H.R. 5975: Appraisal Modernization Act

The Appraisal Modernization Act aims to improve the appraisal process for mortgage loans and fosters greater transparency and equity in home valuation. Here are the main points:

Consumer Rights and Appraisal Review

The bill introduces a right for consumers to request a reconsideration of the value of their appraisals if they believe the report may be inaccurate or biased. Key features include:

• Review Process: Creditors must conduct their own appraisal review before sharing the appraisal with the consumer.
• Notification: At the time of application and upon delivering the appraisal, creditors must provide a clear process for consumers to request a reconsideration or subsequent appraisal.
• Standardized Format: Creditors must use a specific format for consumers to submit their requests for reconsiderations, ensuring all necessary information is included.
• Subsequent Appraisal: If a consumer identifies material deficiencies or discrimination in an appraisal report, creditors are required to order a subsequent appraisal at their expense.

Unacceptable Appraisal Practices

The bill outlines what constitutes unacceptable appraisal practices, including:

• Using unsupported or subjective terms without proper context.
• Inaccurate data regarding the property or surrounding area.
• Inappropriate reliance on comparable properties not inspected personally by the appraiser.
• Discriminatory references within the appraisal report.

Public Appraisal Database

The legislation mandates a study on the feasibility of creating a national public appraisal database. The purpose is to enhance transparency in the housing market by:

• Consolidating appraisal data from relevant federal agencies.
• Providing insights into the efficiency of the appraisal process.
• Helping to identify trends and potential discrepancies in home valuations.

This database would include appraisal data across various agencies like the Federal Housing Finance Agency, Department of Housing and Urban Development, and others.

Reporting and Oversight

The bill requires the Comptroller General of the United States to issue a report within 240 days after enactment, evaluating the viability of the public appraisal database. The report will discuss:

• Costs and benefits of establishing and maintaining the database.
• Risks related to data privacy and business ethics.
• Examples of existing public appraisal data and potential data integration challenges.

Conclusion of Findings

After the Comptroller General's report, both the Senate and House committees will hold hearings to discuss the findings and assess the feasibility of creating the appraisal database.

Relevant Companies

• BRK.A (Berkshire Hathaway Inc.) - May be affected as they operate in real estate and finance sectors, with impacts on property evaluations.
• USFB (U.S. Federal Bank) - Directly involved in mortgage lending and could face changes in appraisal procedures.