The Federal Reserve Board published an interim final rule seeking to ensure appraisal independence and eliminate the Home Valuation Code of Conduct on Monday.
According to the Fed, the interim rule ensures that real estate appraisers are free to use their independent professional judgment in assigning home values without influence or pressure from those with interests in the transactions. The interim final rule includes several provisions that protect the integrity of the appraisal process when a consumer’s home is securing the loan and ensures that appraisers receive customary and reasonable payments for their services.
Additionally, the Fed clarifies that an employment relationship or affiliation between the appraiser and the lender is not a conflict of interest. However, the person who prepares a valuation or who performs valuation management services may not have an interest in the property or the transaction.
Other provisions include a requirement that creditors or settlement service providers that have information about appraiser misconduct must file reports with the appropriate state licensing authorities.
The interim final rule is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Obama earlier this year. Compliance will be mandatory on April 1, 2011. Public comments are due 60 days after the interim final rule is published in the Federal Register, which is expected soon said the Fed.
To view a copy of the rule, see here.