Real Estate Appraisals: Appraisal Subcommittee Needs to Improve Monitoring Procedures
Released: 2012-01-18T00:00:00

Letter

Background

Before originating a residential mortgage loan, a lender assesses the risk of making the loan through a process called underwriting, in which the lender generally examines the borrower’s credit history and capacity to pay back the mortgage and obtains a valuation of the property to be used as collateral for the loan. Lenders need to know the property’s market value, which refers to the probable price that a property should bring in a competitive and open market, in order to provide information for assessing their potential loss exposure if the borrower defaults. Lenders also need to know the value in order to calculate the loan-to-value ratio, which represents the proportion of the property’s value being financed by the mortgage and is an indicator of its risk level. Real estate can be valued using a number of methods, including appraisals, broker price opinions (BPO), and automated valuation models (AVM). Appraisals—the valuation method used in the large majority of mortgage transactions— are opinions of value based on market research and analysis as of a specific date. Appraisals are performed by state-licensed or -certified appraisers who are required to follow the Uniform Standards of Professional Appraisal Practice (USPAP). A BPO is an estimate of the probable selling price of a particular property prepared by a real estate broker, agent, or sales person rather than by an appraiser. An AVM is a computerized model that estimates property values using public record data, such as tax records and information kept by county recorders, multiple listing services, and other real estate records.

In 1986, the House Committee on Government Operations issued a report concluding that problematic appraisals were an important contributor to the losses that the federal government suffered during the savings and loan crisis. The report states that hundreds of savings and loans chartered or insured by the federal government were severely weakened or declared insolvent because faulty and fraudulent real estate appraisals provided documentation for loans larger than justified by the collateral’s real value. In response, Congress incorporated provisions in Title XI of FIRREA that were intended to ensure that appraisals performed for federally related transactions were done (1) in writing, in accordance with uniform professional standards, and (2) by individuals whose competency has been demonstrated and whose professional conduct is subject to effective supervision.

Various private, state, and federal entities have roles in the Title XI regulatory structure:

The Appraisal Foundation. The Appraisal Foundation is a private not- for-profit corporation composed of groups from the real estate industry that works to foster professionalism in appraising. The foundation sponsors two independent boards with responsibilities under Title XI. The first of these, the Appraisal Standards Board, sets forth rules for developing an appraisal and reporting its results through USPAP. Title XI requires real estate appraisals performed in conjunction with federally related transactions to follow USPAP. The second board, the Appraiser Qualifications Board, establishes the minimum qualification criteria for state certification and licensing of real property appraisers. Title XI requires all state-licensed and -certified appraisers to meet the minimum education, experience, and examination requirements promulgated by the Appraiser Qualifications Board. The foundation disseminates information regarding USPAP and the appraiser qualification criteria, which are periodically revised and updated, to state and federal regulators, appraisers, users of appraisal services, and the general public. The foundation is funded primarily by sales of publications but also receives an annual grant from ASC.

State-level regulatory entities. Title XI relies on the states to (1) implement the certification and licensing of all real estate appraisers and (2) monitor and supervise appraisers’ compliance with appraisal standards and requirements. To assure the availability of certified and licensed appraisers, all 50 states, the District of Columbia, and four U.S. territories have adopted structures to regulate and supervise the appraisal industry. These structures typically consist of a state regulatory agency coupled with a board or commission to establish education and experience requirements (consistent with or in excess of Appraiser Qualifications Board criteria), license and certify appraisers, and monitor and enforce appraiser compliance. These regulatory agencies generally oversee the activities of appraisers for all types of transactions, including those that are federally related.

Federal financial institutions regulators. Title XI places responsibility for regulating appraisals and “evaluations” performed in conjunction with federally related transactions with the Federal Reserve, FDIC, OCC, and NCUA. To meet this responsibility, these financial institution regulators have established requirements for appraisals and evaluations through regulations and have jointly issued Interagency Appraisal and Evaluation Guidelines. Among other things, appraisals for federally related transactions must, at a minimum, provide an estimate of market value, conform to USPAP, be in writing, and contain sufficient information and analysis to support the institution’s decision to engage in the transaction. By regulation, loans that qualify for sale to a U.S. government agency or U.S. government- sponsored agency and loans that are wholly or partially insured or guaranteed by such agencies are exempt from the appraisal requirements. In addition, loans that involve residential real estate transactions in which the appraisal conforms to Fannie Mae or Freddie Mac appraisal standards are exempt from these appraisal requirements. Under authority granted by Title XI, the federal regulators also have adopted regulations that exempt federally related transactions of $250,000 or less from appraisal requirements, meaning that the services of a licensed or certified appraiser are not required (although an evaluation must be performed). The regulations provide a similar appraisal exemption for real estate- secured business loans of $1 million or less that are not dependent on the sale of, or rental income derived from, real estate as the primary source of repayment. The regulations and guidelines also specify the types of policies and procedures lenders should have in place to help ensure independence and credibility in the valuation process. Additionally, the federal regulators have developed procedures for examining the real estate lending activities of regulated institutions that include steps for assessing the completeness, adequacy, and appropriateness of these institutions’ appraisal and evaluation policies and procedures.

Appraisal Subcommittee. ASC has responsibility for monitoring the implementation of Title XI by the private, state, and federal entities discussed previously. Among other things, ASC is responsible for (1) monitoring and reviewing the practices, procedures, activities, and organizational structure of the Appraisal Foundation—including making grants to the Foundation in amounts that it deems appropriate to help defray costs associated with its Title XI activities; (2) monitoring the requirements established by the states and their appraiser regulatory agencies for the certification and licensing of appraisers; (3) monitoring the requirements established by the federal financial institutions regulators regarding appraisal standards for federally related transactions and determinations of which federally related transactions will require the services of state-licensed or - certified appraisers; and (4) maintaining a national registry of state- licensed and -certified appraisers who may perform appraisals in connection with federally related transactions. Among other responsibilities and authorities, the Dodd-Frank Act requires ASC to implement a national appraiser complaint hotline and provides ASC with limited rulemaking authority. ASC provides an annual report to Congress on its activities and financial status in the preceding year. For fiscal year 2010, ASC reported total expenses (including grants to the Appraisal Foundation) of approximately $3.6 million.

Some 20 years after the passage of Title XI, questions remain about oversight of the appraisal industry and the quality of appraisals. Although the federal financial institutions regulators have had guidance since the 1990s to help ensure the independence of appraisers, during the mid- 2000s, some appraisers reported that loan officers and mortgage brokers pressured them to overvalue properties to help secure mortgage approvals. An investigation into allegations about a major lender’s role in pressuring appraisers led to questions about what the enterprises, which had purchased many of the lender’s mortgages, had done to ensure that the appraisals for the mortgages met the enterprises’ requirements. A key outcome of that investigation was the enterprises’ adoption of the Home Valuation Code of Conduct (HVCC), which set forth appraiser independence requirements for mortgages sold to the enterprises. Although the Dodd-Frank Act declared HVCC no longer in effect, it codified several of HVCC’s provisions, and the enterprises have incorporated many of the other provisions into their requirements. As we reported in July 2011, appraiser independence requirements and other factors have increased the use of Appraisal Management Companies (AMC). Some appraisal industry participants are concerned that some AMCs may prioritize low costs and quick completion of assignments over appraiser competence, with negative consequences for appraisal quality. Moreover, according to the FBI, appraisal fraud—the deliberate overstatement or understatement of a home’s appraised value—is an ongoing concern. Of the 817 mortgage fraud cases the FBI closed from the fourth quarter of fiscal year 2010 through the third quarter of fiscal year 2011, 92 involved appraisal fraud.

Several Weaknesses Have Potentially Limited ASC’s Effectiveness in Performing Its Title XI Functions

ASC has been performing its monitoring role under Title XI, but several weaknesses have potentially limited its effectiveness. In particular, ASC has not fully developed appropriate policies and procedures for monitoring state appraiser regulatory agencies, the federal financial institutions regulators, and the Appraisal Foundation. As part of its monitoring role, ASC also maintains a national registry of appraisers, which includes data on state disciplinary actions.

ASC Has Improved State Compliance Reviews, but Its Enforcement Tools and Reporting Procedures Have Been Limited

ASC has improved its reviews of state compliance with Title XI, but its enforcement tools and procedures for reporting compliance levels have been limited. ASC has detailed policies and procedures for monitoring state appraiser regulatory programs and has issued 10 policy statements covering different aspects of states’ implementation of Title XI requirements. The policy statements cover topics including submission of data to the national registry, license reciprocity (enabling an appraiser certified or licensed in one state to perform appraisals in other states), and programs for enforcing appraiser qualifications and standards. For example, Statement 6 states that license reciprocity agreements should contain certain characteristics, such as recognizing and accepting successfully completed continuing education courses taken in the appraiser’s home state. Statement 10 sets forth guidelines for enforcing Appraiser Qualifications Board criteria for appraiser certification and complaint resolution. The policy statements are designed to assist states in continuing to develop and maintain appropriate organizational and regulatory structures for certifying, licensing, and supervising real estate appraisers. These statements reflect the general framework that ASC uses to review a state’s program for compliance with Title XI. ASC staff told us that they had initiated actions to update the policy statements to reflect Appraisal Standards Board changes to USPAP, modifications to Appraiser Qualifications Board criteria, emerging issues identified through state compliance reviews, and provisions in the Dodd-Frank Act.

Apart from the policy statements, however, ASC has functioned without regulations and enforcement tools that could be useful in promoting state compliance with Title XI. Prior to the Dodd-Frank Act, Title XI did not give ASC rulemaking authority and provided it with only one enforcement option. ASC’s policy statements on specific elements of Title XI take the form of policies rather than regulations, which may limit ASC’s leverage over states that are not in compliance. As discussed later in this report, the Dodd-Frank Act provides ASC with limited rulemaking authority. Prior to the Dodd-Frank Act, the only enforcement action ASC could take under Title XI was to “derecognize” a state’s appraiser regulatory program, which would prohibit all licensed or certified appraisers from that state from performing appraisals in conjunction with federally related transactions. ASC has never derecognized a state, and ASC officials told us that using this sanction would have a devastating effect on the real estate markets and financial institutions within the state.

While ASC has until recently had limited enforcement tools, it has had a number of tools to encourage state programs to comply with the policy statements and therefore Title XI requirements (see table 1). ASC’s primary tools for monitoring the states are routine and follow-up compliance reviews, which are performed on site by ASC’s four Policy Managers. These reviews are designed to encourage adherence to Title XI requirements by identifying any instances of noncompliance or “areas of concern” and recommending corrective actions. ASC conveys its findings and recommendations to states through written reports. Examples of areas covered by the reviews include timeliness in resolving complaints about appraiser misconduct or wrongdoing; degree to which education courses are consistent with Appraiser Qualifications Board criteria; adequacy of state statutes and regulations on certifying and licensing appraisers; timeliness and completeness of data submissions to the national registry and remittance of national registry fees; and validation of documentation supporting appraiser education and experience.contact visits” on an as-needed basis and off-site monitoring performed continuously.

Dodd-Frank Act Provides ASC New Authorities and Presents Implementation Challenges

The Dodd-Frank Act Expands ASC’s Role and Provides New Tools to Oversee State Appraiser Regulatory Agencies

The Dodd-Frank Act contains 14 provisions that give ASC a number of new responsibilities and authorities. We identified 27 tasks associated with these provisions, ranging from complex undertakings to more straightforward administrative actions. Some of the more complex tasks include establishing and maintaining a national appraisal complaint hotline, making grants to state appraiser regulatory agencies, and implementing new rulemaking authority and enforcement tools. The act includes several other tasks such as encouraging states to accept appraisal courses approved by the Appraiser Qualifications Board and to establish policies for issuing reciprocal licenses or certifications to qualified appraisers from other states. As of October 2011, ASC had completed several tasks that required no rulemaking or creation of new programs and was in various stages of progress on the others. Appendix IV provides a summary of all 27 tasks and their status as of October 2011.

The Dodd-Frank Act requires ASC to determine whether a national hotline exists that receives complaints of noncompliance with appraisal independence standards and USPAP, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process. ASC completed this task in January 2011, within the statutory deadline, and reported that no such hotline currently existed.

The Dodd-Frank Act also requires ASC to establish and operate such a national hotline, including a toll-free telephone number and an e-mail address, if it determined that one did not already exist. Additionally, the act requires ASC to refer hotline complaints to appropriate governmental bodies for further action. ASC has not fully addressed this requirement but has researched how other agencies operate hotlines and make complaint referrals. ASC officials told us that the hotline would require significant staff and funds and that they were exploring options for implementing it, including hiring a contractor.

Appraisal industry stakeholders we spoke with identified a number of potential challenges in establishing and operating a hotline. They noted that creating and maintaining a hotline could be costly because it will likely require investments in staff and information technology to fully ensure that calls are properly received, screened, tracked, and referred to appropriate regulatory agencies. Stakeholders indicated that screening calls would be a critical and challenging task because frivolous complaints could overwhelm the system and identifying valid complaints would require knowledge of USPAP. Some stakeholders we spoke with expressed concern about consumers using the hotline simply to report disagreement with an appraiser’s valuation instead of to report USPAP violations, concerns about appraiser independence, or potential fraud. Some appraisers said that frivolous consumer complaints could hurt an appraiser’s ability to get future appraisal assignments, while federal financial regulatory officials said that frivolous complaints from appraisers against lenders could lead to costly and time-consuming investigations. Additionally, industry stakeholders noted that the hotline would only have value if valid complaints were followed up and resolved but pointed out that some states lack the resources to handle their existing volume of complaints. Further, stakeholders said that deciding which regulatory entities should receive complaint referrals could be difficult in some cases and that differing state requirements for complaints (such as forms, procedures, and standards) could complicate the referral process.

Nonetheless, appraisal industry stakeholders told us they believed that the hotline would offer several benefits. These included giving appraisers a central place to report when they feel they are being pressured, providing a conduit to forward complaints to appropriate entities, promoting the development of more uniform complaint and complaint follow-up procedures, and providing ASC with information that could be useful for its state and appraiser enforcement efforts. Among the state appraiser regulatory agencies we surveyed, views on establishing a hotline varied. For example, 13 of the 50 states responded that the hotline would improve their ability to regulate the appraisal industry in their state, while 9 viewed it as a hindrance. Of the remaining 28 respondents, 13 thought it would neither help nor hinder, 12 did not know, 2 commented on the potential for frivolous complaints, and 1 did not respond.

Additionally, 25 of the 50 states responded that the establishment of a hotline would increase the number of complaints they received.

The Dodd-Frank Act requires ASC to make grants to state appraiser regulatory agencies to support these agencies’ compliance with Title XI, including processing and investigating complaints, enforcement activities, and submission of data to the national registry. As previously noted, timely investigation and resolution of complaints has been a persistent problem for a number of states. Most of the state appraiser regulatory agencies we surveyed expressed interest in applying for ASC grants once the program is implemented. Specifically, 34 of the 50 states responding to our survey indicated they would likely apply for a grant, while 8 said they were unlikely to do so, and 3 said they were neither likely nor unlikely to do so. States cited activities related to enforcement and complaints—such as training for prosecutors and investigation of complaints—as the most likely potential uses of grant funds. Other potential uses cited by states included technological improvements for submitting data to the national registry and hiring appraiser licensing staff.

While generally supportive of the grant program, appraisal industry stakeholders and ASC officials we spoke with noted several potential hurdles. Several stakeholders raised concerns about whether ASC had adequate resources to fund grants or sufficient expertise in grant administration and oversight. For example, officials from one appraisal industry group noted that ASC’s grant resources could be spread thin if numerous states apply and that states may not find small grants to be worthwhile. ASC officials said they were unsure whether a planned increase in the national registry fee—from $25 to $40 per appraiser credential, effective January 2012—would be adequate to fund the grants and oversee them, especially in light of recent declines in the number of appraisers. They also indicated that they would likely need to hire a grants specialist and an accountant to properly administer the grant program.

Additionally, appraisal industry stakeholders cited challenges that ASC could face in designing the grant program and the decisions it will need to make. Some noted the challenge of designing grant eligibility and award criteria that (1) do not reward states that have weak appraiser regulatory programs because they use appraisal-related fee revenues (from state appraiser licensing and exam fees, for example) for purposes other than appraiser oversight and (2) will not create incentives for states to use less of their own resources for regulation of appraisers. They noted that some states direct (or “sweep”) appraisal-related revenues into the state’s general fund, which, in some cases may contribute to underfunding of the state’s appraiser regulatory agency. Twenty-six of the 50 state agencies that responded to our survey reported that their state government had the authority to sweep revenues collected by the agency into the state’s general fund, and 19 of these 26 indicated that their state had exercised In addition, stakeholders had a range of views on what this authority.the grant award criteria should include. For example, some suggested flexible grants based on the number of complaints or the number of appraisers in a state. However, others, including an ASC board member, said that the grants should target specific, well-defined initiatives to help ensure that funds are used appropriately. The board member pointed to state investigator training funded through ASC grants to the Appraisal Foundation as an example of such an initiative. States responding to our survey identified other possible funding criteria, including the extent to which a state had established appropriate performance benchmarks and the state’s past efforts to address compliance deficiencies.

The Dodd-Frank Act also gives ASC the authority to prescribe regulations in four areas: temporary practice, the national registry, information sharing, and enforcement. For purposes of prescribing regulations, the act requires ASC to establish an advisory committee of industry participants, including appraisers, lenders, consumer advocates, real estate agents, and government agencies, and hold meetings as necessary to support the development of regulations. Although ASC already has policy statements covering the four areas, appraisal industry stakeholders and ASC officials indicated that regulations could be expected to strengthen ASC’s leverage over states to comply with Title XI. In addition, ASC officials noted that rulemaking authority would allow them to establish mandatory state reporting requirements and provide them additional administrative options to address state noncompliance. However, as of October 2011, ASC had not established an advisory committee or drafted any regulations. ASC officials told us that these tasks were still in the early planning stage.

In addition to the rulemaking authority, the Dodd-Frank Act expands ASC’s enforcement tools. As previously discussed, ASC’s only enforcement option prior to the act was derecognition of a state’s appraiser regulatory program. The act gives ASC the authority to remove a state-licensed or -certified appraiser or a registered AMC from the national registry on an interim basis, not to exceed 90 days, pending state agency action on licensing, certification, registration, and disciplinary proceedings. It also authorizes ASC to impose (unspecified) interim actions and suspensions against a state agency as an alternative to, or in Many appraisal industry advance of, the derecognition of the agency.stakeholders we spoke with supported ASC’s new authorities because they will allow ASC to take a more flexible, targeted approach to enforcement.

ASC has yet to implement these authorities and will face a number of decisions and challenges in doing so. ASC officials told us they would use their new rulemaking authority to promulgate regulations for removing an appraiser from the national registry. As part of the rulemaking, ASC officials said they plan to develop criteria for circumstances that warrant removal as well as due process procedures. Several appraisers we spoke with stressed the importance of having a process that will allow them to Officials from state bank defend themselves prior to a removal action.regulatory agencies told us that ASC may face challenges in collecting sufficient documentary evidence to justify removing an appraiser from the national registry because evidence collection is resource intensive. ASC officials said that determining the interim actions and suspensions they would take against state agencies also would be done through rulemaking, which can be a time-consuming process. Officials from several state appraiser regulatory agencies said that for such actions to be effective, they should be directed to higher levels of state government because the agencies have limited authority to make resource decisions or implement major changes. For example, some state appraiser regulatory agencies report to other agencies that control budget and policy decisions.

ASC Faces Resource Challenges and Is Developing a Strategic Plan

ASC confronts the challenge of implementing the tasks associated with the Dodd-Frank Act with limited resources. As previously noted, ASC has a small staff and, in recent years, its revenues have declined while its expenses have grown. ASC has 10 staff members, including an Executive Director, a Deputy Executive Director, a General Counsel, 4 Policy Managers, an Information Management Specialist, and 2 Administrative Officers.

ASC’s revenues—which come exclusively from national registry fees— rose (in nominal dollars) from $2.2 million in fiscal year 2000 to a peak of $3.2 million in fiscal year 2007 but declined to $2.8 million in fiscal year 2010 (see fig. 3). According to ASC officials, revenue from registry fees allowed ASC to carry out its Title XI responsibilities and accumulate approximately $6 million in reserves by fiscal year 2008. However, since 2007, the number of appraiser credentials in the registry has declined each year, causing ASC’s revenues to shrink. Pursuant to a Dodd-Frank Act provision, ASC increased its registry fee from $25 to $40 (a 60 percent increase) effective January 2012, which will likely increase ASC’s revenues. However, because the number of appraisers has been declining—by about 9.4 percent from 2007 through 2010—the fee increase may not result in a proportional rise in revenue. To illustrate, ASC’s revenue in 2014 would be about $4.4 million if the number of appraiser credentials stayed at 2010 levels but would be about $4.0 million if the number of appraiser credentials fell by another 9.4 percent from 2011 through 2014. Although the Dodd-Frank Act also authorized ASC to collect registry fees from AMCs, revenues from this source may not be available for several years because regulations for AMC registration must be developed and implemented first.

As shown in figure 3, ASC’s total expenses in nominal dollars increased from $2.2 million in fiscal year 2000 to $3.6 million in fiscal year 2010. ASC’s total expenses include operating expenses and grants to the Appraisal Foundation, both of which rose over that period. Operating expenses grew from $1.3 million in fiscal year 2000 to $2.3 million in fiscal year 2010, primarily due to an increase in personnel and administrative costs for conducting more frequent state compliance reviews. Grants to the Appraisal Foundation grew from $916,000 in fiscal year 2000 to $1.3 million in fiscal year 2010, partly to fund state investigator training courses. In fiscal years 2009 and 2010, ASC’s expenses exceeded its revenues by $380,581 and $782,046, respectively. ASC used reserve funds to cover these amounts, reducing the reserve to $4.8 million by the end of fiscal year 2010.

In light of these resource and implementation challenges, ASC officials began developing a strategic plan in May 2011 that encompasses both its existing activities and its new responsibilities and authorities under the Dodd-Frank Act. ASC also developed a more limited project plan that focuses specifically on tasks and milestones stemming from the act. According to an ASC board member, ASC did not previously have a strategic plan, due partly to stability in its functions over the years. The board member said that the new responsibilities contained in the Dodd- Frank Act prompted them to undertake a full strategic planning effort. ASC officials told us that they hoped to complete the plan by the end of 2011.

ASC officials told us that their strategic plan would include a mission statement and goals but did not provide specific information about the expected contents of their plan. Although ASC is not subject to the GPRA Modernization Act of 2010 (GPRAMA)—which amends the Government Performance and Results Act of 1993 (GPRA)—ASC officials told us that GPRAMA their plan would include GPRAMA’s general components.provides federal agencies with an approach to focusing on results and improving government performance by, among other things, developing strategic plans. Examples of GPRAMA plan components include a comprehensive agency mission statement; general goals and objectives, including outcome-oriented goals; and a description of how the goals and objectives are to be achieved, including the processes and resources required.

Most Recent Mortgages Were Below the Threshold for Appraisal Exemption, and Stakeholder Views on the Threshold Vary

Our analysis of HMDA data found that approximately 71 percent of first- lien mortgages for single-family (one- to four-unit) homes originated from calendar years 2006 through 2009 were less than or equal to $250,000— the regulatory threshold at or below which appraisals are not required for federally related transactions. As shown in figure 4, the percentage varied little by origination year, ranging from a low of 69 percent in 2006 to a high of 73 percent in 2008. For all four years combined, 41 percent of the mortgages were $150,000 or less, and 30 percent were from $150,001 to $250,000. For the same 4-year period, we found that about 22 percent of mortgages for residential multifamily structures were at or below the $250,000 threshold, as were about 98 percent of mortgages for manufactured housing.

The proportions of mortgages originated from 2006 through 2009 that were below the threshold varied considerably by state. The percentage of first-lien mortgages for single-family homes that were less than or equal to $250,000 ranged from a low of 32 percent in California and Hawaii to a high of 95 percent in North Dakota. Two states, New Mexico and South Carolina, represented the median percentage of 82 percent (see fig. 5.) The only places in which more than half of the mortgage originations were greater than $250,000 were California, the District of Columbia, and Hawaii. In states that experienced some of the steepest declines in house prices during the 4 years we examined, the proportion of annual mortgage originations that fell below the threshold increased substantially over the period. For example, the proportion rose 25 percentage points in Nevada, 17 percentage points in California, and 8 percentage points in both Arizona and Florida.

Despite the sizable proportion of residential mortgages at or below $250,000, the threshold has had limited impact in recent years on the percentage of mortgages with an appraisal because mortgage lenders, investors, and insurers generally require them for mortgages, regardless of amount. Due to the sharp contraction of the private mortgage market that began in 2007, the large majority of mortgage originations are currently purchased or insured by the enterprises and HUD’s Federal Housing Administration (FHA), which require appraisals on most mortgages. In 2010, enterprise-backed mortgages accounted for more than 65 percent of the market and FHA-insured mortgages accounted for about 20 percent.

As we reported in July 2011, data for the two enterprises combined showed that they required appraisals for 85 percent of the mortgages they bought in 2010 and 94 percent of the mortgages they bought in 2009 that were underwritten using their automated underwriting systems. FHA requires appraisals for all of the home purchase mortgages and most of the refinance mortgages it insures. Furthermore, lender valuation policies may exceed investor or insurer requirements in some situations. For example, lender risk-management policies may require the lender to obtain an appraisal even when the enterprises do not, or the lender may obtain an appraisal to better ensure that the mortgage complies with requirements for sale to either of the enterprises.

The $250,000 threshold could become more consequential if the roles of the enterprises and FHA are scaled back in the future. The administration and Congress are considering options that would diminish the federal role in mortgage finance and help transition to a more privatized market by winding down the enterprises and reducing the size of FHA. If this were to occur, the proportion of mortgage originations not subject to the appraisal requirements of these entities could increase. If private investors and insurers were to impose less stringent appraisal requirements than the enterprises or FHA, more mortgages of $250,000 or less may not receive an appraisal. However, whether the private market will require appraisals for mortgages below the threshold is unclear at this time.

Appraisal Industry Stakeholders Have Differing Views on Revising the Exemption Thresholds

The perspectives of appraisal industry stakeholders we spoke with— including appraisers, lenders, and federal and state regulators—did not provide a consensus view on whether or how the $250,000 threshold or the $1 million threshold that applies to real estate-secured business loans should be revised. Although no stakeholders advocated higher thresholds, a number recommended lowering or eliminating them, while others thought no changes were necessary. In addition, some stakeholders suggested alternatives to fixed, national dollar thresholds.

Appraiser industry groups, lending industry representatives, and some of the state regulators we contacted said that the appraisal exemption thresholds should be lower, in part to help manage the risk assumed by lending institutions. For example, 14 of the 50 state appraiser regulatory agencies that responded to our survey indicated that the $250,000 threshold should be lowered to either $50,000 or $100,000. Several of the parties we spoke with pointed out that the median sales price of homes in the United States is below $250,000, which exempts numerous mortgage transactions from regulatory appraisal requirements. An NCUA official noted that in large numbers, smaller home mortgages or business loans can pose the same risks to lending institutions as larger ones, so smaller loans should not necessarily be exempt from appraisal requirements. Additionally, appraisal industry stakeholders indicated that “evaluations” that may be performed as an alternative to an appraisal may include methods that are less credible and reliable, such as AVMs. These stakeholders acknowledged that while appraisal requirements are currently driven by the enterprises and FHA, the roles of these entities could change.

Additionally, while appraisals for residential mortgages are not intended to validate the purchase price of the property in question, some stakeholders believe that they serve a consumer protection function by providing objective information about the market value of a property that consumers can use in making buying decisions. One appraisal industry representative said this information can help homebuyers avoid immediately owing more on a property than the property is worth, a situation that can make resale or refinancing difficult or cost-prohibitive. The Dodd-Frank Act requires that any revisions to the $250,000 threshold take into account consumer protection considerations through the concurrence of CFPB.

Other appraisal industry stakeholders, including some state appraiser and bank regulatory officials, felt that the appraisal thresholds should remain where they are. For example, 17 of the 50 state appraiser regulatory agencies that responded to our survey indicated that the $250,000 threshold should not be changed. A few of these stakeholders stated that lowering the threshold would potentially require more homebuyers to pay for appraisals, which are generally more expensive than other valuation methods. For example, according to mortgage industry participants, a typical appraisal can cost a consumer $300 to $450 on average, while a property valuation by an AVM can cost $5 to $25. appraisal industry participant said that lower thresholds could subject more real estate-related transactions for which an appraisal is not necessary to appraisal requirements. For example, he indicated that when the property in question is collateral for a loan that is much less than the probable value of the property, a cheaper and faster valuation method such as an AVM may be sufficient. An FDIC official said it was not clear that the exemption thresholds needed to be revised and noted that even for transactions below the thresholds, regulated financial institutions are expected to have a risk-based approach that determines when they will use an appraisal versus another method.

Some appraisal industry stakeholders said that changes in real estate market conditions and variation in housing markets argued for thresholds tied to median property values at the state or regional level. For example, some of the respondents to our state survey noted that a national $250,000 threshold is largely irrelevant in some areas of the country. As previously shown in figure 5, in several states, over 90 percent of recent mortgages were $250,000 or less. Some stakeholders felt that the thresholds should not be based solely on the loan amount and should include other factors that affect credit risk, such as the borrower’s debt burden.

Appraisal costs can vary considerably depending on the location and size of the property, among other factors. See GAO-11-653.

Conclusions

The critical role of real estate appraisals in mortgage underwriting underscores the importance of effective regulation of the appraisal industry. Title XI of FIRREA created a complex regulatory structure that relies upon the actions of many state, federal, and private entities to help ensure the quality of appraisals and the qualifications of appraisers used in federally related transactions. ASC performs an important function within that structure by, among other things, monitoring the requirements and activities of some of the key entities—state appraiser regulatory agencies, the federal financial institutions regulators, and the Appraisal Foundation. Although ASC is carrying out its monitoring function, it has not developed appropriate policies and procedures for some of its activities, potentially limiting its effectiveness. First, ASC could improve how it assesses and reports on states’ overall compliance with Title XI. Specifically, developing and disclosing clear definitions of the compliance categories could help ensure consistent and transparent application of the categories and provide more useful information to Congress about states’ implementation of Title XI. Second, ASC could better delineate its role in monitoring the appraisal requirements of the federal financial institutions regulators and thereby strengthen accountability for this function. Third, ASC could enhance its policies for determining which Appraisal Foundation activities are eligible for grants to help ensure consistent funding decisions and improve the transparency of the grant process. Addressing these areas would also improve ASC’s compliance with federal internal control standards designed to promote the effectiveness and efficiency of agency operations.

Provisions in the Dodd-Frank Act will help ASC carry out its Title XI monitoring functions but will also create challenges that will require effective long-term planning. The limited rulemaking and enhanced enforcement authorities the act provides to ASC address prior weaknesses in its ability to promote states’ compliance with Title XI. Implementing these authorities will involve significant follow-on steps, including drafting regulations and developing criteria and processes to remove problem appraisers from the national registry. Other tasks stemming from the Dodd-Frank Act, such as establishing an appraiser hotline and a state grant program, require resources and involve difficult decisions. ASC is facing these tasks at a time when its costs have been increasing, and its revenues from national registry fees have fallen because of a decline in the number of appraisers. To help address these challenges, ASC has for the first time undertaken a strategic planning process. Although this process was not far enough along for us to examine the details of ASC’s plan, setting goals and identifying processes and resources necessary to achieve them could help ASC align its new responsibilities with its mission and aid in resource allocation decisions.

Recommendations for Executive Action

To help ensure effective implementation of ASC’s Title XI and Dodd- Frank Act responsibilities and improve compliance with federal internal control standards, we recommend that the Chairman of ASC direct the ASC board and staff to take the following three actions: clarify the definitions used to categorize states’ overall compliance with Title XI and include them in ASC’s compliance review and policy and procedures manuals, compliance review reports to states, and annual reports to Congress; develop specific policies and procedures for monitoring the appraisal requirements of the federal financial institutions regulators and include them in ASC’s policy and procedures manual; and develop specific criteria for assessing whether the grant activities of the Appraisal Foundation are Title XI-related and include these criteria in ASC’s policy and procedures manual.

Agency Comments and Our Evaluation

We provided a draft of this report to ASC, CFPB, FDIC, the Federal Reserve, FHFA, HUD, NCUA, and OCC for their review and comment. We received written comments from the Chairman, ASC; the Assistant Director for Mortgage Markets, CFPB; the Executive Director, NCUA; and the Acting Comptroller of the Currency, which are reprinted in appendixes V through VIII. We also received technical comments from FDIC, the Federal Reserve, and OCC, which we incorporated where appropriate. FHFA and HUD did not provide comments on the draft report.

In their written comments, ASC, NCUA, and OCC agreed with our recommendations. ASC noted that it had already taken preliminary actions to address our recommendations and would consider the report’s findings as it continues to implement its new authority under the Dodd- Frank Act. OCC also acknowledged the challenges ASC faces in implementing its new responsibilities and authority under the act.

CFPB neither agreed nor disagreed with our recommendations but said that the report provided a comprehensive analysis of ASC’s role and highlighted resource and operating constraints that may challenge ASC’s ability to implement its new duties under the Dodd-Frank Act. CFPB also noted that if federal regulators contemplate revising the $250,000 appraisal exemption threshold, CFPB would evaluate whether the proposed change would provide reasonable protection for homebuyers. Additionally, CFPB indicated that it hoped to designate an ASC board member in the near future and that, in the meantime, CFPB serves on the ASC board in an advisory capacity.

We are sending copies of this report to the appropriate congressional committees, the Chairman of ASC, the Chairman of FFIEC, the Chairman of FDIC, the Chairman of the Federal Reserve, the Acting Director of FHFA, the Secretary of Housing and Urban Development, the Chairman of NCUA, the Acting Comptroller of the Currency, the Director of the Bureau of Consumer Financial Protection, and other interested parties. In addition, the report is available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff members have any questions about this report, please contact me at (202) 512-8678 or shearw@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IX.

Appendix I: Objectives, Scope, and Methodology

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank Act) requires GAO to examine the Appraisal Subcommittee’s (ASC) ability to carry out its functions, as well as related issues, including regulatory exemptions to appraisal requirements, state disciplinary actions against appraisers, and the extent to which a national appraisal repository would benefit ASC. Our objectives were to examine (1) how ASC is performing its functions under Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) that existed prior to the passage of the Dodd-Frank Act, (2) ASC’s plans and actions to implement provisions in the Dodd-Frank Act, and (3) analysis and stakeholder views on existing dollar-based exemptions to appraisal requirements for federally related transactions. For the first objective and for information that appears in appendix II, we also examined the number of state-licensed and -certified appraisers, as of December 31, 2010, and the number of disciplinary actions that states took against appraisers from 2001 through 2010. Finally, for information that appears in appendix III, we examined the views of appraisal industry stakeholders on the potential benefits and challenges of a national appraisal repository for ASC.

ASC’s Title XI Functions Prior to the Dodd-Frank Act

To determine how ASC is performing its Title XI functions that existed prior to the passage of the Dodd-Frank Act, we reviewed Title XI of FIRREA and its legislative history. We reviewed ASC’s policies and procedures, including its rules of operation, policy and procedures manual, policy statements, compliance review manual, bulletins, and notices. We consulted GAO’s Standards for Internal Control in the Federal Government and Internal Control Management and Evaluation Tool to assess ASC’s policies and procedures.

We reviewed a wide range of ASC reports and records relating to each of ASC’s functions. With respect to ASC’s monitoring of states, we reviewed reports on ASC’s compliance reviews of states from 2007 through 2010, state response letters to compliance reviews, and summary statistics in ASC’s annual reports to Congress on the results of compliance reviews. We analyzed this information to determine how often ASC reviewed states, the type and frequency of noncompliance problems ASC identified, and the number of states in each of three overall compliance categories (“in substantial compliance,” “not in substantial compliance,” and “not in compliance”). We identified states that ASC reviewed at least twice from 2007 through 2010 to determine any changes in these states’ overall compliance levels over that period. Regarding ASC’s monitoring of the federal financial institutions regulators, we reviewed ASC board minutes from 2003 through 2010, ASC’s annual reports to Congress for those years, and a 2007 internal review of ASC’s operations, which addressed this monitoring responsibility. With respect to ASC’s monitoring of the Appraisal Foundation, we reviewed foundation grant proposals, statements of work, and reimbursement requests from 2003 through 2010; ASC decisions on grant proposals and reimbursement requests for that period; agreed-upon procedures reviews of the foundation from 2005 through 2010 by an independent auditing firm; and miscellaneous correspondence between ASC and the foundation. We also reviewed ASC’s annual reports to Congress and board meeting minutes from 2003 through 2010 to obtain information about the foundation’s activities and ASC’s monitoring process. Regarding the national registry, we analyzed selected information from ASC’s national registry database, including the number of active appraiser credentials by type and state as of December 31, 2010, and the number and types of disciplinary actions against appraisers that states took and reported from calendar years 2001 through 2010. To assess the reliability of the registry data, we (1) reviewed information related to data elements, system operations, and controls; (2) performed electronic testing for obvious errors in accuracy and completeness; and (3) interviewed ASC officials knowledgeable about the data. We concluded that the data elements we used were sufficiently reliable for our purposes.

In addition to our document review and data analysis, we interviewed current ASC staff, including the Executive Director, Deputy Executive Director, and General Counsel, as well as a former ASC General Counsel. We also interviewed ASC board members, which, at the time of our fieldwork, included officials from the Federal Deposit Insurance Corporation (FDIC), Board of Governors of the Federal Reserve System (Federal Reserve), Federal Housing Finance Agency (FHFA), Department of Housing and Urban Development (HUD), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and Office of Thrift Supervision (OTS). We also interviewed officials from the Federal Financial Institutions Examination Council (FFIEC); representatives of the Appraisal Foundation; state appraisal regulatory officials; and a range of other appraisal industry participants and stakeholders, including trade groups that represent appraisers and lenders, officials from the government-sponsored enterprises Fannie Mae and Freddie Mac (the enterprises), and officials from the Federal Bureau of Investigation (FBI).

Finally, to support this objective and our other reporting objectives, we conducted a Web-based survey of appraiser regulatory agencies from the 50 states, the District of Columbia, and the U.S. territories of Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands. During May 2011, we conducted four telephone pretests of the survey instrument with officials from different state regulatory agencies. The pretest results were incorporated into the survey questions as warranted. We fielded the survey to officials from the 55 state and territorial regulatory agencies on June 7, 2011. The survey had a closing deadline of July 8, 2011. Fifty of the 55 agencies completed the survey; the remaining five either did not start or did not finish the survey. Among other things, the survey collected information on how the state and territorial agencies carry out their Title XI responsibilities (including submitting data to the national registry and following up on complaints against appraisers); agency funding and staffing issues; and state views on ASC, appraisal-related provisions in the Dodd-Frank Act, and the $250,000 appraisal exemption threshold. The results are contained in an e-supplement to this report that includes the questions asked and a summary of the answers provided. View the e- supplement at GAO-12-198SP.

Implementation of Dodd- Frank Act Provisions

To describe ASC’s plans and actions to implement Dodd-Frank Act provisions, we reviewed pertinent sections of the act and analyzed ASC records and other documents that described specific tasks stemming from the act and ASC’s progress in addressing them. These records and documents included ASC board meeting minutes, ASC Dodd-Frank Act summaries and implementation timelines, and Federal Register notices. We also interviewed ASC board members and staff about progress and challenges in implementing these tasks. To gain perspective on ASC’s resources for implementing the Dodd-Frank Act provisions, we reviewed information from ASC’s annual reports and financial statements. More specifically, we examined the number and responsibilities of ASC’s staff positions and ASC’s revenues, expenses, and reserves from fiscal years 2001 through 2010. In addition, we estimated ASC’s fee revenues in 2014 under two scenarios. The first assumed no change in the number of appraiser credentials after 2010, and the second assumed a 9.4 percent drop after 2010 (mirroring the decline that occurred from 2007 through 2010). To examine ASC’s strategic planning efforts, we interviewed ASC board members and staff about their planning process and time frames. We also reviewed the GPRA Modernization Act (GPRAMA), which provides a framework for federal agency’s strategic plans.

Dollar-Based Appraisal Exemption Thresholds

To examine existing dollar-based appraisal exemption thresholds, we analyzed data from FFIEC’s Home Mortgage Disclosure Act (HMDA) database and obtained stakeholder opinions about the thresholds. HMDA requires lending institutions to collect and publicly disclose information about housing loans and applications for such loans, including the loan type and amount, property type, and borrower characteristics. These data are the most comprehensive source of information on mortgage lending and are estimated to capture about 75 to 85 percent of conventional mortgages (those without government insurance or guarantees) and 90 to 95 percent of mortgages insured by HUD’s Federal Housing Administration. Lenders with small total assets and lenders that do not have a home or branch office in a metropolitan statistical area do not have to report HDMA data. We analyzed HMDA data from 2006 through 2009 to determine the proportion of mortgages less than or equal to $250,000—the regulatory threshold at or below which appraisals are not required for federally related transactions.purchase and refinance mortgages for single-family (one-to-four unit) site- We focused primarily on built residences. At the national level and for each state, we calculated the proportion of these mortgages that were $250,000 or less by year of origination and for all 4 years combined. In addition, for each state, we calculated the change in the proportion of mortgages at or below the $250,000 threshold from 2006 through 2009. Using FHFA’s purchase- only house price index, we also examined the extent to which states with large increases in the proportion of mortgages at or below the threshold also experienced large house price declines over the 4-year period. We analyzed mortgages for residential multifamily housing (five or more units) and manufactured housing separately and at the national level only. Specifically, we calculated the proportions of these mortgages that were at or below the $250,000 threshold, combining data for 2006 through 2009. Due to a lack of readily available data, we were not able to perform a similar analysis for real estate-secured business loans, which have an appraisal exemption threshold of $1 million or less. To assess the data reliability of the HMDA data we used, we reviewed documentation on the process used to collect and ensure the reliability and integrity of the data; reviewed Federal Reserve and HUD analysis of the data’s market coverage; conducted reasonableness checks on data elements to identify any missing, erroneous, or outlying data; and spoke with officials from the Federal Reserve and the Bureau of Consumer Financial Protection (also known as the Consumer Financial Protection Bureau or CFPB) knowledgeable about the data. We concluded that the data we used were sufficiently reliable for our purposes.

To provide perspective on the impact of the $250,000 threshold, we relied on information in a report we issued in July 2011, which included information on the proportion of residential mortgage originations from 2006 through 2010 that had appraisals. In that report, we indicated that the enterprises and the Federal Housing Administration (FHA) have commanded a large share of the mortgage market in recent years and that these entities require appraisals on the large majority of the mortgages they back, both above and below $250,000.

To obtain stakeholder views on the $250,000 and $1 million thresholds, we interviewed ASC board members and staff; officials from the federal financial institutions regulators, FHFA, HUD, and CFPB; and representatives from the Appraisal Foundation and state appraiser regulatory agencies. We also interviewed other appraisal industry participants, including trade groups that represent appraisers and lenders and officials from the enterprises. Additionally, we drew on the results of our state survey, which included questions about the $250,000 threshold.

National Appraisal Repository

To obtain stakeholder views about whether new means of data collection, such as the establishment of a national appraisal repository, might assist ASC in carrying out its responsibilities, we interviewed ASC board members and staff; officials from federal financial institutions regulators, CFPB, FBI, FHFA, HUD, and the enterprises; representatives of the Appraisal Foundation; and state appraiser regulatory officials. We also interviewed representatives of trade groups that represent appraisers and lenders, as well as individual mortgage lenders, appraisers, and appraisal industry researchers.

We conducted this performance audit from November 2010 to January 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Data on the Number of Appraiser Credentials and State Enforcement Actions Against Appraisers

ASC’s national registry of state-licensed and -certified appraisers contains information on four classes of appraiser credentials: certified general, certified residential, licensed, and transitionally licensed. As of December 31, 2010, the database reported nearly 110,000 active appraiser credentials. The number of appraiser credentials reported by state appraiser regulatory agencies ranged from 8 in the Northern Mariana Islands to 13,050 in California (see table 3.) Nationwide, certified general and certified residential appraiser credentials accounted for about 84 percent of the total appraiser credentials.

As previously noted, the national registry contains information on disciplinary actions taken and reported by state regulators. Table 4 summarizes this information for calendar years 2001 through 2010.

Appendix III: Potential Benefits and Challenges of a National Appraisal Repository for ASC

The Dodd-Frank Act asked us to examine whether new means of data collection, such as the establishment of a national repository of appraisal information, would benefit ASC’s ability to perform its functions. We spoke with a range of appraisal industry stakeholders, including appraisers, lenders, regulators, and ASC officials about what a national repository might contain, its potential benefits and challenges, and the extent to which it would help ASC carry out its responsibilities.

The Dodd-Frank Act does not specify the information that a national appraisal repository would contain if one were to be created. Appraisal industry stakeholders we spoke with identified a number of possibilities, ranging from a compilation of scanned appraisal reports to a searchable database of appraisal information such as the location and characteristics of the subject property, name of the appraiser and mortgage lender, appraised value, and properties used as “comparables.” Some stakeholders indicated that a repository could potentially be linked to other data such as geographic information (e.g., digital maps), mortgage and borrower characteristics (e.g., status of mortgage payments), and housing market and economic statistics (e.g., local sales activity and rental and vacancy rates). Stakeholders said that multiple listing services and other proprietary databases contain some of this information.

While the potential uses of a repository would depend on who had access to it, appraisal industry stakeholders identified a variety of benefits that a repository could provide. Some indicated that a repository could help regulators detect problematic appraisals and appraisers. For example, knowing the entities associated with every appraisal (e.g., appraiser, appraisal management company, and lender) could help regulators identify patterns of questionable behavior by individuals or firms. Additionally, the ability to view appraisals of the same property over time and appraisals for nearby properties could help regulators identify outliers (i.e., unusually high or low values) that may merit further investigation. Appraisers also could benefit from a repository by having access to additional data with which to perform their valuations. For example, one ASC board member said a repository that included the selling price of the comparables used in each appraisal would give appraisers access to sales information in states where such data are not publicly disclosed. In addition, industry stakeholders indicated that an appraisal repository could be integrated with mortgage portfolio information to help manage financial risk—for example, by assessing relationships between appraisal quality and loan performance. The government-sponsored enterprises Fannie Mae and Freddie Mac (the enterprises) have undertaken a joint effort, under the direction of FHFA that illustrates this concept. Known as the Uniform Mortgage Data Program (UMDP), this effort will collect consistent appraisal and loan data for all mortgages the enterprises purchase from lenders and will produce a proprietary dataset for use by the enterprises and FHFA. According to officials from the enterprises, UMDP will allow the enterprises to work with lenders to resolve any concerns regarding appraisal quality prior to purchasing mortgages.

While a repository could provide some benefits, appraisal industry stakeholders also identified a number of challenges related to data collection and analysis, access rights, and resources. For example, they indicated that reporting of appraisal data would need to be more standardized for the repository to be useful. They also said questions exist about the extent to which appraisal reports are proprietary and could be included in a database that would potentially be widely accessible. Some stakeholders said analyzing data in a repository would not be straightforward because potential differences in the scope of work for each appraisal (e.g., an interior and exterior inspection versus an exterior inspection only) would complicate comparison of appraisal results. Additionally, some stakeholders expressed concerns about who would have access to the repository and whether broad access would encroach upon the privacy of appraisers. Further, a number of stakeholders and ASC officials said that a national repository could be very costly to create and maintain. They indicated that ASC was not the appropriate agency to develop a repository because it lacks the necessary resources. Some stakeholders also said that development of a repository would partially duplicate the enterprises’ efforts under UMDP.

Appraisal industry stakeholders and ASC officials questioned how much a national repository would help ASC carry out its monitoring responsibilities. They said that the high-level nature of ASC’s monitoring responsibilities did not require detailed information on individual appraisals. For example, ASC officials said it was unclear how a repository would help them monitor states’ appraiser regulatory programs, a process that involves examining state appraiser licensing and certification requirements and assessing their compliance with Title XI. Other industry stakeholders said they were not sure how ASC could use a repository because ASC is not charged with assessing appraisal quality or proactively identifying individual appraisers or institutions responsible for problem appraisals. Additionally, one appraisal industry participant noted that analyzing information from a repository could require expertise and resources that ASC may not currently have.

Appendix IV: Status of ASC Tasks Stemming from the Dodd-Frank Act

Subtitle F, Section 1473 of the Dodd-Frank Act, includes amendments to Title XI of FIRREA. These amendments expand ASC’s responsibilities and authorities. We identified 27 tasks for ASC stemming from the Dodd- Frank Act provisions. A description and the status of each task as of October 2011 is presented in the table below.

Appendix V: Comments from the Appraisal Subcommittee

Appendix VI: Comments from the Consumer Financial Protection Bureau

Appendix VII: Comments from the National Credit Union Administration

Appendix VIII: Comments from the Office of the Comptroller of the Currency

Appendix IX: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Steve Westley, Assistant Director; Alexandra Martin-Arseneau; Yola Lewis; John McGrail; Marc Molino; Carl Ramirez, Kelly Rubin; Jerome Sandau; Jennifer Schwartz; Andrew Stavisky; and Jocelyn Yin made key contributions to this report.