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Federal Reserve closer to TILA final rule on appraiser coercion

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The Federal Reserve Board of Governors proposed an interim final rule amending the Truth in Lending Act (TILA) and strictly prohibiting coercion on real estate appraisals. Regulation Z or TILA was enacted on July 21 as part of the Dodd-Frank bill. It forces lenders to disclose costs and terms of mortgage loans and better inform consumers. This final rule, one of the many the Fed must draft after the passage of Dodd-Frank, seeks to ensure appraiser independence much like the replacement to the final rule replacing the Home Valuation Code of Conduct for appraisers of Fannie Mae and Freddie Mac loans. The latest rule submitted to the Federal Register Oct. 28 clarifies that a person in violation if he or she attempts to coerce a real estate agent or appraiser, either licensed or certified by the state, into valuing a property for anything other than his or her own judgment. With new regulations piling on appraisers and lenders, some are choosing to play it safe and exceed the new requirements. Brian Coester, CEO of Coester Appraisal Group based in Maryland, said all the regulations are intertwined. "The idea with TILA, as well as HVCC, RESPA, Dodd-Frank, is that you are not allowed to coerce an appraisal in any way," Coester said. "In that way all of these regulations are inter -onnected to avoid pre-determining a valuation for any reason. For us, we just have a straight policy of no allowing any influence whatsoever. This way we remain in compliance with the law and well-within all acceptable parameters." The TILA interim final rule will be effective Dec. 27 but compliance will not be enforced until April 1, 2011. Write to Jon Prior.

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