will shoot us in the foot, but these people are in it for the short term gains, not sound lending. Don’t worry appraisers, they will send us a box of food every month when we apply for what used to be food stamps. They will sell it like it is Blue Table internet food with all the ingredients and recipe to cook when you could do this yourself, shopping and choosing what you want your family to eat, but this will be the replacement for any welfare check and then you’ll lose your social security and medicare, then you can sign up under the thousands of other appraisers who will do hybrid appraisals for $25 because some non-appraiser, politician and their high paid lobbyist killed our profession. I gotta go and watch this legislation and write my Senators!
Both dems and GOP senators are supporting this bill!
Mark Warner & Tim Kaine, both VA senators, are co-sponsoring this bill along with 10 other democrats, 12 republicans and one independent. Politicians are bought and paid for by American lobbyists, special interests, regardless of their party affiliation.
You can read Mark Warner’s response to my email at at http://appraisersblogs.com/stop-senate-bill-2155-fake-appraisers-shortage/#comment-19910
Good luck writing to your Senators!
Please stop giving Apprasier’s more problems than the government has already done. Stop any new laws that will hinder the Appraiser’s livelihood.
I have been performing rural Appraisals for the past 25 years. I have never worked for an amc. How can I make sure that I would receive notice of assignments that have been turned down? Can an amc contact me if I am not signed up with them?