When the Dodd-Frank Wall Street Reform and Consumer Protection Act (known colloquially as Dodd-Frank) was passed in the wake of the 2008 financial crisis, the federal government was trying to prevent a crisis of that sort from occurring again. The Act’s overall goals were threefold: it was meant to place stronger consumer protections into the economy; it made moves to regulate the derivatives market and the assets that undergirded them—interest rates, commodities, bonds, currencies, and so forth; and taxpayer risk was to be reduced by mitigating the necessity of bailing out large corporate financial organizations. Where the housing industry was concerned, because consumers tended to consider the housing collapse one of the primary causes of the crisis, mortgage lenders were targeted by the Act (in Title XIV, the “Mortgage Reform, and Anti-Predatory Lending Act”), which required that they only grant mortgages to borrowers who could afford to pay their loans and that they streamline data collection for underwriters. Moreover, Subtitle F of the same Act regulates the activities of Appraisal Management Companies (AMCs).
Among the regulations affecting AMCs were requirements to take further precautions in the case of high-risk loans (including actions like making physical visits to the properties in question).
By design, the Act was to go into effect in phases. Some of its provisions were only enacted in August 2018, these AMC provisions among them. Included in these AMC rules are requirements that any appraisers for federally related property transactions must be considered “qualified,” that any appraisals made must comply with the Uniform Standards of Professional Appraisal Practice, and that appraisals must be made independently and free of any outside influence. Moreover, the states are permitted to apply fees to any AMCs attempting to register or renew registration to conduct appraisals within their borders. As of right now, some are predicting that this latter provision may result in large-scale fee inflation, creating windfalls in state budgets pulled from built-in increased costs to the consumer. But this remains to be seen.
If you’re looking for a closing attorney in Jacksonville, Florida; Rockport, Massachusetts; or Cumberland, Rhode Island—whether for a federally-connected transaction or otherwise—contact us to see how we can help. Topouzis & Associates, P.C., performs title searches and provides title insurance backed by multiple underwriters. We’re staffed by residential real estate specialists and ready to help avoid costly delays and to streamline residential transactions.
