GAO calls for improvement in appraisal monitoring procedures

In a report earlier in January, the Government Accountability Office called on the congressional Appraisal Subcommittee to improve its procedures for monitoring the appraisal process. According to an NAHB story, flaws in the system have been leading to inaccurate appraisals, which, in turn, often leads to lost sales.

The report from the GAO cited inadequate enforcement and reporting mechanisms as the main cause for concern. According to the office, “several weaknesses” have continually hampered the effectiveness of the subcommittee, through boom and bust periods.

The Appraisal Subcommittee was designed to oversee the activities of state appraiser regulatory agencies, the federal financial institution regulators and the nonprofit Appraisal Foundation. The Dodd-Frank Act allowed for the creation of a national hotline to report complaints of noncompliance with appraisal standards, but no such tool was ever created; the GAO believes that in its current state, the program is beyond the means of the subcommittee.

Instead, the GAO challenged the Appraisal Subcommittee to develop specific policies and procedures related to the appraisal requirements of federal financial institutions regulators. This position has been supported by NAHB, which also would like to see increased training and education for appraisers.

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