TheMReport

28 | TH E M R EP O RT FEATURE A stack of growing and outdated rules and regulations weighs down real estate ap- praisers in the United States. An antiquated regulatory structure and layers of federal rules and regulations add costs and a false sense of added protection that is duplicative and unnecessary. This aging regulatory structure, in place for nearly 30 years, is unlike any other in the federal system. There is no comparable system of federal regulation or oversight found within other real estate or finance industries. The two most prominent parties that engage with homebuyers—real estate agents and mortgage origina- tors—do not have federal oversight of their licensing functions. Many aspects of federal over- sight of the valuation profession's regulatory structure have remained static and out of touch while re- dundant red tape has been added. In stark contrast, finance mortgage methods have changed, and alter- native valuation methods are more advanced than ever. Consider some examples of how the world has changed since Congress, in the wake of the savings-and-loan crisis, enacted the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), which regulates the U.S. appraisal profession, in 1989: • The Dow Jones Industrial Average closed the year at 2,753 (vs. 2017's year-end closing of 24,719); • U.S. postage stamps cost 25 cents (vs. 50 cents in October 2018); • A new house's average cost was $120,000 (vs. $305,372 in 2017); and • A gallon of gas cost 97 cents (vs. $2.84 in October 2018). Technological changes since then abound. In 1989, Microsoft first released Office, the first satellite of the Global Positioning System was placed into orbit, and Nintendo began selling the Game Boy. (Also, the Berlin Wall fell, Chinese protesters gathered in Tiananmen Square, and the Exxon Valdez gushed oil in Alaska.) Nearly three decades later, U.S. appraisers continue to labor under rules and regulations virtually unchanged since that long-ago era. Today appraisers are inundated with unnecessary standards and training requirements. The federal government is unnecessarily play- ing "big brother" over the states when state regulatory agencies could function just fine on their own with a federal backstop au- thority to ensure states continue to meet minimum requirements. This places states in the very unusual position of being audited by a federal agency, which is unique in federal statute. Outdated and burdensome regu- lations have created a layering effect of rules and regulations, including: • Background checks without a federal mandate; • Unappealing supervisor- appraiser and trainee-appraiser requirements; • Imposing license renewal fees; • Extensive course requirements; and • Expensive mandates to pur- chase rules and regulations. The structure impedes innovation and can place appraisers at a disadvantage with competitors in other professions, such as accountants and attorneys. The bureaucracy created has imposed unnecessary costs throughout the system. In what other profession are practitioners forced to pay for the regulations that oversee their work? Additionally, appraisers are given little flexibility as to how they best can perform appraisals in service of their clients. Why Does it Matter? A home purchase is one of the most important lifetime investments anyone can under- take. For most Americans, it's the single biggest purchase they will ever make. Appraisals serve an essen- tial role in that purchase: they safeguard the fairness of home buying and selling for everyone. Appraisals conducted by highly trained and skilled professionals with knowledge of the local area are the very best protection for consumers and lenders. Without independent and qualified apprais- als, home-secured lending poses significant risks to consumers, investors, and the entire economy. Real estate appraisers are critical guardians of consumer inter- ests. They are uniquely qualified to protect consumer financial interests by providing an objective, reliable opinion of property value. Appraisers are independent third parties who perform a service for a fee rather than for a commis- sion contingent on the determined value, the approval of a loan. or the eventual sale of the property. The Impact on Appraisers A ll this over-regulation results in negative ef- fects on appraisers. Suffocating regulation is causing more and more appraisers–the majority of In Need of Reform Outdated and burdensome regulations are hurting the appraisal industry—could the solution lie in a new nationwide licensing structure? By Stephen S. Wagner, MAI, SRA, AI-GRS

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