With one out of every three home builders reporting that they have lost signed sales contracts because of flawed appraisals, a new report from the Government Accountability Office (GAO) ramps up the pressure for a solution to this critical problem.
A newly published report from the Government Accountability Office (GAO) this month cites multiple inadequacies in the regulation and enforcement of standard appraisal practices, and clearly states that the authority that oversees appraiser regulatory programs established by the states needs to improve its monitoring procedures. Specifically, the GAO report finds that the Appraisal Subcommittee that oversees appraiser regulatory programs has “limited” enforcement tools and procedures for reporting compliance levels. The report also cites “several weaknesses” that have potentially limited that body’s ability to monitor state appraiser regulatory agencies, federal financial institution regulators and the Appraisal Foundation (a private, nonprofit corporation that sets criteria for appraisals and appraisers). Observing that ”the critical role of real estate appraisers in mortgage underwriting underscores the importance of effective regulation of the appraisal industry,” the GAO study calls on the Appraisal Subcommittee to strengthen its oversight by developing specific policies and procedures for monitoring the appraisal requirements of the federal financial institutions regulators. Responding to this important report, NAHB Chairman Bob Nielsen said that clearly, “The current system is not working,” and “We must resolve a flawed appraisal process that produces inaccurate assessments of home values, because this fosters price instability, puts more families in danger of default or foreclosure, and undermines the housing and economic recovery. It’s time that regulators, appraisers, lenders and all of the stakeholders in this debate come together and agree on major reforms in appraisal practices and oversight to ensure that homes are appraised at their fair market rate.” Read NAHB’s official response here, or view the GAO report at this link. Contact: Steve Linville (800-368-5242 x8597)
**ALERT: NAHB TO RELEASE NEW APPRAISAL PRIMER**
Want to know more about the Appraisal Subcommittee mentioned in the story above? Have questions about how appraisals are generated, what knowledge and training appraisers have, and how they arrive at a value for your high-quality home for which there are no appropriate area comparables? NAHB’s Housing Finance experts will release a comprehensive new Appraisal Primer in time for the International Builders’ Show that’s aimed at answering your questions and helping you to obtain the fairest appraisal possible for your project. This free member resource will be published on www.nahb.org within the next few days and profiled in Nation’s Building News, so keep a lookout for your next edition. Of course, we’ll also provide more details in an upcoming edition of this report!