House Democrats plan amendment; action may mean more work for appraisers, less legal action for regulators.

Appraisers have had life rough lately, but with some House Democrats now ready to introduce an amendment that would permanently assure their role in the real estate industry, some lobbyists in Washington are joking that Firrea, short for the Financial Institutions Reform and Recovery Act, may now more suitably mean "Finally I'm a Rich Real Estate Appraiser."

The four House members--House Banking Committee Chairman Henry B. Gonzalez, D-Texas, New York Democrats Floyd Flake and Charles E. Schumer and Peter Deutsch, D-Fla.--issued a joint statement May 4 announcing their intention to sponsor the amendment that would require all real estate evaluations to be performed by a licensed and certified appraiser.

The provision would advance an agreement appraisers reached with regulators.

Under the joint regulation issued May 3, regulators agreed to invoke the previously ignored departure provision of the Uniform Standards of Professional Appraisal Practice. That provision allows appraisers to perform less-meticulous appraisals depending on the needs of the customer.

But the provision House members plan to introduce will take that agreement one step beyond the regulation by making it a mandate rather than just allowing it.

The joint statement said when regulators raised the threshold, many considered it a direct repeal of the intent and effect of present federal law, and that the four members would propose an amendment to Title XI of Firrea to "preserve the requirement that financial institutions must retain the services of state-certified and state-licensed professional appraisers to evaluate the collateral which secures the home mortgage loans these institutions make"

"Regulators can still set the threshold, but it can't exceed $250,000," said one House source, adding that House leaders believe the amendment will solve one of the major sticking points brought about by the regulators' actions--what the standards should be for evaluators.

"The bill puts everyone in a better position," he said. The amendment will eliminate the need for the two-tiered industry that Flake had opposed creating--one for appraisers and one from evaluators.

"Appraisers won't lose that business, and bank examiners will get a clear definition of what standards are required. Consumers also won't have to worry as much about getting a low-ball appraisal from an unqualified source--it's good public policy."

But not everyone thinks so. "It's an unfortunate turn of events," said Diane Casey, regulatory counsel for the Independent Bankers Association of America.

"This fight is being fought on the wrong battlefield ... this [rule] is supposed to contribute to safety and soundness, not to keep the appraisal industry gainfully employed," Casey said.

Having to rely on appraisers to do evaluations will increase costs for consumers without contributing to safety and soundness, she added, "and you might as well double the cost of an evaluation right now."

The IBAA plans to fight the amendment, Casey said.

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