Current Event Blog

Sample letter for submission to pass HB3624

HB 3624-A received bi-partisan and near-unanimous support (8 to 1) in the House Consumer Protection and Govern-ment Accountability Committee. The need for HB 3624-A has become apparent in Oregon and elsewhere as we experience the constrictions brought about by recent government responses to the collapse of the real estate market. The Home Valuation Code of Conduct (HVCC) is the result of a joint agreement made in March 2008 between Fannie Mae, Freddie Mac, the Federal Housing Finance Agency, and the New York State Attorney General to enhance the independence and accuracy of the appraisal process. It set up a firewall between lenders and appraisers, leading to greater reliance on Appraisal Management Companies (AMC’s) to manage the appraisal process.

However, this Code has led to unforeseen consequences for purchasers and property owners, lenders, appraisers and others involved in lending and the sale of real estate. Since the implementation of the HVCC, the majority of appraisal assignments for lending purposes are now placed through appraisal management companies. AMC’s are currently the only unregulated entity in the real estate valuation chain. Banks, mortgage lenders, title companies, real estate agents, and appraisers are all highly regulated via licensing laws.

Too many AMC’s have devalued appraisers to the point that many appraisers are leaving the field, after deciding that it is no longer a worthwhile career. This does not benefit purchasers or property owners, who expect a competent, credible and reliable appraisal of their home or commercial property, but who may not understand the process well enough to evaluate the problems, including:

• Minimal or no education requirements for AMC’s means that too often the lack of real estate knowledge on the part of AMC’s has led to poor results for the consumer. Real estate appraisers are required to have a college degree and continuing education, in addition to being licensed, while AMC personnel are not.
• Appraisers are required to complete appraisals in less than adequate time and their compensation level has dropped significantly. Sometimes Oregon appraisers have not been paid by AMC’s.
• Real estate appraisers work from comparables, which are comparisons of similar houses or properties that have recently sold in the surrounding neighborhoods. Frequently, an AMC will select an appraiser based on the lowest bid rather than on experience with certain types of property and geographic knowledge.
• AMC’s may require reduced turn-around times which adversely affect the ability to accurately research and verify data. This can mean that appraisals received by lenders are not accurate, thus having financial ramifications for consumers. Real estate agents must shoulder extra burdens in working with appraisers who are unfamiliar with the area or comparable sales data.

HB 3624 requires appraisal management companies to register with the Appraiser Certification and Licensure Board, and establishes standards for appraisal management companies working in Oregon. Six states have already adopted similar AMC regulation: Arkansas, California, Louisiana, Nevada, New Mexico, and Utah. Other states are in the process of adopting legislation as well.

Please vote “yes” on HB 3624-A as it moves to the floor. Thank you!