ASB Public Meeting: Appraisal Standards in USPAP?
Should USPAP make an accommodation for evaluations?
(Washington, DC) November 6, 2019 – Responding to comments that “the appraisal profession is at a major turning point” and “this is a critical moment for appraisers, especially those who provide services to lenders,” the Appraisal Standards Board (ASB) has asked for “input about whether USPAP should make an accommodation for evaluations, and if so, how to distinguish them from appraisals.”
After issuing a Concept Paper and call for comments on the subject of Evaluation Standards in USPAP on September 3, 2019, the ASB then heard testimony from three panels at a public meeting on October 18th. The first panel included lenders and financial institution contractors; the second was comprised of state regulators; and the third panel represented professional appraiser organizations.
One panelist concluded, “Given the likely increase in evaluation activity…. the ASB, as the entity entrusted with providing guidance to appraisers and other valuation professionals through the Uniform Standards of Professional Appraisal Practice (USPAP), needs to provide clearer and more robust guidance on evaluations.”
Some Takeaways from the Public Hearing Testimony and Comments (so far)
• Lenders and financial institution contractors, who have decades of experience with evaluations, indicate that their institutions follow the Interagency Guidelines and use evaluations judiciously. Some believe that standards for evaluations could improve consistency;
others think new standards are unnecessary and would add a layer of confusion.
• In some states, evaluations are not subject to state regulatory authority. Regulators expressed concern that consumers may be harmed by an increased use of evaluations.
• Appraisal groups reported that evaluations are generally not performed by licensed or certified appraisers. Sometimes this is because appraisal management companies find it simpler to hire non-appraisers, avoiding the complexity of differing state requirements. In
other cases, appraisers are uncertain about how to do so and fearful about how state regulators might interpret requirements for evaluations.
• Many appraisers oppose any change to the USPAP definition of appraisal and do not want USPAP standards to be “watered down.” They worry that consumers, politicians, and reporters may not understand the difference between an evaluation and a USPAP-
compliant appraisal and predict that public trust in all valuations may be adversely impacted “…when the next crash occurs, resulting in significant foreclosures and bank losses.”
Wayne R. Miller, Chair of the Appraisal Standards Board, said “We deeply appreciate the contributions of the panelists and all of the thoughtful comments received to date. The ASB will carefully consider all points of view and has not made a decision about whether to propose changes in how USPAP addresses evaluations.”
The Appraisal Foundation is the nation’s foremost authority on the valuation profession. The organization sets the Congressionally-authorized standards and qualifications for real estate appraisers, and provides voluntary guidance on recognized valuation methods and techniques for all valuation professionals. This work advances the profession by ensuring appraisals are independent, impartial, and objective. More information on The Appraisal Foundation is available at www.appraisalfoundation.org.