The effectiveness of home appraisal regulation under Title XI is limited by several factors, a January Government Accountability Office report finds, with numerous points of gray area when it comes to policy and enforcement.
The Appraisal Subcommittee (ASC) operates under several weaknesses, such as lack of rulemaking and enforcement tools with regard to state monitoring, the report finds., in addition to challenges in implementing some Dodd-Frank provisions.
“Not having appropriate policies and procedures is inconsistent with federal internal control standards designed to promote effectiveness and efficiency and limits the accountability and transparency of ASC’s activities,” GAO wrote in its report. “…ASC faces potential resource and planning challenges in implementing some Dodd-Frank Act provisions.”
The study also found more than 70% of residential mortgages made from 2006 through 2009 were below the threshold at or below which appraisals are not required for transactions involving federally regulated lenders. In recent years, however, the threshold has had a limited impact because investors including the Federal Housing Administration have generally required appraisals for homes above and below the threshold.
GAO recommends that the ASC should clarify and report the criteria it uses to assess states’ overall compliance with Title XI and develop specific policies and procedures for its other monitoring functions, according to the report.
View the report.
Written by Elizabeth Ecker