More than 40 percent of state appraisal regulatory agencies reviewed by the Federal Financial Institutions Examination Council last year failed to resolve complaints against real estate appraisers expeditiously and were inconsistent in applying disciplinary sanctions, a recent report concluded.
The Council’s 2002 annual report to Congress found that state agencies failed to pursue alleged violations of the Uniform Standards of Professional Appraisal Practice and did not adequately document enforcement-related files.
The Council’s report, along with a United States General Accounting Office Report in May outlining numerous problems with the appraisal regulatory structure, has led major national appraiser bodies to urge a full investigation of the current regulatory structure.
“The fact that 43 percent of state appraisal boards failed to resolve complaints against real estate appraisers in an expeditious manner is troubling,” said President Alan E. Hummel of the Appraisal Institute, one of the groups calling for an investigation.
Hummel said the findings were not unexpected, however. He noted numerous problems with Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989, which created the current regulatory structure.
“The regulatory structure that developed as a result of FIRREA has become increasingly complex and inconsistent from state to state,” he said. “Our organizations are not surprised about the problems within the current system.”
The Appraisal Institute was joined by the American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and the National Association of Realtors in submitting a letter to Congress urging a full investigation of the shortcomings, including hearings.
“Proper valuation of real estate held as collateral is of vital importance, especially in this time of economic uncertainty,” Hummel said. “Competent and qualified real estate appraisers serve as a crucial safeguard in our banking system, but lax enforcement and ineffective federal oversight will only serve to diminish this safeguard.”