The revised Interagency Appraisal and Evaluation Guidelines, published in December 2010, actually were not issued as a result of Dodd-Frank; they exist separate and independent of Dodd-Frank. They were proposed in 2008, two years before Dodd-Frank, and finalized just after Dodd-Frank.
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One of the things Dodd-Frank did was task the U.S. Government Accountability Office (GAO) with writing two reports to Congress in which they were critical of the oversight of state appraisal boards and appraisers.
If you’re doing evaluations internally, you need to think about how you are getting information on physical condition. The term “average condition” is frowned upon, especially if it’s unsupported and assumed.
In many cases, standard operating procedures for evaluations that were once considered acceptable to regulators are now deemed wholly unacceptable, due to Dodd-Frank.
There is a mandate that all evaluations and appraisals be reviewed prior to the final credit decision. Worth noting is an expectation on the part of the regulator that the person who does the evaluation has the appropriate education, experience and competence, specifically with respect to the property type, the risk and the complexity involved in the transaction.
One consumer protection regulation that will impact how you perform evaluations on the residential side is Dodd-Frank's Section 1474: Equal Credit Opportunity Act (ECOA) § 701(e), an amendment requiring a free copy of an appraisal/valuation.
Late yesterday, the CFPB published compliance guides for its ECOA Valuations Rule and the TILA Higher-Priced Mortgage Loans (HPML) Appraisal Rule. Both rules were finalized in January of this year and take effect in January of 2014.
Appraiser Blacklisting and Defamation
Three Predictions for Your Next Regulatory Exam
In a blog post last week, we alerted you that the agencies had released a new, 211-page proposal to implement Dodd-Frank Section 1471, which added Section 129H to the Truth in Lending Act. That section imposes tougher appraisal requirements on higher-risk mortgage loans. The next day, we circulated our preliminary analysis of the proposal.