While we hold hands with the Dodd-Frank statute with regard to appraisers from a licensing standpoint, the obvious follow-through with that is to ensure that while such appraisers are considered reputable, that they still maintain their codes of conduct as outlined by the law.
In other words: not only are appraisers supposed to be accurate, they’re supposed to continue doing their job under due process, procedure and licensing. They can follow the law with honesty and integrity all they want; but if they’re not following the outlined process at all, they can all still be held liable under the Constitution, plain and simple. FIRREA governs that mandate. It’s known as the Financial Institutions Reform, Recovery, and Enforcement Act.
More importantly, this ensures legal compliance not simply with appraisers, but appraisal licensing entities, specifically within the states. With the Appraiser Qualifications Board, we’ve got specialized regulation of the Dodd-Frank statute’s minimum licensing requirement, plus a true methodology defined by a chain of command. The guidelines for every appraiser are such that the USPAP (Uniform Standards of Professional Appraisal Practice), FFIEC (Federal Financial Institutions Examination Council) and the FDIC (Federal Deposit Insurance Corporation) oversee those processes to ensure proper certification and licensing of our United States appraisers.
In a way, Dodd-Frank are the branches of the tree – FIRREA are the roots. Violation of this particular law can result in removal, prohibition, civil money penalties and cease and desist petitions. Undoubtedly, when you’ve got two laws appraisers observe, excellence and reputation are first and foremost. When it comes to real estate, there’s nothing more important.
Michael Douglas and Shia LaBeouf (or Charlie Sheen, for that matter), beware, as Wall Street hits the legal stratosphere with this statute related to consumer protection and disclosure of appraisals for real estate. Chances are no one has heard of the Dodd-Frank law, unless you are, in fact, an appraiser. Originally titled the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” this law enforces and regulates the process by which appraisers operate.
That’s for good reason as well given that accuracy in terms of market values and compensation are key in this industry. If the appraiser isn’t doing an accurate job, per se, it can be catastrophic. Additionally, this is a law mandating that applicants receive a free copy of the appraisal of the property in question. A notification that a creditor will utilize the appraisal, too, is sent with the copy. Beware of cunning crafters in the real estate industry trying to bribe or pay off an appraiser just to influence a specific amount or adjustment on a piece of property, because they are lawbreakers according to this law as well.
Lenders, brokers and title companies are known to file claims in the event that there’s even a slight hint that the appraiser has been compromised or under expected levels of professionalism and accuracy. The Uniform Standards of Professional Appraisal Practice (USPAP) ensures that, of course.
What are the entities enforcing this law? For one, the Federal Reserve ensures appraisers are operating within their legal parameters. The Consumer Financial Protection Bureau as well lends a hand. Other federal banking regulators know too well that appraisers must do their jobs correctly, or else serious penalties are ruled to ensure justice is served. You could be seeing compensation paid upon consequence adding up to $10K per day on initial violations, plus an additional $20K for following penalties. That’s nothing to laugh at.