§1639e Appraisal Independence Requirements

Summary

Makes it a crime for anyone involved in a mortgage on a borrower’s main home to try to control or corrupt the home’s appraisal. People may not pay, pressure, threaten, bribe, or otherwise push an appraiser or appraisal company to give a certain value. They also must not lie about the appraised value, try to get a “target” value to make the loan easier to sell or price, or refuse to pay on time for a properly contracted appraisal. Lenders, brokers, appraisal companies, or others may ask an appraiser to look at more information, explain their value, or fix errors. Appraisers and appraisal companies may not own or have a stake in the house or loan they are valuing. Anyone who thinks an appraiser broke professional rules or the law must report it to the state appraiser licensing agency. If a lender knows of a violation at or before closing, the lender must not make the loan based on that appraisal unless it reasonably checks and documents that the appraisal is not misleading. Federal regulators must write rules about these appraisal independence rules, and the Board had to issue interim rules within 90 days after July 21, 2010. Regulators can also set rules so an appraisal can be used by different lenders for a 1-4 unit main home. Lenders must pay independent fee appraisers a customary, reasonable rate backed by objective evidence. A “fee appraiser” is a licensed appraiser who is not an employee of the lender or appraisal management company, or a company that hires such appraisers. Donated appraisal work for qualified charities counts as customary. Complex appraisals may get higher fees. When the interim rules take effect, the Home Valuation Code of Conduct from December 23, 2008, no longer applies. Violators face civil fines up to $10,000 per day, and if fined once, later violations may be fined up to $20,000 per day; the appropriate agency named in law will collect the fines.