On July 10, Governor Bobby Jindal signed legislation that will provide the Louisiana Real Estate Appraisers Board oversight and jurisdiction over Appraisal Management Companies doing business in Louisiana. Several members of the Louisiana Chapter of the Appraisal Institute were instrumental in getting this legislation passed by virtue of their contribution of both personal time and expense. Additionally, the Louisiana Realtors provided key support and contribution of both time and resources in shepherding this bill through the legislative process.

As most members are aware, our local chapter does not have the financial resources to retain a full time lobbyist. Accordingly, when local legislation or initiatives of concern to the appraisal industry are proposed, it is generally up to our members to provide their time and expertise to ensure that our positions are represented and advanced. Timely communication and a willingness to engage are essential. Often we are at a disadvantage in dealing with full-time legislative professionals and special interest groups with more resources. In that light, special thanks indeed to those members who were instrumental in researching and writing the legislation, meeting with representatives, senators, and aides, attending meetings, preparing testimony before the respective committees, and staying alert to changes and amendments that were constantly threatening to undermine our efforts.

Once enacted next year, this legislation will provide the Appraisers Board the ability to require the registration and oversight of AMC's and provide a mechanism that will comport with national legislation (H.R.1728) currently working it's way through congress (passed in the house last May, now in the senate finance committee) that will - among other things - require the national registration and regulation of AMC's.

The use of AMC's has proliferated since the implementation of the Housing Valuation Code of Conduct on May 1. In our last message, we reported on the genesis and basis for the Housing Valuation Code of Conduct. Now that we have had a few months to observe the manifestation of the HVCC, some of the more pronounced problems have come to light. Of particular concern are the unintended consequences of the immediate widespread utilization of new and/or inexperienced AMC's by many residential lenders seeking to comply with the spirit of HVCC. Some of the more vociferous complaints (from real estate agents, lenders and appraisers) involve the hiring of appraisers from outside their respective areas of expertise. Some appraisers are apparently being engaged from broadcast solicitations by AMC's based upon the lowest bid, quickest promised delivery date, or simply because they were next on the rotation list - without regard to their level of familiarity with the location of the subject property. In many instances appraisers are being hired to perform appraisals on property that is outside of their normal area of activity.

This problem is not restricted to our Louisiana market. The problem is apparently sufficiently widespread that on August 18 AI President Jim Amorin sent an e-mail statement to Appraisal Institute members reminding us of our obligation to USPAP, with specific reference to the competency provision - more specifically the geographical competency provision - that requires an appraiser to be competent in the geographical area in which he accepts an assignment. We are reminded that it is not sufficient to simply visit another community and secure some comparable sales from a real estate agent or another appraiser and then head back to your office and prepare a report. USPAP requires that the appraiser must be sufficiently knowledgeable with the geographical area to recognize the subtle nuances and trends within the subject market in order to provide a credible evaluation. In his statement, Amorin also reminds members of the Appraisal Institute that we must adhere to AI's code of Professional Ethics, which (among other things) addresses geographic competency.

As members of the Appraisal Institute we have historically prided ourselves on maintaining the highest standards and levels of excellence. That reputation is advanced when we adhere to sound appraisal practices and stay well informed on the issues that are transforming our industry.

The Appraisal Institute has done a fine job in keeping it's members updated on the issues outlined here. I would remind all members to visit the Appraisal Institute's website (appraisalinstitute.org) for current appraisal legislation and regulatory updates that are available to both members and non-members alike. One of the tabs across the top of the website: "News and Advocacy", has the very latest information on issues that concern our profession. Visiting this site on a regular basis will provide you with information that can be informative and useful to both you and your lender-clients.

Most recently, an updated outline on the "Myths and Realities of HVCC" is available for review and print-out. This outline can help in informing and educating some of your clients on the provisions of this regulation and disposing of some misconceptions attendant to HVCC. This is especially important now in light of the announcement last week by FHA to essentially adopt much of the HVCC provisions that had heretofore been largely applicable only to loans sold to Fannie Mae and Freddie Mac.

By keeping abreast of our transitional regulatory environment and industry transformation, we can provide the most timely information to our clients and better promote and demonstrate the professionalism of our industry.

Bill Kipf, SRA
2009 President
Louisiana Chapter