Agenda Summary
2006 Appraisal Committee
National Association of REALTORS®
2006 Midyear Legislative Meetings & Trade Expo
Marriott Wardman Park
New York Room, Lobby Level
Wednesday, May 17, 2006
8:00 AM - 10:00 AMChair: H Dan Derbers, Baton Rouge, LA
Vice Chair: Vic Knight, Chapel Hill, NC
CommitteeLiaison: Cynthia Shelton, Lake Mary, FL
Committee Executive: Chere Larose Senne, Chicago, Il, Tom Heinemann, Washington, DC
To serve the specialized needs of those members with an interest in real estate appraisal by: 1) monitoring, reviewing, examining, and analyzing appraisal-related issues for NAR; 2) referring appraisal-related issues to appropriate NAR committees for their consideration; and 3) providing recommendations on appraisal- related issues to the Board ofDirectors.
I. Call to Order and Introductions Dan Derbes
II. Approval of Minutes from Last Meeting Dan Derbes
III. Old Business
A. Legislative/Regulatory Tom Heinemann1. Appraisal Sections of HR 1295 - The Responsible Lending Act Update
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) was enacted to protect federal financial and public policy interests inreal estate related transactions by requiring that real estate appraisals be performed by individuals with demonstrated competency. Since FIRREA was passed over fifteen years ago, and because it mandated state licensing under federal standards, the regulatory structure for appraisers has evolved into a unique and complex system. It involves licensing boards in the various states, qualification criteria and uniform standards set by the Appraisal Foundation and federal oversight by the Appraisal Subcommittee of the Federal Financial Institutions Examinations Council. The various state licensing boards license, certify and provide oversight and enforcement of nationally recognized standards, the Uniform Standards of Professional Appraisal Practice (USPAP), and state laws. Since Title XI was enacted, it has been difficult to achieve necessary consistency among the states for enforcement of both standards and certification requirements.
NAR believes that states should consistently enforce both standards and certification requirements, that the Appraisal Foundation should be more responsive and accountable to its professional association sponsors and that faulty appraisal reports and deficient appraisers should be reported to the appropriate state regulatory boards. The USPAP standards should ensure public trust in the appraisal profession.
Appraisers are adequately regulated at both the state and federal levels and the system of public funding of private organizations to develop appraisalstandards and appraiser qualifications is satisfactory.
With a patchwork of state laws and ineffective federal oversight allowing for only “minimum” qualifications criteria for licensing and certification in some cases, states andthe federal oversight bodies have too often not carried out their responsibility to enforce the standards as required by the federal law.
In March, 2005 Congressmen Bob Ney (R-OH), Chairman of the Subcommittee on Housing, and Paul Kanjorski (D-PA) introduced H.R. 1295, the Responsible Lending Act. The bill is intended to protect consumers against deceptive lending practices by, among other things, enhancing appraisal standards and oversight. The legislation would require lenders to obtain a written appraisal for higher cost mortgages. H.R. 1295 would enhance the accountability of the Appraisal Subcommittee, improve federal oversight of state appraisal programs and protect mortgage borrowers by making a number of changes to Title XI of FIRREA. The bill also enhances the independence of appraisers by prohibiting undue pressure on appraisers to meet a certain property value. NAR's position on the appraisal sections of H.R.1295 was established at the National Conference in October, 2005.
2. Pending Predatory Lending Legislation
A number of bills have been introduced in the 109th Congress that address the issue of predatory and subprime lending. One of the bills that has been mentioned as a vehicle for his issue should Congress decide to address it is H.R. 1295, the Responsible Lending Act. Introduced by Representatives Bob Ney (R-OH) and Paul Kanjorski (D-PA), this bill, also known as the Ney-Kanjorskibill, has gained the support and backing of lenders throughout the country because of its preemption of state laws addressing subprime and predatory loans. At the C.A.R. September 2005 business meetings, C.A.R. took the following position: “that C.A.R. ‘OPPOSE,’ and seek the support of NAR to ‘OPPOSE,’ H.R. 1295 because it includes: -- A federal preemption ofCalifornia’s subprime lending law;
-- Federal requirements for a uniform mortgage broker license and
-- A hard numerical threshold on debt to income ratio for borrowers;”At NAR’s October business meetings, C.A.R. asked the Conventional Finance Committee to consider C.A.R.’s policy. The Committee referred the motion to the NAR Subprime Lending Working Group for consideration. H.R. 1295 has 38 cosponsors and has been referred to the Subcommittee on Housing and Community Opportunity.B. Fannie Mae’s Appraisal Form – Update Dan Derbes
C. The Appraisal Foundation AdvisoryCouncil Bob Galliher
D. Appraisal Foundation Trustee Report Joe Traynor
E. RAA/GAA Designation Update Cheré LaRose-Senne
IV. New BusinessA. The Appraisal Foundation Advisory Council Update Bob Galliher
B. ARELLO Meeting Update Bob Galliher
C. AARO Meeting Update Frank Gregoire
D. Guest Presentation on New Mortgagee Letters
E.Doug Walters, Housing Program Policy Specialist, Home Valuation Policy Division, Federal Housing Authority
V. Other BusinessA. Appraisal Networking Session Vic Knight
“Appraisal Qualifications Board (AQB): New Qualification Criteria for 2008”
Presented by: Rick Baumgardner, GAA, AQB Member
VI. Adjourn
AddendumNAR Conflict of Interest Statement
Ownership Disclosure Policy
1. When NAR has an ownership interest in an entity and a member has an ownership interest* in that same entity, such member must disclose the existence of his or her ownership interest prior to speaking to a decision making body on any matter involving that entity.
2. If a member has personal knowledge that NAR is considering doing business with an entity in which a member has any financial interest**, or with an entityin which the member serves in a decision-making capacity*, or wit, then such member must disclose the existence of his or her financial interest or decision making role prior to speaking to a decision making body about the entity.
3. If a member has a financial interest in, or serves in a decision-making capacity for, any entity that the member knows is offering competing products and services as those offered by NAR, then such member must disclose the existence of his or her financial interest or decision-making role prior to speaking to a decision making body about an issue involving those competing products and services.
After making the necessary disclosure, a member may participate in the discussion and vote on the matter unless that member has a conflict of interest as defined below.
Conflict of Interest Policy
A member of any of NAR’s decision making bodies will be considered to have a conflict of interest whenever that member:
1. Is a principal, partner or corporate officer of a business providing products or services to NAR or in a business being considered as a provider of products or services (“Business:); or
2. Holds a seat on the board of directors of the Businessunless the person’s only relationship to the Business is service on such board of directors as NAR’s representative; or
3. Holds an ownership interest of more than 1 percent of the Business.
Members with a conflict of interest must immediately disclose their interest at the outset of any discussions by a decision making body pertaining to the Business or any of its products or services. Such members may not participate in the discussion relating to that Business other than to respond to questions asked of them by other members of the body. Furthermore, no member with a conflict of interest may vote on any matter in which the member has a conflict of interest, including votes to block or alter the actions of the body in order to benefit the Business in which they have an interest.
________________________________________
*Ownership interest is defined as the cumulative holdings of the member, the member’s spouse, children, siblings and to any trust, corporation or partnership in which any of the foregoing individuals is an officer or director, or owns, in the aggregate, at least 50% of the (a) beneficial interest (if a trust), (b) stock (if a corporation) or (c) partnership interests (if a partnership).
**Financial interest means any interest involving money, investments, credit or contractual rights.
