HUD Archives: News Releases
HUD No. 02-081
July 18, 2002
BUSH ADMINISTRATION ANNOUNCES "APPRAISER WATCH" -
NEW PROTECTIONS FOR HOMEOWNERS
Martinez To Hold Appraisers Accountable for Their Performance
WASHINGTON - The Department of Housing and Urban Development said today it intends to expand its protection of homeowners by proposing standards that will hold appraisers accountable for their performance. Faulty appraisals too often lead to default and foreclosure.
The new initiative, called Appraiser Watch, will be published soon as an Advance Notice of Proposed Rulemaking in the Federal Register. Once implemented, the standards will cover some 25,000 individuals who conduct appraisals on Federal Housing Administration-insured single-family homes.
"Faulty appraisals, whether intentional or not, contribute to the inability of homebuyers to make monthly mortgage payments and to the instability of neighborhoods," said HUD Secretary Mel Martinez. "The measure that we will be proposing is part of the Administration's on-going commitment to protect unsuspecting victims, who are often first-time homebuyers and minorities, from poor appraisals and unscrupulous appraisers."
Under the proposal, FHA will monitor appraisers' default and claim rates and will levy sanctions - including removal from its list of approved appraisers - against those whose rates are excessive.
"Excessive default and claim rates represent an unacceptable risk to taxpayers and to FHA," said Assistant Secretary for Housing - Federal Housing Commissioner John Weicher. "At the same time, we recognize that high defaults and claims do not by themselves prove wrongdoing. Some appraisers may experience them through no fault of their own, and these appraisers should not be subject to sanctions." For example, Weicher said that certain geographical areas might have higher than average default and claim rates because of local economic conditions, regardless of whether the appraisal is faulty.
Under the terms of the proposal, FHA will notify appraisers before removing them from its roster of approved appraisers. Any appraiser who receives such notice may meet with HUD officials to present evidence that factors beyond his or her control contributed to the excessive rates. The proposal will also make provisions for appraisers to be reinstated to the approved roster.
HUD will accept comments on the proposal from the public and other interested parties for 60 days after it is published in the Federal Register. The Department is especially interested in comments related to threshold levels for evaluating appraiser performance, age of the appraisals, mitigating circumstances that should be considered and severity of sanctions levied. Those comments should be submitted to: Regulations Division, Office of General Counsel, HUD, Room 10276, 471 7th Street SW, Washington, DC, 20410.
Other recent actions by the Bush Administration to protect homeowners and promote
- A proposal, currently available for public comment for 90 days, to reform
the regulatory requirements of the Real Estate Settlement Procedures Act (RESPA)
that would make the process of buying and refinancing a home significantly
simpler, potentially less expensive and would protect consumers from unscrupulous
lending practices. In addition, Martinez recently announced five major settlement
agreements with mortgage lenders and service providers with payments of nearly
$2.3 million. HUD will spend $1.5 million to investigate RESPA violations,
a six-fold increase over current funding, and is more than doubling its investigative
staff to further bolster its RESPA enforcement activities. HUD is also increasing
its efforts to educate homebuyers in ways to avoid predatory lending practices
in the first place.
- A goal to increase the number of minority homeowners by 5.5 million by the
year 2010. To reach this goal the Administration has proposed: the American
Dream Downpayment Fund, aimed at helping 40,000 families each year with down
payment cost, the most common barrier to minority homeownership; and, a tax
credit for builders of single-family homes. The Administration has also proposed
a $15 million increase in the fiscal year 2003 HUD budget for housing counseling,
which would increase funding for consumer education on many topics, including
- The recently announced "Homebuyer Bill of Rights," which requires greater
disclosure of costs associated with buying a home, allows consumers more choices
in choosing providers of closing services, limits excessive settlement fees
and encourages innovation and competition in the marketplace.
- Developing a rule to stop "flipping" - quickly reselling properties at inflated
values - of FHA insured loans. The proposal would make properties that have
been sold within a defined period of time ineligible for FHA insurance, effectively
prohibiting resale of the property.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov.
Content Archived: April 9, 2010