Appraisal Institute Applauds FHA for
Removing Cap on Appraiser Fees

The Appraisal Institute celebrated a significant victory for the appraisal profession this week as the Federal Housing Administration announced that it was reversing a policy that inadvertently capped fees to appraisers.

“FHA’s action is tremendously important to appraisers, and we’re thrilled with this result that benefits the profession and our members,” said Appraisal Institute President Jim Amorin, MAI, SRA. “We’ve long spoken out about the issue of transparency, so we’re pleased to see that FHA has heeded our consumer-friendly recommendations.”

The Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers in July urged FHA to rescind its previous policy, which was effectively accomplished in the new policy released Friday. View the letter by clicking here.

“This policy change marks a significant victory for consumers and residential appraisers, and it is part of the Appraisal Institute’s ongoing efforts to address disclosure and fairness concerns,” Amorin said.

The policies also address lender, appraisal management company and appraiser requirements relating to geographic competency, appraiser independence, appraisal portability (Mortgagee Letter 09-29) and appraisal validity periods (Mortgagee Letter 09-30). Many of the changes are favorable for appraisers, Amorin said. He noted that the Appraisal Institute will seek to work with Freddie Mac and Fannie Mae in order to address other concerns.

Bill Garber, Appraisal Institute director of government and external relations, encouraged Appraisal Institute members who perform FHA appraisals to discuss how they can help lenders achieve compliance with the new rules and how appraisers can offer appraisal services. As with the HVCC, lenders can engage appraisal firms directly, and there is no requirement to utilize the services of appraisal management companies, Garber said. Further, the appraisal function can be maintained internally by lenders in a variety of ways.

By becoming familiar with the new rules, Garber added, appraisers are in an excellent position to advise lenders on compliance and technical matters. For instance, lenders who maintain an appraisal function internally may choose to delegate the appraisal ordering function to salaried staff, Garber said. Lenders who opt to develop a rotational panel should retain qualified appraisers based on performance, education, experience as demonstrated through credentials and professional designations, he added.

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