WASHINGTON (June 28, 2012) – Developing and reporting
property values more accurately is critical to improving market performance,
reducing risk and strengthening the housing finance system, according to the
National Association of Realtors®.
That was the message delivered today by Frank Gregoire,
immediate past chair of NAR’s Real Property Valuation Committee, in testimony
before the House Financial Services Subcommittee on Insurance, Housing and
Community Involvement regarding appraisal oversight.
“As the leading advocate for housing issues, Realtors®
know that an accurate appraisal is an important part of the home buying process
and that a strong and independent appraisal industry is critical to restoring
faith in the mortgage origination process,” said Gregoire, a state-certified residential
appraiser and president of Gregoire & Gregoire, Inc., in St. Petersburg,
Fla. “There are many challenges currently facing the appraisal industry, and we
see appraisals as one of the most crucial and overlooked aspects of the
recovery of the real estate market.”
In his testimony, Gregoire said that a number of issues
are impacting the credible valuation of real property, including appraiser
competency and local market knowledge, challenges in accurately estimating
market value in stabilizing markets, and the lack of oversight and regulation
of Appraisal Management Companies (AMCs).
While many AMCs provide legitimate services for
legitimate fees, a large number of AMCs are contributing to problems in the
appraisal business and the overall housing market, said Gregoire. There is
evidence that AMCs are often compromising appraiser independence by insisting
appraisers include specific transactions as comparable sales, complete
appraisals in unreasonably short turnaround times and comply with a broad scope
of work not commensurate with the fee paid.
Many AMCs also require appraisers to accept any and all
liability if a loan defaults if there is any claim related to the value of the
property. All of this puts pressure on the appraiser, compromises their independence
and negatively impacts the quality of the appraisal report, said Gregoire.
“Appraisers are facing undue pressure by AMCs to complete
appraisals using distressed transactions as comparable sales, to deliver
completed appraisal reports faster, and do a greater scope of work for a lower
fee than a competing vendor,” said Gregoire. “The end result is that lenders
and consumers are being underserved, and all of this is contributing to the
failure to recognize positive movement in prices and values in many markets,
creating an additional obstacle to the housing market recovery.”
NAR strongly supports the independence of appraisers and
the appraisal process, and believes that all AMCs should be required to
register with the state appraisal regulatory agencies where they are providing
appraisal management services. Currently, AMCs that are subsidiaries of lenders
are regulated at the federal level and not subject to state AMC registration
requirements, which exacerbates problems because it leads to different
standards and creates confusion. Lenders should also be prohibited from
retaining an AMC’s services if that lender maintains any level of ownership in
the AMC.
Other appraisal challenges include limitations of the
current reporting format, lagging market information, discrepancies in market
definitions, the funding structure of appraisal programs, and a declining
number of appraisers. NAR represents about 30,000 state-licensed and certified
appraisers throughout the country, who report that their colleagues are leaving
the industry for many reasons, but among the most cited is that experienced
appraisers refuse to work under the current AMC-imposed climate.
Gregoire said that while appraisals are the gold standard
for mortgage origination, there is also an important role for broker price
opinions, comparative market analyses and automated valuation models. While
some organizations focus only on appraisals, NAR is the only real estate trade
association that can speak with authority on appraisals and alternative
valuation products.
NAR has long been seeking to ensure credible valuation of
real property for the industry and since 1993 has encouraged appraiser members
to demonstrate their professional competence by earning one or both of NAR’s
appraisal designations.
The Residential Accredited Appraiser (RAA) and General Accredited Appraiser
(GAA) are awarded to certified appraisers with education and experience in
excess of the minimum state qualifications.
Earlier this year, NAR also adopted the Responsible
Valuation Policy, which serves as a guide for members and staff in
advocacy efforts for federal legislation and regulatory policy. Through its
subsidiary, the Realtors® Property Resource (RPR), and its Real
Property Valuation Committee, NAR is able to provide one of the most
comprehensive sets of data and tools for determining credible home values.
The National Association of Realtors®, “The
Voice for Real Estate,” is America’s largest trade association, representing 1
million members involved in all aspects of the residential and commercial real
estate industries.
Horizon Properties Inc. is Guam’s leading real estate services provider and property managementcompany. We work diligently to fulfill the requirements of buyers and renters, while working towards a smooth, hassle-free transaction for sellers. Our innovative and “customer first” approach towardsproperty management results in outstanding property care and profitability.
WASHINGTON (June 28, 2012) – Developing and reporting property values more accurately is critical to improving market performance, reducing risk and strengthening the housing finance system, according to the National Association of Realtors®.
That was the message delivered today by Frank Gregoire, immediate past chair of NAR’s Real Property Valuation Committee, in testimony before the House Financial Services Subcommittee on Insurance, Housing and Community Involvement regarding appraisal oversight.
“As the leading advocate for housing issues, Realtors® know that an accurate appraisal is an important part of the home buying process and that a strong and independent appraisal industry is critical to restoring faith in the mortgage origination process,” said Gregoire, a state-certified residential appraiser and president of Gregoire & Gregoire, Inc., in St. Petersburg, Fla. “There are many challenges currently facing the appraisal industry, and we see appraisals as one of the most crucial and overlooked aspects of the recovery of the real estate market.”
In his testimony, Gregoire said that a number of issues are impacting the credible valuation of real property, including appraiser competency and local market knowledge, challenges in accurately estimating market value in stabilizing markets, and the lack of oversight and regulation of Appraisal Management Companies (AMCs).
While many AMCs provide legitimate services for legitimate fees, a large number of AMCs are contributing to problems in the appraisal business and the overall housing market, said Gregoire. There is evidence that AMCs are often compromising appraiser independence by insisting appraisers include specific transactions as comparable sales, complete appraisals in unreasonably short turnaround times and comply with a broad scope of work not commensurate with the fee paid.
Many AMCs also require appraisers to accept any and all liability if a loan defaults if there is any claim related to the value of the property. All of this puts pressure on the appraiser, compromises their independence and negatively impacts the quality of the appraisal report, said Gregoire.
“Appraisers are facing undue pressure by AMCs to complete appraisals using distressed transactions as comparable sales, to deliver completed appraisal reports faster, and do a greater scope of work for a lower fee than a competing vendor,” said Gregoire. “The end result is that lenders and consumers are being underserved, and all of this is contributing to the failure to recognize positive movement in prices and values in many markets, creating an additional obstacle to the housing market recovery.”
NAR strongly supports the independence of appraisers and the appraisal process, and believes that all AMCs should be required to register with the state appraisal regulatory agencies where they are providing appraisal management services. Currently, AMCs that are subsidiaries of lenders are regulated at the federal level and not subject to state AMC registration requirements, which exacerbates problems because it leads to different standards and creates confusion. Lenders should also be prohibited from retaining an AMC’s services if that lender maintains any level of ownership in the AMC.
Other appraisal challenges include limitations of the current reporting format, lagging market information, discrepancies in market definitions, the funding structure of appraisal programs, and a declining number of appraisers. NAR represents about 30,000 state-licensed and certified appraisers throughout the country, who report that their colleagues are leaving the industry for many reasons, but among the most cited is that experienced appraisers refuse to work under the current AMC-imposed climate.
Gregoire said that while appraisals are the gold standard for mortgage origination, there is also an important role for broker price opinions, comparative market analyses and automated valuation models. While some organizations focus only on appraisals, NAR is the only real estate trade association that can speak with authority on appraisals and alternative valuation products.
NAR has long been seeking to ensure credible valuation of real property for the industry and since 1993 has encouraged appraiser members to demonstrate their professional competence by earning one or both of NAR’s appraisal designations. The Residential Accredited Appraiser (RAA) and General Accredited Appraiser (GAA) are awarded to certified appraisers with education and experience in excess of the minimum state qualifications.
Earlier this year, NAR also adopted the Responsible Valuation Policy, which serves as a guide for members and staff in advocacy efforts for federal legislation and regulatory policy. Through its subsidiary, the Realtors® Property Resource (RPR), and its Real Property Valuation Committee, NAR is able to provide one of the most comprehensive sets of data and tools for determining credible home values.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
Horizon Properties
Inc. is
Guam’s leading real estate services provider and property management company. We
work diligently to fulfill the requirements of buyers and renters, while working towards
a smooth, hassle-free transaction for sellers. Our
innovative and “customer first” approach towards property management results in
outstanding property care and profitability.
