Another Threat Looming
- AVMs… The Not So Accurate Magic Bullet - November 22, 2022
- Visualizing Market Activity Using Graphs & Trendlines - November 18, 2022
- Diatribes Against Appraisers - October 31, 2022
Senate Bill raising de minimus value to $400,000 will also waive appraisals in certain situations in rural areas
Folks, while the TriStar Bank appraisal waiver issue is important for appraisers, there is another insidious threat looming:
Senate Bill 2155 passed the Senate this week, and is now in the hands of the House of Representatives.
That bill, if fully ratified as it stands, and is signed by the President, will undercut the need for appraisals in two ways:
- the current de minimus value of $250,000 is raised to $400,000, which means lenders can use to establish property value for a mortgage – for a heavy majority of properties
- it also has a waiver component which will allow no appraisals in certain situations in rural areas
, if a compromise bill is passed with these provisions, it means mortgage lending policies across the US and territories will radically change and appraisers will be affected.
Everyone needs to start contacting your House of Representative members NOW, and express why these provisions are bad for America.
Here is the language from S. 2155:
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) Definitions.—In this section—
“(1) the term ‘mortgage originator’ has the meaning given the term in section 103 of the Truth in Lending Act (15 U.S.C. 1602); and
“(2) the term ‘transaction value’ means the amount of a loan or extension of credit, including a loan or extension of credit that is part of a pool of loans or extensions of credit.
“(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, on the mortgage originator’s approved appraiser list in the market area in accordance with part 226 of title 12, Code of Federal Regulations; and
“(B) has documented that no State certified appraiser or State licensed appraiser, as applicable, was available within 5 business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments, as documented by the mortgage originator or its agent;
“(3) the transaction value is less than $400,000; and
“(4) the mortgage originator is subject to oversight by a Federal financial institutions regulatory agency.