Key government agencies finally addressed the critically growing appraisal shortage crisis that’s hampering the mortgage process, highlighting two alternative options to help areas that are facing a shortage.
Particularly, the alternative options are aimed at helping rural areas that are struggling with the availability of state certified and licensed appraisers.
The problem goes much deeper than rural communities though, with most appraisers currently in their late 50s. And those who are in the field aren’t mentoring a lot of trainees due to the lack of compensation and benefit, along with lender restrictions.
As a result, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency issued an advisory that highlights two options to help insured depository institutions and bank holding companies facilitate the timely consideration of loan applications.
The groups were responding to concerns brought to light from financial industry representatives during the Economic Growth and Regulatory Paperwork Reduction Act review process, who attributed shortfalls in the timeliness of appraisals to shortfalls in the availability of state-certified and -licensed appraiser.
Under Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), appraisals for federally related transactions are required to be performed by individuals who meet certain state-certification or -licensing requirements.
However, the groups’ advisory points to two existing alternatives that may help in areas facing a shortage of appraisers: temporary practice permits and temporary waivers.
Here’s an overview of the two options. Check out the advisory note here for the full description:
1. Temporary practice permits
Temporary practice permits allow appraisers credentialed in one state to provide their services on a temporary basis in another state experiencing a shortage of appraisers, subject to state law. The advisory also discusses reciprocity, in which one state allows appraisers that are certified or licensed in another state to obtain certification or licensing without having to meet all of the state's certification or licensing standards.
2. Temporary waivers
Temporary waivers set aside requirements relating to the certification or licensing of individuals to perform appraisals under Title XI of FIRREA in states or geographic political subdivisions where certain conditions are met. Temporary waivers may be granted when it is determined that there is a scarcity of state-certified or -licensed appraisers leading to significant delays in obtaining an appraisal.