The subject of appraiser trainees, and the preparation for them to enter into the profession remains a hot topic of discussion. Appraisal Institute Government/External Relations Director Bill Garber offers his views, as well as key roles regulatory agencies will play within the appraisal arena.
As to additional issues needing to be addressed when it comes to trainees moving forward, Garber said the appraisal profession lacks diversity.
“Appraisal is ranked as one of the least diverse professions in the United States. Entry into the profession can be difficult, particularly garnering the necessary experience to satisfy minimum qualifications criteria,” he told Valuation Review. “Further, some state requirements vary greatly in the requirements for trainee appraisers. Some states require twice of much education than the minimum AQB criteria for trainees. The issue is exacerbated by restrictions placed by some lenders on trainee inspections, which limits the ability of trainees to gather the necessary field experience.”
Garber also suggested existing guidance and regulation relating to the acceptability of trainee inspections needs to be clarified. Supervisory appraisers should be able to deploy trainee appraisers to complete inspections and/or cosign the report once competency to complete inspections is reached. And support is needed as far as existing initiatives such as the Appraiser Diversity Initiative that promotes appraisal careers amongst diverse candidates and aspiring appraisers.
“There should be support as far as the consistent acceptance at the state level for alternative experience pathways for aspiring appraisers, such as Practical Applications in Real Estate Appraisal (PAREA). All stakeholders and agencies should encourage 100 percent state adoption of experience credit for PAREA programs approved by the AQB (Appraiser Qualifications Board),” Garber suggested. “Promote and encourage greater consistency amongst state regulatory agencies by advancing the Portal for Appraisal Licensure and interstate compacts that promote consistency in licensing requirements. The PAL would create a centralized clearinghouse of appraiser licensing information, including education and experience logs for state regulators to pull down in reviewing license applications. An interstate compact could standardize minimum education and experience requirements and promote reciprocity, while reducing compliance costs for all appraisers.”
Improvements need to be made regarding communication between stakeholders, homeowners and appraisers with Garber indicating that ROV processes and procedures vary by lender/institution. Some lenders, he said, have proprietary forms, while some lenders do not accept ROV requests at all. Federal loan guarantee programs provide a level of structure around ROV processes – the VA has the Tidewater Initiative, and the FHA maintains guidance on ROV process within its handbook. Separately, current practice does not provide sufficient information to consumers/borrowers. “The appraisal stands” is what is commonly communicated to borrowers following a ROV request that agrees with the appraisal.
“Compared to credit reporting, this communication is insufficient and leaves the consumer wondering how the lender reached this conclusion,” Garber said. “Were the subject property, neighborhood, and improvements sections complete and accurate? Was the data and analysis presented in the approaches to value complete, appropriate, and accurate? Were the comparable sales locationally, physically, and functionally the most like the subject property?
“Additionally, the bank regulatory agencies, loan guarantee agencies, FHFA and the CFPB should work with stakeholders to develop standardized and consistent guidance for lenders on ROV process and procedure,” Garber noted. “Such guidance should explore ways to model key components of the VA Tidewater Initiative – particularly Notice of Value opportunities for appraisers to communicate appraisal results that are below contract prices, providing ways for parties to share relevant information (different than a ’data dump’) with the appraiser prior to delivery of the appraisal report to the lender/client.”
The AI executive also suggested to amend ECOA to require consumers receive an explanation from the lender for a denial of a ROV request.
“The contents of the explanation should include analysis completed by the lender relating to the completeness, appropriateness, and accuracy of the appraisal report and the qualifications of the reviewer,” Garber said.