The Federal Reserve Board of Governors published an interim final rule amending the Truth in Lending Act (TILA) and strictly prohibits coercion on real estate appraisals.
Regulation Z or TILA was enacted on July 21 as part of the Dodd-Frank bill to implement the appraisal independence provisions added to the TILA.
“Unlike HVCC which focused primarily on a creditor’s improper influence on an appraiser, these provisions also impose liability on persons other than the creditor and expressly prohibit an appraiser from misrepresenting the value of a property,” according to an alert from Weiner Brodsky Sidman Kider.
The Fed’s interim final rule provides that an appraiser or a person who prepares a valuation or who performs valuation management services may not have an interest, financial or otherwise, in the property or the transaction. The rule also clarifies that an employment relationship or affiliation does not, by itself, violate the prohibition.
The Interim Rule replaces the Home Valuation Code of Conduct, which Dodd-Frank set for expiration on the date the Interim Rule issued. The Board is soliciting comments on the Interim Rule generally and on a variety of specific issues.
The Interim Rule is effective December 27, 2010 and compliance is mandatory April 1, 2011.