TheMReport

30 | TH E M R EP O RT FEATURE whom are small business own- ers—to reconsider staying in the field and discouraging others from joining. Predictive analytics for the next five to 10 years suggest there will be even fewer appraisers due to factors such as retirements, fewer new people entering the profes- sion, economic factors, and govern- ment regulation. This affects not just residen- tial and commercial real estate appraisers engaged in mortgage work, but also those practicing in areas such as development consulting, litigation, tax and financial reporting services, and other valuation services. Appraisers are being choked by rules and regulations in nearly every facet of their business. From how an appraiser reports an ap- praisal, to supervising trainees, to uneven licensing requirements, to li- censing and registration fees passed down by clients, to mandates from federal agencies, appraisers' profes- sional lives have become extremely complicated, more expensive, and less productive due to a dated and archaic regulatory structure. As a result, consumers—and real estate professionals who work with appraisers—suffer from in- creased turnaround time, delays in loans, and potentially higher costs. Indicative of the challenges, a March 2017 "Appraiser Trends Study" conducted by the National Association of Realtors found that excessive regulation is one of the most common reasons for leaving the profession among appraisers who are unlikely to remain for another five years. For example, standards and associated required coursework for the profession change every two years, causing appraisers to devote additional fees and significant time for minute, inconsequential updates. Since most appraisers operate as small businesses, these requirements become a significant burden. Regulatory Modernization Priorities T he situation calls for ap- praisal regulatory modern- ization. There are three primary areas where regulatory modern- ization is needed: Appraisal oversight: Appraisal regulation should be aligned along the lines of regulatory structures in other industries, such as insur- ance and mortgage origination, recently enacted by Congress. Those structures maintain state li- censing authorities but set up more efficient licensing application and renewal processes. Any solution also should explore a nationwide platform, or portal, for appraisal practitioners, users of appraisal services, and state regulators to use to process license applications and renewals, thus eliminating redun- dancies and red tape. Enforcement: Streamlined regula- tion should provide clear audit processes for states' appraiser regulatory agencies, allowing state regulators to focus on licensing administration and enforcement. Also, modernized regulations should improve information shar- ing among state regulatory agencies through a common platform. Appraisal quality: Financial institutions should be authorized and encouraged to "raise the bar" when hiring real estate appraisers, utilizing professional appraisal designations that exceed minimum licensing requirements when pro- curing appraisal services. The current regulatory system forces appraisers to overcome mul- tiple, complex layers of regulation by creating a redundant federal oversight agency to audit state licensing agencies, who in turn set their own specific licensing requirements. A Proposed Solution I deally, federal oversight would come in the form similar to the Nationwide Multistate Licens- ing System (NMLS). But under the current system, there is no national platform for states to co- ordinate licensing, which makes it extremely inefficient for appraisers to work across state lines. The real estate valuation profes- sion should be able to adopt a structure based on the NMLS, which would maximize efficiency through improved coordination among state regulators, lower cost burdens, and expand lender and consumer benefits. Lessening burdensome regulations also can potentially counteract the negative sentiment about over-regulation of the profession among appraisers. In fact, updating the 1989 Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) by developing and integrating a multistate licens- ing systems like the NMLS was recently highlighted by the U.S. Department of Treasury in a July 2018 report on technology and harmonizing state licensing laws in the financial services industry (titled "A Financial System that Creates Economic Opportunities— Nonbank Financials, Fintech, and Innovation"). This report recognizes the benefits of the NMLS for other professions, which has been "to reduce duplicative regulatory requirements, promote greater information sharing and coordi- nation, and maintain consumer protections and the strength and resilience of regulated firms." The report recommends efforts to build A March 2017 "Appraiser Trends Study" conducted by the National Association of Realtors found that excessive regulation is one of the most common reasons for leaving the profession among appraisers who are unlikely to remain for another five years.

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