Appraisal Reform

Written By: Bonnie Wilt-Hild

Beginning October 19, 2010 how we conduct business with regard to residential mortgage appraisals will receive a much needed overhaul thanks to the passage of the Dodd-Frank financial reform legislation. This date is also the sunset date on the much beleaguered Home Valuation Code of Conduct (HVCC) which will make way for the new rules under Dodd-Frank. Now I am sure that most of you are pretty familiar with my feeling towards HVCC based on my previous blog posts, however I am curious to see if the changes to current policy will make that much of a difference where the current standards are concerned and at this point there are not real answers because key players such as FNMA are still working on the interim provisions.

A lot of industry professionals still have questions regarding the key points of the legislation and how it will affect the mortgage industry as a whole, so I thought I might highlight the key talking points of the legislation if for no other reason but to provide a little bit of insight as to what to expect within the coming months. This is by no means a complete recap of the legislation people but simply a brief description of the more relevant provisions of the law with recognition that how these provisions will be implemented from an industry standard is still up in the air to some degree.

To begin I would like to state that the appraisal requirements can be found in the legislation under Subtitle F – Appraisal Activities and the pertinent sections being 9501-9506, for those of you who feel inclined to read it, and contains new rules for everything from enforcement mechanisms for violations of the requirements to regulations regarding the use of broker price options (BPOs). In general it not only imposes new regulations to the appraisal process overall but implements changes to existing legislation such as TILA, ECOA as well as RESPA so for those of you who thought that you had your Provider of Service Addendum nailed, get ready to add the names of your AMC as well as their fee which now needs to be disclosed. Additional highlights include;

1. Appraiser compensation
2. New borrower disclosure and free copy of the appraisal to the same
3. Requirements for subprime mortgages
4. Unlawful coercion, extortion, bribery etc where interacting the appraisers are concerned.
5. Appraiser qualifications
6. AMC oversight

Needless to say the changes, once implemented will require industry professionals to modify how they do business with regard to the appraisal piece of the mortgage transaction however what changes need to be implemented from a procedural standpoint can’t be determined until key players decided what the most effective policy will be. With that said, I will suggest some further training on the subject once the new rules have been implemented to avoid any compliance mishaps. As always, Happy Underwriting!

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University ( as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at:

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