Until I wrote this post, I had been saying that AMC low fees and hassles were the main cause of the current appraiser shortage. Many appraisers won’t work for AMCs. Others left the profession because they would not work for AMCs.
I was wrong. The major factor is that trainees cannot sign on their own until certified. There is no other way to manage the huge ups and downs in volume of lender appraising. Prior to HVCC, this had been done for decades.
If this cannot be fixed, lenders will try to get their regulators to require fewer appraisals by using AVMs, BPOs, etc. They have always wanted this. Their reason now: too few appraisers causing purchases to be delayed.
The residential lender appraisal system is broken.
The problem is NOT primarily low fees, licensing requirements, college degree, aging appraiser population, reluctance to hire “competitors”, etc.
The Problem: for the first time, there is no way to bring in trainees during boom times to sign on their own.
Since the 1970s, when Freddie and Fannie started and refis accelerated, lender volume had huge ups and downs, depending on interest rates. Lenders hired armies of trainees and laid them off when business slowed down. During the last big boom prior to the mortgage meltdown, fee appraisers hired the trainees and let them go. Now, very few appraisers are hiring trainees, except friends and relatives.
Lots of complaints now about the appraiser shortage. The Appraisal Foundation is considering lowering licensing requirements for certified appraisers. But, this will take years to change.
If lenders accept licensed appraisers, who do not need a college degree but need 150 hours of college classes, this will really help. A minimum of 12 months and 2000 hours of experience is required. The certified appraiser requirements will not have to be reduced. Certified res is 2.5 years of experience.
The AQB experience requirements are the minimum. I am in California, which has the AQB requirement: “Personally inspect the property with the Trainee until the supervisor determines the Trainee is competent to make unsupervised inspections, in accordance with the Competency Rule of USPAP for the type of property being appraised.” Some states have gone way beyond this, requiring the supervisor to inspect the subject with the trainee for the two years of experience. e supervision.
Lenders who want to switch from conventional and FHA will not be able to use licensed or trainees, of course. But, this is much, much better than weeks of delays getting appraisals, especially for purchases.
|Residential (AL)||150 hours, covering specific modules including the 15-hour National USPAP Course (or its equivalent as determined by the AQB); and 30 semester units of college-level education, OR an Associate’s degree or higher (in any field).||2,000 hours and encompassing no less than 12 months of acceptable appraisal experience.||Any non-complex 1-4 family property with a transaction value up to $1 million; and non-residential property with a transaction value up to $250,000|
|Certified Residential (AR)||200 hours, covering specific modules, including the 15-hour National USPAP Course; and a Bachelor’s degree or higher.||2,500 hours and encompassing no less than 2.5 years (30 months) of acceptable appraisal experience.||Any 1-4 family property without regard to transaction value or complexity; and non-residential property with a transaction value up to $250,000.|
Posted in: AMCs, appraiser shortage
Of course, for existing appraisers, this is a boom time with no new competitors entering the business. Fees are increasing dramatically and have increased this much in the past.