(Washington, DC) August 1, 2019 – The Appraisal Standards Board (ASB), an independent board of The Appraisal Foundation, announced today that it intends to examine the concept of creating standards for evaluations, which are alternatives to appraisals used by financial institutions.
Currently, there are no uniform standards for appraisers to follow when conducting an evaluation, which leads to greater risk to the safety and soundness of the real estate transaction and diminished protection for consumers. The ASB intends to issue a concept paper around Labor Day, and will follow up with a public hearing with panels of constituents on October 18, 2019 in Washington, DC. As with all public meetings of the ASB, the public hearing will be broadcast via livestream.
“This important development by the ASB shows how the Board has their ear to the ground, listening to the concerns of working appraisers in a rapidly evolving marketplace where there is an increasing demand for different valuation products,” said David Bunton, president of the Foundation. “They are balancing that with their responsibility to protect the public trust in valuation by creating uniform standards that are subject to oversight.”
Currently, the Interagency Appraisal and Evaluation Guidelines for federally regulated financial institutions provide guidance on evaluations, but that guidance is directed at lenders, not appraisers. Furthermore, the courts have found such guidance to be unenforceable. “This puts appraisers in a difficult, untenable position,” said John Brenan, vice president of appraisal issues at the Appraisal Foundation. “Appraisers often struggle when asked to perform evaluations, since most are mandated to comply with the Uniform Standards of Professional Appraisal Practice (USPAP). It’s almost a Catch-22 situation.”
Under federal regulations, evaluations may be performed by non-appraisers who have not demonstrated a level of expertise through education, training, and examination. If appraisers are not completing an evaluation, there is no recourse for a lender or consumer to appeal a bad evaluation. With the increased use of evaluations in the marketplace lenders and consumers are being exposed to an unnecessary level of risk not seen since the 1980s when national appraiser qualifications and appraisal standards had not yet been created.
“Appraisers are valuation experts. When hiring a licensed or certified real property appraiser to develop and report market value, the client should expect the work to be performed in accordance with USPAP,” said Wayne Miller, chair of the Appraisal Standards Board. “The Board is eager to receive stakeholder feedback from the planned concept paper and public hearing on the impediments, if any, to appraisers completing evaluations in accordance with USPAP. As always, the Board’s goal is to allow USPAP to evolve in an ever-changing real estate valuation environment, while continuing to promote and maintain a high level of public trust in the valuation profession.”
For these reasons, the ASB is considering creating standards for developing and reporting evaluations, which would apply to those appraisers who want to perform evaluations while complying with state laws. The concept is to draw a bright line between evaluations and appraisals in USPAP.
Based on feedback from the concept paper and the public hearing, the ASB could consider moving forward with a discussion draft or an exposure draft by late 2019. The question of when evaluation standards would go into effect is likely to be part of the discussion in the concept paper and at the public meeting.
Media Contact: David Greer
Director of Communications
The Appraisal Foundation
?direct phone 202.624.3048