FIRREA Amendment Reappraises Appraisers

ABA Banking Journal, November 1989 | Go to article overview
Save to active project

FIRREA Amendment Reappraises Appraisers

Among its many provisions, the Financial Institutions Reform, Recovery and En-

forcement Act of 1989 sets new policies for real estate appraisal activities involving federally related real estate transactions.

What are federally related real estate transactions? Virtually any real estate transaction of an insured depository institution-loans to finance real property or loans secured by real property, for example. The law is intended to be very broad, says ABA Federal Legislative Representative Debbie Shannon. "About the only real estate loan not covered is a loan from your mother. "

The new appraisal rules are found in Title XI of FIRREA. The law created an appraisal subcommittee of the Federal Financial Institutions Examinations Council (FFIEC). This subcommittee will monitor the states' appraiser certification and licensing systems; maintain a national registry of certified and licensed appraisers; monitor appraisal standards and determinations as to whether a transaction requires a certified appraiser or a licensed appraiser; and monitor the work of the Appraisal Foundation, a nonprofit corporation of the appraisal industry.

The law states that all appraisals of federally related transactions must be performed by state-certified or licensed appraisers after July 1, 1991. The only exception is if the subcommittee finds a scarcity of certified or licensed appraisers in a particular region that would create "inordinate delays" in the transaction.

Under the law, all federally related real estate transactions of $1 million or more must be appraised by a state-certified appraiser, unless they involve one-to-four family properties, in which case they may be appraised by a state-licensed appraiser. In general, any

federally-related transactions not requiring a certitied appraiser can be handled by a licensed appraiser.

The five member agencies of the FFIEC-the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision, the Federal Reserve Board, and the National Credit Union Administration-as well as the Resolution Trust Corp., are required to establish appraisal standards that meet the minimum requirements adopted by the Appraisal Foundation.

Getting started. The FFIEC subcommittee will begin operations with $5 million borrowed from the Treasury

Department, and additional funds will come through the regular appropriations process. The subcommittee will collect an annual registration fee of not more than $50 from appraisers who perform or wish to perform federally related work. These funds will be used to cover operating costs, repay the Treasury Department, and defray expenses of the Appraisal Foundation.

The subcommittee will be staffed by representatives of the FFIEC agencies, and a chairman will be selected by the subcommittee for a two-year term. However, an FFIEC spokeswoman says no appointments will be announced until 1990.

The impetus behind the new reform amendments was the notoriously faulty appraisal standards practiced or accepted by many thrifts. A recent General Accounting Office report on 26 failed thrifts found 88% of their total loans had

been made on the basis of inadequate appraisals.

Me new law seeks to discourage a reprise of those situations by imposing civil money penalty assessments for violations of the new rules.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

FIRREA Amendment Reappraises Appraisers


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?