Government Agency Overseeing Appraisal Industry in Chaos

The federal agency overseeing the nation’s 80,000 real estate appraisers is in crisis, prompting growing bipartisan Senate concern.

The Appraisal Subcommittee has operated without a permanent director for more than six months while staff levels dropped 30 percent, Bisnow reported. Two senators sent a letter last week expressing concerns about the ASC’s ability to regulate the profession.

Democratic Sen. Catherine Cortez Masto of Nevada and Republican Sen. Mike Rounds of South Dakota noted the agency’s staffing cuts, its failure to hold required public meetings and litigation alleging fraud in state certification processes. They asked Federal Financial Institutions Examination Council chair Michelle Bowman to investigate why the subcommittee lacks permanent leadership.

“Given current trends in the commercial real estate sector, high borrowing rates and increasing recovery costs from natural disasters, it is important that the appraisal system remain stable and well-managed,” the senators wrote.

The moment is critical. Roughly $960 billion in commercial mortgages mature this year, requiring updated appraisals. Meanwhile, the appraiser workforce is aging rapidly with a median age of 60 and 80 percent of professionals over 50, according to the National Association of Realtors.

The ASC, funded by appraiser fees rather than taxes, has seen revenue jump from $3.6 million to $11.6 million between 2018 and 2023 due to added oversight of appraisal management companies. Cash reserves ballooned to $29 million last year, money that can’t be spent without approval of its board.

Despite the financial cushion, acting executive director Matt Ponzar implemented cost-cutting measures, including pulling back grants to seven states that were designed to recruit appraisers. The agency’s website has also repeatedly crashed due to aging technology infrastructure, limiting access to the national appraiser registry.

Current and former employees say the federal hiring freeze instituted by the Trump administration has prevented filling crucial positions, including financial manager. Staff are being forced to document activities in 10-minute increments while compliance review teams operate without adequate support.

Industry insiders worry more retirements are coming to the subcommittee as the agency struggles to execute basic duties.

The crisis in the industry extends beyond the ASC. The Appraisal Institute has faced two lawsuits this year, including allegations of test result manipulation and workplace misconduct.

The senators gave the ASC board until Aug. 29 to respond to the letter.

— Holden Walter-Warner