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Th e M Rep o RT | 27 Feature T he degree of oversight and regulation affecting the appraisal industry today got its roots as a result of the Savings and Loan (S&L) crisis of the 1980s. As a result of that crisis, Congress passed the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), creating for the first time a federal oversight system regulating valua- tions conducted for federally related mortgage lending transactions with- in Title XI of the Act. These new rules continued to morph into the regulations we are doing business under today, such as The Dodd– Frank Wall Street Reform and Consumer Protection Act, and the regulatory environment will con- tinue to be a hot topic for apprais- ers in 2015 and beyond. Unchartered Course: The Appraisal Industry Prior 1989 P rior to the passage of FIR- REA (which at the time was referred to as Federal Interference Regarding Real Estate Apprais- als) the appraisal community was a self-regulated industry where membership in national appraisal organizations and their respec- tive designations represented an appraiser's level of experience and expertise. The system of account- ability resided in the by-laws of the various appraisal organizations governing the ethical and com- petent activities of the designated members and those pursuing designations enabling the organiza- tions to self- discipline and mentor through a peer review process, those involved with the organiza- tions, including revoking if neces- sary those with the designations. Unfortunately approximately only 30 percent of practicing apprais- ers in 1989 belonged to a national appraisal organization. The other 70 percent had no affiliation with a professional appraisal organization and as such were accountable to no one other than their clients, and the only consequence for unethical or incompetent behavior was possibly the loss of business. The paradigm shift spurred by the S&L crisis relates to the creation of The Appraisal Foundation, the Uniform Standards of Professional Appraisal Practice (USPAP), the Appraisal Subcommittee (ASC) that oversees the activities of The Appraisal Foundation, and the state appraiser regulatory agencies in the post- FIRREA world of valuations for federally related transactions. These entities were created in response to appraisers being blamed in large part for the sav- ings and loan failures in the 1980s. Title XI of FIRREA required the establishment of the state appraiser regulatory agencies to oversee the licensing and certification of apprais- ers in all 55 states and jurisdictions. The Appraisal Foundation Appraiser Qualifications Board became the entity establishing the minimum education and experi- ence requirements for appraisers to qualify for state appraiser licensure or certification. The Appraisal Foundation Appraisal Standards Board became the entity establish- ing and administering the mini- mum standards of competency and ethical behavior appraisers must adhere to in order to retain their state licensure and certification. In the 1990s and early 2000s that all seemed to be working. Appraisers were getting licensed and certified in the various states and the state appraiser regulatory agencies were taking action against the licensed and certified apprais- ers who were violating USPAP or otherwise egregious behaviors putting the public at risk. And then along came the mort- gage market meltdown of 2008. A New Era Begins: Introduction of Dodd- Frank I n response to the meltdown of 2008, in 2010, the U.S. Congress passed a new set of regulations known as the Dodd- Frank Wall Street Reform and Consumer Protection Act. Signed into law by President Obama in July 2010, it has been referred to as the most compre- hensive financial regulatory reform measures taken since the Great Depression. The enrolled bill is more than 2,200 pages in length and has a word count of 383,013. It comprises sixteen titles, requires 243 new rules, created 12 new regulatory agencies, and will take more than five years to implement at a cost in excess of $30 billion. As comprehensive as it is, the Dodd-Frank Act introduced minimal changes in the oversight of real property valuations. Real property valuation over- sight is contained in Title XIV, the Mortgage Reform and Anti- Predatory Lending Act, which among others, created a new bureau called The Consumer Financial Protection Bureau (CFPB) tasked with the administration of the new laws and regulations. Subtitle F–Appraisal Activities contains revisions to TILA (Truth in Lending Act) relating to Higher Risk Mortgages requiring creditors to obtain an on-site, full interior appraisal by a certified or licensed appraiser and established require- ments for a second appraisal for rapid-resale transactions. TILA amendments also expanded appraiser indepen- dence guidelines and payment of Reasonable and Customary Fees paid to appraisers. Although the Federal Reserve Board published the Interim Final Rules relating to Reasonable and Customary Fees in October 2010, the fee issue remains one of the most widely discussed and de- bated issues within the valuation community. Other regulatory changes in the Act and in the subsequent Final Rules published by the Agencies worth mention include conflict of interest and appraiser independence. In response to the proliferation of appraisal management com- panies following implementation of the Home Valuation Code of Conduct and concerns expressed by industry participants, Congress also included AMCs regulations, specific prohibition language relating to appraiser indepen- dence, and the prohibition to have either a direct or indirect inter- est, financial or otherwise, in the property or transaction involving the appraisal. Another significant TILA amendment was the manda- tory reporting requirement for any mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal manage- ment company, employee of an appraisal management company, or any other person involved in a real estate transaction involving an appraisal in connection with a consumer credit transaction secured by the principle dwelling of a consumer who has a reason- able basis to believe an appraiser is failing to comply with USPAP, is violating applicable laws, or is otherwise engaging in unethi- cal or unprofessional conduct. If such unprofessional conduct is observed by any of those named, they are required to refer the mat- ter to the applicable state appraiser certifying and licensing agency. FIRREA Title XI was also amended in the Dodd-Frank Act, the most significant changes since enactment in 1989, which included modification to 13 of the original 25 sections and the addition of three new sections. One of the new sections (1124), established minimum require- ments for states to establish registration requirements for appraisal management compa- nies. Per Section 1124, the states are required to implement laws requiring AMCs to: • Register with and be subject to