S. 1635: Appraisal Industry Improvement Act

This bill, known as the Appraisal Industry Improvement Act, seeks to amend the National Housing Act and restructure various aspects of the appraisal industry as it relates to federal housing programs. Here are the main components of the bill:

1. Appraiser Standards

The bill modifies the requirements for appraisers who work on mortgages insured by the Federal Housing Administration (FHA). Key changes include:

• Appraisers must be certified or licensed by the state where the property being appraised is located.
• Federal employees working as appraisers need only to hold a license in one state to work nationwide.
• Appraisers must meet competency requirements as per the Uniform Standards of Professional Appraisal Practice.They must complete education that aligns with the FHA's appraisal requirements, which can be provided through approved organizations.

2. Compliance and Implementation Requirements

Starting from the date when new regulations take effect, appraisers must comply with these updated standards before conducting appraisals for FHA-insured mortgages. This includes:

• Existing appraisers approved by the FHA will still be eligible to conduct appraisals without needing immediate re-certification.
• The Secretary of Housing and Urban Development is required to issue guidance that clarifies compliance requirements within 240 days of the bill's enactment.

3. Appraisal Management Companies

The bill changes how annual registry fees are handled for appraisal management companies. The Appraisal Subcommittee will have the authority to adjust these fees if they are deemed not suitable for operational needs.

4. Inclusion of State Credentialed Trainee Appraisers

Modified regulations will include provisions for state-credentialed trainee appraisers. This entails:

• These trainee appraisers will be recognized alongside licensed appraisers in the national registry.
• Options for lowering registry fees for both licensed and state credentialed trainees have been proposed.

5. Grants for Appraiser Workforce Development

The Act establishes a system for funding educational and training programs aimed at bolstering the appraiser workforce. The goal is to enhance skills and address workforce shortages in the appraisal sector.

6. Role of the Appraisal Subcommittee

Finally, the bill clarifies the involvement of the Appraisal Subcommittee by defining its membership to include representatives from various departments, such as the Department of Veterans Affairs and the Department of Agriculture.

Relevant Companies

• HOUS: Companies involved in real estate lending or mortgage insurance may face changes in operational protocols as a result of new requirements for appraisals.
• IRM: Companies that provide appraisal management services might need to adjust their fee structures based on the new regulations regarding annual registry fees.