Appraisal Industry Reform in Washington, D.C.
As the 115th Congress continues to debate a wide range of fiscal and public policy priorities this summer, the issue of housing finance reform at large remains on the congressional to-do list. Part of that reform includes examining the future state of the appraisal industry. Of course, at CoreLogic, we care deeply about any reforms in this space because we are proud to employ the largest panel of appraisers in the country. While not at the epicenter of broader housing finance reform discussions at this point, addressing the challenges and capitalizing on the opportunities facing the appraisal industry is a topic that is gaining greater levels of attention in the halls of Congress.
Policy makers in both the House and Senate are starting to examine a diverse, but interconnected series of issues facing appraisers across the country. These issues include, but are not limited to coming up with innovative ways to address regional appraiser shortages, figuring out how to strike an appropriate balance when it comes to appraisal independence, and concurrently debating the larger role of the federal government in industry regulation.
More specifically, moving forward we expect congressional committees to debate the role of the federal government and the Appraisal Subcommittee relative to state agencies when it comes to industry oversight and the creation of operating standards. We also expect legislators to continue discussing how to make Dodd-Frank mandated appraisal independence the most effective oversight mechanism so that taxpayers, consumers and appraisers are protected from the effects of undue influence during the appraisal process. While more apposite of an issue immediately following the most recent financial crisis, the reemergence of the appraisal independence debate is timely given the array of new challenges facing the industry.
Chief among those challenges are regional supply-and-demand issues that arise in certain cities and rural communities. The net decrease in active appraisers annually can create unwanted service gaps and transaction delays in key markets. Fortunately, we are seeing thought leadership from groups like the Appraisal Foundation on removing unnecessary barriers to entry. If properly structured and responsibly executed, there is a strong potential that reforms could attract more millennials into the appraiser profession to address those gaps where they may exist. Additionally, smart reforms like removing excessive and often repetitive education requirements could provide honorably discharged veterans with unique skills sets the opportunity to pursue a second, rewarding career in the mortgage finance industry as appraisers.
At CoreLogic, we are pleased to see Congress seriously debating policy proposals related to the servicing of our nation’s veterans. Just recently, the House Veterans Affairs (VA) Committee held a highly constructive hearing focused on the U.S. Department of Veterans Affairs’ appraisal program. Legislators examined ways to leverage the VA network and its own appraisal program to address the service issues that are manifesting in rural areas. It was encouraging to see Members of Congress discuss how to effectively balance people, processes, and technology to maximize service outcomes, while maintaining the integrity of accurate valuations. This type of smart modernization, incorporating industry-leading modeling, analytics, and consortium databases, will be critical in shaping the evolution of our nation’s appraisal system.
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