Study finds new appraisal regs to have little effect.
The group determined that despite the recently adopted increase in the price ceiling, or appraisal de minimis level, by several federal financial regulators, most lenders will continue to rely on licensed or certified appraisers in real estate transactions in their efforts to operate consistently with one another.
The de minimis study group, comprised of qualified, full-time residential and non-residential appraisers, was appointed earlier this year by the NAR's Real Estate Appraisal Committee to look at possible ramifications the increase of the de minimis level could have on the use of licensed or certified appraisers by lenders involved in real estate transactions where the loan is one issued or insured by the federal government. It reached its conclusions in April after meeting with officials from the U.S. Office of Management and Budget (OMB) and the U.S. Department of the Treasury.
The study group also concluded that the rise in the de minimis level would have little effect because: * Appraisal users have already established or will establish criteria that encourages or requires the use of licensed/ certified appraisers in their transactions. * Most banks and lenders under the federal regulatory umbrella will elect to use licensed or certified appraisers due to audit concerns and a desire to operate under a uniform set of rules * Many states, regardless of the de minimis level, require that all appraisal work be performed by licensed or certified appraisers
* Only 2 percent of assets owned by the Resolution Trust Corp. (RTC) are comprised of one- to four-family residential, non-performing loans or real estate. The majority of real estate assets owned by the RTC are in non-residential properties.
According to NAR President Dorcas T. Helfant, the association's Real Estate Appraisal Committee will continue to monitor the de minimis issue, rather than take a position on it, based on the study group's findings.
"After reviewing this issue, we came to the conclusion that the levels will be meaningless, since most users of appraisers will rely on licensed or certified professionals no matter what, in an effort to avoid hassles with auditors down the road," said Rick Baumgardner, a Realtor and appraiser with Baumgardner and Associates, Elizabethtown, Kentucky., and chairman of the de minimis study group.
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|Title Annotation:||real estate appraisal regulations to have minor effect on public and real estate appraisal industry|
|Publication:||Real Estate Weekly|
|Date:||Jul 1, 1992|
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