Real-estate appraisers call for reform after investigation

by Mitch Weiss - Aug. 21, 2008 12:00 AM
Associated Press

CHARLOTTE, N.C. - Four national associations of real-estate appraisers have asked Congress for major regulatory reforms in the wake of an Associated Press investigation that identified key failings within the existing system.

Led by the Chicago-based Appraisal Institute, the groups said Wednesday they want Congress to approve more money so that state appraisal boards can boost enforcement efforts. They also called on lawmakers to increase the oversight authority of the federal agency charged with monitoring the appraisal industry.

"We have been deeply troubled by the lack of responsiveness by some federal and state appraiser regulators in carrying out (the law)," said Bill Garber, the director of governmental and external relations at the Appraisal Institute, the nation's largest association for real-estate appraisers.

The AP's investigation found that since 2005, more than two-dozen states and U.S. territories violated federal rules by failing to investigate and resolve complaints about appraisers within a year. Some complaints sat uninvestigated for as long as four years and as a result, hundreds of appraisers accused of wrongdoing remained in business.

Experts told the AP the failings helped contribute to the current crisis in America's housing market.

"We hope this article proves to be a catalyst for modernizing the existing appraisal regulatory structure and making it more effective," they wrote to the Senate Banking Committee. The other groups signing the letter are the American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers.

Reps. Paul Kanjorski, D-Pa., and Judy Biggert, R-Ill., the co-sponsors of appraisal-reform legislation that passed the House last year, said earlier this week it was unlikely Congress would have time to address the AP's findings before adjourning for the year. But the staff of Sen. Bob Casey, D-Pa., who sponsored similar legislation in that chamber, said he plans a renewed effort to move it forward in the wake of the AP's report.

Under the current regulatory system, created in the wake of the savings and loan crisis in 1989, states license appraisers and discipline those who break the law. An independent federal agency, the Appraisal Subcommittee, is responsible for conducting field reviews and audits of the states, and maintaining a national registry of appraisers.