Housing Finance & Regulatory Affairs

David L. Ledford

Senior Vice President

November 29, 2012

Appraisal Subcommittee

Attn: Lori Schuster 1401 H Street NW, Suite 760 Washington, DC 20005

Re: Appraisal Subcommittee; Proposed Policy Statements

Docket N o . AS12

- 16

Dear M s

. Schuster :

On behalf of the National Association of Home Builders (NAHB), I would like to submit

comments on the Appraisal Subcommittee’s (ASC) request for comment on their Proposed Policy Statements. NAHB is a Washington

- based trade association representing more than 1 4 0,000 member firms involved in a wide vari ety of businesses related to housing and home building

.

The proposed Policy Statements provide guidance to ensure State appraiser regulatory programs (Program) comply with Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 , as amended. The proposed Policy Statements would supersede the current ASC Policy Statements.

The present economic situation has brought to the forefront the importance of effective appraiser guidance and regulation. NAHB is committed to addressing the systemic appraisal issues that the housing industry experienced both before and after the housing crisis.

Since 2009, NAHB has convened five A ppraisal S ummits , with the most recent
Summit held on October 24, 2012. NAHB’s Appraisal Summits bring together representatives of major housing and financial institution stakeholders, appraisal organizations, and federal housing and banking regulators to discuss appraisal problems and solutions. We appreciate the participation of ASC’s Executive Director, members, and their representatives at the Summits. There has been broad agreement at the S ummits that the stakeholder organizations should work together to address the critical appraisal issues that remain a major impediment to the housing recovery and, therefore, finding solutions to these problem continues to be a major priority for NAHB.

Background

Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended (Title XI), established the Appraisal Subcommittee. The purpose of Ti tle XI is to provide protection of f ederal financial and public policy interests by upholding Title XI requirements for appraisals performed for federally related transactions.Appraisal Subcommittee

Proposed Policy Statements

November 2 9

, 2012 Page 2

Pursuant to Title XI, the ASC performs periodic Compliance Reviews of each Sta te’s Program to determine its compliance, or lack thereof, with Title XI, and to assess it s implementation of the Real Property Appraiser Qualification Criteria (AQB Criteria), as adopted by the Appraiser Qualifications Board (AQB).

The ASC originally a dopted the Policy Statements in 1993 and in 1997 added Policy Statements governing temporary practice and reciprocity. Since 1997 the Policy Statements have remained largely unchanged. Two recent occurrences necessitated revision of the Policy Statements :

 Passage of the Dodd

- Frank Wall S treet Reform and Consumer Protection Act (Dodd

- Frank Act); and

 ASC implementation of its revised Compliance Review process in 2009.

The proposed Policy Statements are intended to provide States with the necessary informa tion to maintain their Programs in compliance with Title XI. The proposal also excludes provisions from the current Policy Statements that have become outdated or lack enforceability. Additionally, the proposal reflects consideration of recent amendments to the Uniform Standards of Professional Appraisal Practice (USPAP) and the AQB Criteria.

In January 2012, The Government Accountability Office (GAO) released a report, “Real Estate Appraisals

– Appraisal Subcommittee Needs to Improve Monitoring Procedur es”. The report identified several weaknesses that have limited the ASC’s effectiveness, including weak enforcement tools and reporting procedures; and, inadequate policies and procedures for monitoring appraisal requirements . NAHB believes the proposed P olicy Statements are a step toward resolving many of the deficiencies identified by the GAO. Our comments on the specific Policy Statements follow.

Policy Statement 1: Regulations, Policies and Procedures Governing State Programs.

NAHB supports the pres ervation of essential language concerning independence and ethical standards with deference given to State standards. States should retain primary responsibility for certifying and overseeing appraisers and the quality of their work. E nforcement actions against licensees sh ould continue to occur at the State level. F ederal policy should dictate that disciplinary actions are meted out in a consistent manner.

Recognizing the primacy of State rights, NAHB believes that the S tates would greatly benefit

from more prescriptive direction and enforcement from the ASC that would better integrate, consolidate and streamline the jumble of existing policies generated independently at the state

level. This would contribute to uniform and consistent standards and avoi d the current multitude of conflicting and confusing requirements which creates inefficiencies, duplicated efforts and

additional cost burdens for the states.

NAHB strongly supports the authority granted to the ASC, by the Dodd

- Frank Act, to review
State Programs for adequate funding and staffing. States must have an independent appraisal

board with funding from license activities, fines and where appropriate grants from the ASC

. States should be forbidden from commingling appraisal license fees with ot her general funds and absolutely forbidden form sweeping any funds supplied through the ASC as grants.Appraisal Subcommittee

Proposed Policy Statements

November 2 9

, 2012 Page 3

NAHB supports the amendment to the current Policy Statement ’ s discussion on prohibiting

discrimination against appraisers with or without membership in a nationally recognized professional appraisal organization

. However, NAHB recognizes t he importance of developing an appraisal organization that would represent the broadest possible range and number of appraisers because the appraisal profession appears to be the most fractured group under the

real estate umbrella . U nfortunately

, most appraisers belong to no organization

, leaving appraisers with little to no representation. Without representation

, appraisers are profoundly powerless to be involved in e ffecting change within their own profession.

Policy Statement 2: Temporary Practice

NAHB supports the recognition, on a temporary basis, the certification or license of an out

- of

state appraiser entering a state and not being subjected to excessive fee s or burdensome requirements, for the purpose of completing an appraisal assignment. It is equally important to

ensure the out

- of

- state appraiser’s competency meets or exceeds the requirements of the assignment.

Policy Statement 3: National Registry

AS C’s National Registry is a critical tool providing industry stakeholders accurate and timely

information to determine who is and

, just as importantly

, who is not eligible to perform appraisals in federally related transactions. Having real time data regar ding the issuance and renewal of licenses and certifications, sanctions, disciplinary actions, revocations and suspensions provides industry stakeholders due diligence tools to ensure the integrity of appraisers and the appraisal process.

NAHB does have c oncerns , however, that not all State s are expeditiously reporting actions, including disciplinary actions , to the National Registry. NAHB would recommend the ASC develop very specific processes and procedures with timelines in which the State s must comply

. ASC grants could assist State s if it is determined that they do not have adequate resources. NAHB also recommends that the ASC maximize the information sharing benefits and integrity of the National Registry by identifying ways to increas e standardizatio n and functionality of the National Registry.

Policy Statement 5: Reciprocity

NAHB supports establishing uniform credentialing standards that would be applied across all jurisdictions

. A strong federal standard would support managing reciprocal credenti als providing

efficiencies for states

. Reciprocity should be automatic provided the appraiser license status is in good standing. NAHB suggests additional clarification on how reciprocity would occur with

State s that are in a Poor or Non

- Compli an ce statu s

. Notice of d isciplinary actions imposed upon appraisers should be made available to any and all part ies charged with engaging an appraiser.

Policy State ment 7: State Agency Enforcement

NAHB supports a timely enforcement process to ensure that S tates a re processing and investigating complaints to ensure effective supervision of appraisers. The process mustAppraisal Subcommittee

Proposed Policy Statements

November 2 9

, 2012 Page 4

incorporate and enforce definitive penalties and remove incompetent appraisers from the pool when appropriate

.

The single largest complaint of NAHB members is the lack of a standard for appeals on an appraisal. The current enforcement process does nothing with regard to a pending transaction. NAHB supports t he establishment of a timely value dispute resolution process that is fair, balanced and appr opriate to allow interested parties to appeal appraisal values when appraisal assumptions are incorrect. An appeals structure similar in design to that of the Department of Veterans Affairs Loan Guaranty Service Home Loan Program should be considered.

Po licy Statement 8: Interim Sanctions

NAHB supports the Dodd

- Frank Act in providing the ASC with the authority to impose interim actions and suspensions, as an alternative to a non

- recognitions proceeding against a State

. This is an important step forward f or the ASC’s enforcement and oversight of State Programs

.

Conclusion

NAHB remains committed to working with ASC, and other industry stakeholders to address the problems in the current U.S. appraisal system. Again, we appreciate the opportunity to

comme nt. Please contact Steve Linville, NAHB’s Director, Single Family Finance, at 202

- 266

- 8597 with any questions you may have regarding this letter.

Sincerely,

David L. Ledford