Appraisal Organizations Call for Fed
to Drop BPOs in Loan Modification Plan

In a February 3 letter, the Appraisal Institute strongly urged the Federal Reserve Board (FRB) to require the use of appraisals performed by certified appraisers as part of its Homeownership Preservation Policy for Residential Mortgage Assets program. Currently, the program, which intends to guide the Federal Reserve Banks if the FRB were to control residential mortgage assets, would permit the use of broker’s price opinions to ascertain loan-to-value ratios as part of the modification of loans where the value of the collateral is less than the loan amount.

While the letter supported the overall intent of the Fed’s policy – reducing the number of homes in foreclosure – the Appraisal Institute pointed out that use of a BPO for any purpose other than establishing a purchase or selling price of property is illegal in at least 24 states. Further, they pointed out that allowing the use of BPOs, which are largely unregulated and are performed with little oversight and training, amounts to a significant step toward loosening valuation requirements at a time when the federal government should be ensuring that taxpayer “bailout” dollars are not exposed to unnecessary risk.

The Appraisal Institute was joined by the American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and National Association of Independent Fee Appraisers in penning the letter. For more information, contact Bill Garber, the Appraisal Institute's Director of Government and External Affairs at 202-298-5586 or bgarber@appraisalinstitute.org.

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