WASHINGTON -- Registered real estate appraisers are fighting back with a lawsuit over a regulation that would slash their share of the home-sale business.

In the 1989 thrift bailout law, Congress directed that insured financial institutions seek valuations from state-certified or licensed appraisers before making real-estate-related loans.

The Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and Office of Thrift Supervision decided the law should apply only to properties valued at $100,000 or more, twice the level sought by the appraisers.


The National Association of Independent Fee Appraisers, in the lawsuit filed in federal district court this month, said the agencies are playing fast and loose with the intent of the law by setting the higher threshold.

More than half of all real estate transactions are for property valued below $100,000, and those consumers need protection from faulty appraisals by unlicensed individuals, said Matthew Schneider of Willkie, Farr & Gallagher, the New York law firm that represents the association.

Banking industry representatives said appraisers were overstating the risk of unaccredited appraisals.

"It is not a high-risk kind of lending," said John Alderman, regulatory counsel for the Independent Bankers Association of America. The IBAA found in a recent survey that banks lose little money in lower-value transactions.

Expense Is Cited

Bankers also say that reducing the appraisal threshold would be bad for consumers.

Alan R. Tubbs, president of the American Bankers Association, has said that a threshold below $100,000 would cause "needless expense and significant delays for American home buyers and small businesses."

The Consumer Federation of America objects to the exemption as "purely another political move to satisfy" interest groups.

The Consumer Federation, in a survey of about 20 large and medium-size banks, said it found that certified appraisers charge no more for their services than uncertified ones, said Peggy Miller, banking director.

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