The federal government is exploring ways to build a hotline used for appraisal complaints but is running into several implementation and funding problems, according to the Government Accountability Office. The Appraisal Subcommittee was formed in 1989 to monitor how state and private lenders implemented new appraisal guidelines Congress passed under Title XI. Washington found that problematic appraisals hurt several federal agencies during the savings and loan crisis of the 1980s. Some of the same problems resurfaced during the recent housing bubble as lenders routinely pressured appraisers to overvalue properties to secure the mortgage. Post-crisis, it's widely believed appraisals are coming in too low. Roughly one-third of National Association of Realtors members reported contract cancellations in December, up from 9% one year before. Appraisals coming in below the negotiated prices killed many of the deals, NAR said. The Dodd-Frank Act requires the ASC to build a hotline for complaints about appraisals from homebuyers, lenders and even the appraisers themselves, who want to report being pressured to bring a valuation in at a certain figure. But according to a GAO report released this week, difficulties remain. The first being money. The complaints would be relayed to individual state regulators monitored by the ASC, but because so many are cash-strapped as it is – especially California – the GAO concluded some states lack the resources to properly follow up with the complaints, eliminating any value the hotline might bring. According to the GAO, the ASC employs just 10 staffers but is funded by appraisal registration fees totaling more than $2.8 million. The GAO is tracking where resources are needed to implement Dodd-Frank provisions. Investments will need to be made from the small ASC in information technology and staff to effectively screen, track and refer the inevitable wave of complaints that will come its way. "Nonetheless, appraisal industry stakeholders told us they believed that the hotline would offer several benefits," the GAO said. Complaints and follow-up procedures might finally be given some standard, that's if the hotline is implemented effectively. Of the 50 state agencies the GAO surveyed, only 13 said it would improve their ability to regulate the industry. Nine said it would actually be a hindrance. Another 13 said it wouldn't have any effect, and 12 said they simply didn't know. A major concern was how the hotline would be used. Frivolous complaints are almost inevitable and would waste time, money and could unjustly hurt an appraiser's ability to get future assignments. "Some stakeholders we spoke with expressed concern about consumers using the hotline simply to report disagreement with an appraiser’s valuation instead of to report violations, concerns about appraiser independence, or potential fraud," the GAO said. Write to Jon Prior. Follow him on Twitter @JonAPrior.