subcommittee are actual licensed and certified appraisers and as mr. park testified, that number of folks is diminishing. >> thank you. mr. kelly? >> thank you. we would like to see the asc move quicker. as i testified, states are already proceeding with registration and other standard development and so i believe that the asc could be helpful with moving along with their agenda. >> ms. mann. >> there's a pressing need for speedy implementation -- >> i think your mike again. >> i'm sorry. there is a pressing need for speedy implementation by rule making of many of the dodd-frank appraisal provisions that have yet to be addressed. they include important issues including supervision, registration of amc, development of quality control standards for

avm, automated valuation models, establishment of appraisal complaint hotline and consideration of whether the banking's existing threshold is adequate. we look forward to this. >> thank you. ms. stevens. >> i think one of the biggest problems we see is that the current structure really assumes the states are not capable of administering this entire process of certification and entire process of overview. we would like to see that change. that's one of the reasons that we make the suggestion that a good look be taken at the way that our whole entire system is set up. >> thank you. now, i've got two questions that are just a yes or no answer. the first one is -- we'll start with you, ms. stevens and go the other way. is the appraisal subcommittee effective? >> in my opinion, no. >> ms. mann?

>> i believe it is and it will get better. >> mr. kelly? >> yes. >> needs improvement. >> okay. now, another question, yes or no. should congress consider a complete overhaul of appraisal regulations and improve it for consumers and businesses alike. >> i think there's a serious need to look at -- >> yes or no. >> there's a need to look at it. [ inaudible ] >> we should continue to look at it. >> improve the existing system. >> yes. >> thank you. all right. my time has expired. mr. sherman from california is recognized for five minutes. >> thank you, madame chair.

the gses created this new uniform appraisal data base, the uad, which is used on all gse appraisals and also for fha. how is it all working out? >> fortunately because of the work that i do, i've not had to complete one of those reports. however, i have heard from dozens if not hundreds of appraisers. >> could you be closer to the microphone? >> i've heard from dozens if not hundreds of appraisers about their experience also from consumers. the uad method of reporting was not implemented to enhance the quality or credibility of an appraisal report. what it does enhance is data gathering. it does not improve an appraiser's performance or ability to accurately or

credibly estimate an opinion of value. in fact, i believe it makes the appraisal report more confusing and less useful to the consumer. granted, the consumer is not an intended user of an appraisal completed for mortgage finance transaction. however, the wording in the form clearly anticipates that the borrower will be placing some credence in that and the report according to federal law is required to be provided to the borrower prior to closing of the transaction. that uad does not improve the usefulness of that report to the consumer. >> so at a very minimum we need to change how it's presented so the consumer can understand it? >> i believe that the reporting format that is instituted by the gses is not designed to result in a more accurate estimate of

value. it's designed for the convenience of the gse. and things that make things more useful to consumers are very often excluded from the report due to the manner in which the report is delivered to the gse. there's also privacy concerns. the gses are now insisting on a whole slew of interior photographs and the borrower and the seller and the lender don't control the distribution of that appraisal report. a lot of our members are very concerned about privacy concerns. >> the only thing i've been told about real estate is that it has something to do with location, location and location. what can we do to make sure the appraisers actually understand the neighborhoods that they are appraising? >> well, that's -- thank you again.

unlike some of the discussion here concerning geographic competency, i don't believe that geographic competency is determined solely by the appraiser's proximity to the property that's being appraised. geographic competency is determined by the appraiser's knowledge of a particular market or knowledge of a particular neighborhood or particular location. it's also determined by the appraiser's knowledge of a particular property type. and competency can be -- it's not absolutely positively necessary at the time the appraiser accepts the assignment as long as the appraiser takes the steps necessary to acquire the competency. you don't acquire competency in a manner of minutes or hours. and i believe that appraisers are fully kpapable of gaining

necessary competence if given the necessary time to spend in a market, interview the folks necessary to gather market information, and given the time necessary to appropriately complete the appraisal report. >> but even a very competent appraiser who is given just one job in some community he doesn't know, only paid a few hundred dollars so he want spend hours and hours studying everything that competent appraiser if he's only going to do one appraisal in that neighborhood is probably going to miss some things. >> i agree. i think the uniform standard of professional standards practice provides the appraiser guidance with what to do in that circumstance and that is to decline the assignment. i believe that we have to hold appraisers to that standard. they have to know when it is appropriate for them to accept an assignment and when it is

appropriate for them to decline the assignment. >> if i can squeeze in one more question. how are appraisals and valuations affecting the housing recovery or what we hope to be a housing recovery. >> that's a pretty broad question. i believe the concern of the national association of realtors is that there is interference in an appraiser's independence to call things the way they see it. i have plenty of antidotal evidence of appraisers and i work and appraise in florida. it's a county which is not monolithic. areas are improving. some dramatically. some not so much and areas that are stable. there are appraisers that have identified improving areas and as a result of their data and analysis in reaching an opinion that an area is improving have

reported that to their clients. and they've made the appropriate adjustments to comparable sales to make sure they are reflected to what they would have sold for on the effective date of the proposal. the result that has been reported is that you better rethink those date of sale time adjustments. that is interference with an appraiser's independence and it results in a misleading appraisal report and an appraisal report that does not reflect a current and improving market in a specific area. >> the gentleman from california. you are recognized for five minutes. >> thank you, madame chairman. >> the problem i have and this panel doesn't really have -- we don't have a mortgage broker in

here or a builder. the appraisal i have seen done are refinances. let's put those in one category. refinancing the home. whatever. hbc was so efficient in changing the landscape that even though congress came back and said we don't like that, they never listened and are implementing the concept of what was a disaster. a time like ordering an appraisal when a mortgage broker called an originator could do something. they are excluded from participating in the appraisal process as in the past and trying to represent a client, realtor comes in with a client and think about what the house will sell for and they could do an appraiser and if the appraisal didn't come in the same line they would say what's the difference? is there an error in the appraisal? issues we need to look at here?

those are off the table. in dodd-frank, i made sure the language included in there that said appraisal would be portable but they're not. they're not being done. you go to one lender and they do an in-house appraisal and they're not giving it to the other lender. someone will pay for two appraisals or three appraisals when it could have been done the first time by understanding what the house was really worth based upon somebody's understanding of what an appraisal should be and who should do an appraisal. geography, should that play a matter? i think it does. i think appraisals are wonderful. if he's two hours away and he has one appraisal in a neighborhood, that makes it really tough. when you deal with a marketplace is tough, is this the appraiser likely to say i think i should forego this job when i can go on the computer and come up with something and present an appraisal. there's an inherent conflict in the industry when you put that onus on the individual to say

i'm going to turn the work down. it's been a bad market. it's been tough. people are trying to grow businesses back. portability is huge and it's not taking place. the problem i have is especially in the industry today, you're appraising many distressed homes at a value and unless the appraiser is on site, they really don't know which one is stressed and which one is distressed. you have to drive up to the door and understand what you're dealing with especially when it applies to new marketplace. i don't believe the economy is going to come back until the housing industry comes back. i don't believe it. nothing will show me it's going to happen until the industry comes back full swing and the economy turns around. you have builders in communities that are buying lots basically through this down marketplace in recent years for less than it costs to do the improvements. so you have an appraiser going out there appraising it on values less than it would cost

to do improvements today. land is supposed to be free. it's not. all of the new requirements placed on them aren't being considered an appraisal value. i'm not impugning appraisers. i don't mean that at all. it's tough and you need someone local that understands the issues and the market and comes up with a realistic value on that home based on current market conditions. if that doesn't happen, you'll continue to distress the marketplace. new product can't be built today unless you use realistic values of what fair market value is for that home in today's market. when you have a buyer willing to buy and a seller willing to sell and appraiser comes down here, everybody is looking at each other scratching their heads saying what do we do? and that's where the problem is today. you need to be able to say i think you made some mistakes in your appraisal here but you're excluded from that now. you can't do that. conflict of interest the way they look at it. you have to get back to some

realistic approach to the concept of value at market rate and putting a lender together with is that buyer and seller to be able to move forward in the marketplace. i think we are hurting ourselves and hurting this economy by not realistically looking at that. i guess when you look at the state appraiser expected to be selected from individuals with knowledge in an area and type of product. is that happening? if not, what steps are being taken to make sure that appraiser understands what they are looking at? they are restricted it and have not come full circle in correcting? >> we hear from appraisers and clients that this is not happening. that we are not sending people into an area who are familiar. one of the big problems again is that most of the function of

today's residential lending market is invested in hiring people based on fee and turnaround time. we are not saying they're not doing a good job. there are instances where people are traveling great distances to work on a residential assignment when there are qualified people, professional people, in the area who would do that job if the fee were commensurate with their time. >> the problem with traveling that distance is it's a cost factor for the appraiser. they're traveling. not doing something else. time lost in a car when they could do two appraisals somewhere else. i think that's the inherent conflict placed on the industry today is nobody wants to turn the job down and i don't blame them. there's not adequate compensation based on the impact associated with what they have to do to get the appraisal done to expect a reasonable approach to the appraisal process.

you have been generous and my time is way up and i had eight more questions but i yield back. thank you very much. might i insert into the record, a written statement by president impact management advocacy and advisory group. >> without objection and mr. miller i'm going to ask a few more questions so if you would like to -- >> what can be done in your opinion to fix that problem? she gave me the time. go for it. >> i just got an e-mail forwarded to me from a tallahassee appraiser. this appraiser is in tallahassee.

he wanted to let me know about an assignment that he was given yesterday. they have a conventional 1004 appraisal for a property in georgia. it is in georgia and not in florida. if you're interested in working with us on this and future appraisal, please reply to this e-mail with your estimated turn time and fee. this appraiser is licensed, actually certified in florida. not in georgia. that is an example. i don't know how many appraisers in florida received the same e-mail. that is the primary driver of a lot of amcs determination as to who gets the assignment. the turn time and the fee. no question here whether or not he even is certified in georgia or what his qualifications are and whether or not he's a designated appraiser. >> the problem with that and i do like appraisers.

i'm not impugning anybody. don't anybody mischaracterize what i'm saying. everyone is shopping for business. when a lender receives an estimate from this appraiser that says we'll do it for this amount and lender says that's a good deal. doesn't matter if you're hundred miles away. continue. >> now as to how it can be corrected? first off, i believe that consumers should be entitled to an appraisal report that is commensurate with the fee that the consumer pays. they're not getting that now. they get only a fraction of what they are paying for because the bulk of the fee is going to a party other than the person that is completing the assignment. the bulk of the fee is going to an organization, a company, that adds no value to the transaction. they are strictly a broker, strictly a middle man and despite all of the claim of the

quality control and the adherence of the appraiser's qualificati qualifications, in most cases it is not. it is simply a means of siphoning off money. very often the appraisal management company is associated with or affiliated with the lender. it is a means for the lender -- >> on a contract basis. >> yes. so we have to think that the consumer needs to get what they're paying for and if the lender wants to use the services of an appraisal management company to broker these valuation services, the amcs claim they operate as an agent for the lender. by golly, let the lender pay for that service. don't make the appraiser pay for it or don't make the consumer pay for it. the lender is the one getting the benefit. make the lender pay for that benefit. >> i agree. i guess i admit that i'm getting old but i've been in the real

estate and building industry for over 40 years. i really have tremendous respect for appraisers. especially when i used to make application to a bank to build a subdivision and they relied on the in-house appraiser to give a fair appraiser because they were taking a risk the money. the individual went out and did what i considered a fair market appraisal. they did a good job. when we would buy or sell the house, they would appraise the individual house. they appraised the house the block away and appraised the house a mile down the road and really understood the area. and what we did with hbcc was overturn the card. to such a degree that nobody's figured out, even though we've directed them how to put it back the way it was, government doesn't change rapidly for some reason they did with hbcc, but coming back the other way it's not done a good job. i think it's done a disservice to the appraisers in this country who do excellent work. it's hurt them. it's created a situation where

the lenders are no longer having appraisals to compare with theirs and can't deal with the issues of errors like we could in the past having multiple appraisals. the appraisal can't be used somewhere else because one person paid for it and it's propry tir. we created a situation where they're putting out, bidding these things on a bulk basis, whoever gives them the best prices is going to get all of them, irrespective of the letter you read to me about geography. you talked about geography, fully capable, and talked about guidance. every one of them was followed with an if. and approximately doesn't matter if. fully capable if. provide guidance with. the problem is defining if. i have no definition of what if is. open add huge problem that we started and we've got to correct. now, realtors are out trying to provide a service to a buyer and

seller. mortgage bookers are trying to provide a mortgage to a buyer/seller. the appraisers, service to everybody. we put them in such a difficult situation that it's just not working. we put them in a situation where it's stifle lg the ability of the economy to recover because we decimated values in homes with the downturn of the economy. we are stepping it, steps, and we're stopping it right there because we've mandated things that don't work. somebody's starting to listen that hey, we're not happy with what we did. we messed up. we're not happy with you not listening to us wanting to correct what we did wrong. that's the problem today. we have to fix it, it has to be done. somebody needs to listen, and madam chairman, you've been more than generous. i would yield back my time

twice. thank you. >> thank goodness. >> madam chair, madam chair, might i respond quickly to congressman miller? i appreciate your summary and description of the plight. i agree with much of what you said. however, i don't -- i don't believe that you should consider legislating on the basis of anomalies or hearsay. i mean, i've heard the stories, too, about -- >> i didn't mean to do that. >> i know you wouldn't, but, and i appreciate that. but amc, there's 350 of them in the country. are they all the best and good? no. are there good and great ones? yes, there are. and i think they're associated with my association. but they do, indeed, provide real value to the process and

reputable amcs help protect the appraiser but also allow for the types of transactions that you're talking about to be facilitated. we mentioned in our testimony earlier that bpos, avms and other methodologies can be utilized to either check appraisals or to give them a sense of what the trends are in any given neighborhood or any given property and those sorts of tools are very much available and in use in today's world. i was delighted to see my friend karen mann using an ipad to give her testimony today. as you know, from your real estate experience, big technology of the day back in our day was the memory card and a celectrix typewriter. things have changed. things are, indeed, available, today that go to the issues -- >> what is your opinion on what

he just said, too? >> well, i think that there are a couple of things that are incumbent on all of us and that we need to make sure change, and one of those is that lenders are held accountable for these appraisals and for the opinions and for their actions. we also/áneed to make sure that people who are regulate iing industry, who are the regulators coming in are well versed and that we have a sufficient staff to take care of the problems that are coming and to make sure that that what's happening in the appraisal business is well maintained and understood as they try to do their job. >> give me one second. can i agree with -- i'm not disagreeing with what you said. what i'm saying is we all made mistakes. we did. congress did. and we came back and tried to correct that. but what we did was exclude everybody from being able to be involved in participating in this appraisal process.

use matching appraisals, dealing with areas we think were done wrong. errors that might are been made. they happen in appraisals. they just do. happens in every business. but we've taken and excluded that ability to be competitive, comparative, and being to deal with mistakes that just occur. and that's why i'm saying we've messed up. it's not impugning any appraiser everywhere. it's saying let's get back to a system of accountability and portability and reliability. and that's -- that was all i was saying. so if anybody in any way took any statement impugning anybody, it was never intended to be that way. i'm saying we goofed up. and other people make mistakes, too. let's get back to a system where we can correct the mistakes and come up with something that's good for everybody. thank you, ma trdam chairwoman. >> thank you. i'll recognize myself for five minutes. in that line of thinking, miss

stevens, you've offered an alternative regulatory structure for real estate appraisers. how would this structure differ from the one we have today? >> let me start by emphasizing that what the appraisal institute is speaking about and what we are proposing is not a self-regulatory organization. like some have mentioned. self-regulatory organizations involve industry. whereas the national mortgage licensing system is owned and operated by bank regulators, in this case, state bank supervisors. whether the fundamentles of the state appraiser certification and licensesure, standards of professional appraisal practice would remain unchanged. at a high level, as i alluded to before, the current regulatory structure assumes states are not capable of administering a system of certification,

creating a specific agency to intervene with the process. the mortgage licensing systems assumes that a state can assume the responsibility and administer state certification maintaining a federal presence out of a last resort. for many years, congress and others have sought a way to advance regulator communication and this mortgage licensing system has developed a solution. we understand that they are offering the system to state regulators outside the mortgage loan origination business. and as there are common problems that all state regulators face. so it would not be elite for appraising regulators to participate in this system. thank you. >> thank you. then just one last question. miss mann, on page two of your testimony, you call, quoting, stunning and completely inappropriate a federal reserve rule on customary and reasonable fees as required by dodd/frank

and you also mentioned this rule creates a loophole. could you expound on these points? >> let me catch up with you here. >> okay. page two. >> yes. creates a loophole whereas the amcs were allowed to go out and check customary fees but within the scope of their investigation, they used amc fees as part of the equation. as part of the array. we feel that customary fees should be outside of the amc realm and should be from the general marketplace. for instance, va, fha. appraisals done for other purposes. whether it be for dissolution or for estate work. just to get an idea as to what the