WASHINGTON – Oct. 25, 2010 – As reported on the Florida Realtors website (http://www.floridarealtors.org) The Federal Reserve’s (http://www.federalreserve.gov) new interim rule on appraisals is a welcome step in clarifying the home valuation process, according to the National Association of Home Builders (http://www.nahb.org). NAHB has sought appraisal guidance that provides transparency in the appraisal process with sufficient flexibility to address the unique aspects of valuing new homes. NAHB will work with the Federal Reserve and other appraisal stakeholders to ensure the final rule fully achieves that outcome.

“The interim rule makes it clear that home builders and others can ask an appraiser to consider additional information about a property, including information about additional comparable properties,” says Joe Robson, NAHB’s immediate past chairman. “That’s critical to our members because in far too many cases, we’re seeing appraisals based on inappropriate comparables.”

The Federal Reserve unveiled the interim rule on Oct. 18 and the rule takes effect 60 days after published in the Federal Register, with the Fed accepting comments on the interim rule during this period. While the rule becomes effective earlier, however, compliance is voluntary until April 1, 2011. The Fed’s action was required  by the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law on July 21, 2010.

“Many appraisers do not understand the impact of new code requirements, new green building practices and other aspects of new construction that add value to a home,” Robson says. “It is particularly important that home builders be allowed to provide appraisers with information to assist in appraising new construction.

The Federal Reserve’s interim rule includes conflict-of-interest guidance, which prohibits loan officers and mortgage brokers from selecting appraisers. It also mandates the reporting of negligent appraisals and appraiser misconduct to the appropriate state appraiser licensing authorities, and requires those seeking an appraisal to pay appraisers at a rate that is reasonable and customary in the geographic market where the property is located and that reflects the difficulty of the assignment.

“Builders, developers, lenders, appraisers and other stakeholders need a better understanding of what they can and cannot do,” Robson says. “This interim rule offers much needed clarity, and NAHB will be offering comments in an effort to make sure the final rule provides guidance that recognizes all of the issues involved in appraisals of new homes and restores confidence in the appraisal process.”

© 2010 Florida Realtors®