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Real estate industry

Appraisal Summit Highlights Need for Regulatory Clarity in Distressed Markets

Strategic Insights

— 1 min read

The National Association of Home Builders (NAHB) hosted a Residential Real Estate Appraisal Summit with regulatory agencies and industry stakeholders to discuss solutions to appraisal problems. The summit highlighted the use of foreclosed properties as comparables, unintended consequences of the Home Valuation Code of Conduct (HVCC), and the need for regulatory clarity in distressed markets. Inaccurate appraisals are driving down home values and impacting sales, particularly in areas where appraisers are unfamiliar with the market. The NAHB, National Association of REALTORS, and Mortgage Bankers Association are calling for immediate action to address these concerns and establish "best practices" for the appraisal process.

Key Takeaways:

  • The use of foreclosed properties as comparables without proper adjustments is a major issue in the appraisal process.
  • The HVCC has unintended consequences, including impeding the ability to obtain high-quality appraisals in distressed markets.
  • Inaccurate appraisals are driving down home values and impacting sales, particularly in areas where appraisers are unfamiliar with the market.
  • NAHB, NAR, and MBA are urging regulators to adopt clear and concise guidance on the use of distressed properties in appraisals.
  • These regulatory bodies are also advocating for the establishment of "best practices" for the appraisal process.
  • Summit participants emphasized the importance of regulatory clarity in maintaining the integrity of the appraisal process.
  • NAHB believes that regulators should acknowledge the realities of appraising properties with deferred maintenance or internal damage.
  • NAR supports the independence of appraisers and the need for consistent appraisal rules for FHA and GSEs.
  • MBA calls for fair and accurate appraisals to ensure the secured lending system remains trustworthy.

Statistics:

  • 80% of new housing units projected for 2009 will be constructed by NAHB builder members (NAHB).
  • Over $200,000 members involved in home building, remodeling, multifamily construction, and other aspects of residential and light commercial construction (NAHB).
  • More than 800 state and local home builders associations affiliated with NAHB (NAHB).
  • HVCC's unintended consequences are affecting the ability to obtain high-quality appraisals in distressed markets.

Sources:

  • NAHB, "NAHB Hosts Appraisal Summit with Regulatory Agencies" (no date).
  • "About NAHB", National Association of Home Builders, no date.
  • Press release on statements by NAHB Chairman Joe Robson, NAR President Charles McMillan, and MBA Incoming Chairman Robert E. Story, Jr. (no date).

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