The Title/Appraisal Vendor Management Association (TAVMA) says federal consumer potection bill H.R.1728 would dismantle safeguards designed to protect appraiser independence.
H.R.1728 would, in effect, repeal the Home Valuation Code of Conduct initiated by Fannie Mae and Freddie Mac last year, permitting discredited business practices that were key factors behind the real estate bubble and crash, TAVMA says.
Specifically, the federal legislation, along with similar bills on the state level, would allow mortgage brokers to select hand-picked appraisers and communicate with them regarding property values.
"For more than 20 years, various federal bodies have struggled with ways to prevent appraiser pressure, " says Jeff Schurman, executive director of TAVMA. "Finally, an effective mechanism has been put in place to prevent this practice, and in less than six months, pressure from the same groups that created the real estate crisis are on the verge of overturning it. Is our collective memory really that short?"
The new bill, if passed in current form, would reinstate business practices that have led to appraiser pressure, the organization says. Commission-based professionals, such as mortgage brokers, would again be in a position to unduly influence transactions, TAVMA argues.
"If Congress wants to help consumers, and not just a small group of interested parties, it will make sure that it retains safeguards to protect appraiser independence before it discards new rules that are already doing this job," Schurman adds.