HUD Unveils "Appraiser Watch" - Claims New Protections For Homeowners
|July 19, 2002|
HUD To Hold Appraisers Accountable for Their Performance
WASHINGTON - - The Department of Housing and Urban Development intends to expand its protection of homeowners by proposing standards that will hold appraisers accountable for their performance. Faulty appraisals too often lead to default and foreclosure.
The new initiative, called Appraiser Watch, will be published soon as an Advance Notice of Proposed Rulemaking in the Federal Register. Once implemented, the standards will cover some 25,000 individuals who conduct appraisals on Federal Housing Administration-insured single-family homes.
"Faulty appraisals, whether intentional or not, contribute to the inability of homebuyers to make monthly mortgage payments and to the instability of neighborhoods," said HUD Secretary Mel Martinez. "The measure that we will be proposing is part of the Administration's on-going commitment to protect unsuspecting victims, who are often first-time homebuyers and minorities, from poor appraisals and unscrupulous appraisers."
Under the proposal, FHA will monitor appraisers' default and claim rates and will levy sanctions - including removal from its list of approved appraisers - against those whose rates are excessive.
"Excessive default and claim rates represent an unacceptable risk to taxpayers and to FHA," said Assistant Secretary for Housing - Federal Housing Commissioner John Weicher. "At the same time, we recognize that high defaults and claims do not by themselves prove wrongdoing. Some appraisers may experience them through no fault of their own, and these appraisers should not be subject to sanctions." For example, Weicher said that certain geographical areas might have higher than average default and claim rates because of local economic conditions, regardless of whether the appraisal is faulty.
Under the terms of the proposal, FHA will notify appraisers before removing them from its roster of approved appraisers. Any appraiser who receives such notice may meet with HUD officials to present evidence that factors beyond his or her control contributed to the excessive rates. The proposal will also make provisions for appraisers to be reinstated to the approved roster.
HUD will accept comments on the proposal from the public and other interested parties for 60 days after it is published in the Federal Register. The Department is especially interested in comments related to threshold levels for evaluating appraiser performance, age of the appraisals, mitigating circumstances that should be considered and severity of sanctions levied. Those comments should be submitted to: Regulations Division, Office of General Counsel, HUD, Room 10276, 471 7th Street SW, Washington, DC, 20410.
Other recent actions by the Bush Administration to protect homeowners and promote homeownership include:
Source: Department of Housing and Urban Development