registration and other standard development and so i believe that the asc could be helpful with moving along with their agenda. >> ms. mann. >> thank you, 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 which have yet to be addressed. these provisions involve enormously important revisions, including supervision, registration of amc, development of quality control standards for avm, that's automated valuation models, establishment of an appraisal complaint hotline and the cfpb's consideration of whether the banking agency's existing dollar threshold for the de minimus is adequate, so we look forward to that. >> thank you. ms. stevens. >> yes.

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. >> gregoire? [ inaudible ] >> mr. bunton? >> 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. mr. berenbaum? >> i think there's a serious need to look at -- >> yes or no. >> yes or no? there's a need to look at it. >> mr. bunton? [ inaudible ] >> mr. gregoire? [ inaudible ] >> mr. kelly. >> we should continue to look at it, yes. >> okay, ms. mann? >> improve the existing system. >> ms. stevens? >> yes. >> thank you. all right. my time has expired. mr. sherman from california is recognized for five minutes. >> thank you, madam chair. in greg mr. gregory, the gses have created this new uniform appraisal database, the uad, which is used on all gse appraisals and also for fha. how is it all working out?

>> form -- thank you for the question -- because of the >> 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? mr. gregoire? >> 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 capable of gaining necessary competence if they're given the appropriate and 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 -- he's only paid a few hundred dollars, so he can't spend hours and hours studying everything that a competent appraiser -- if he's only going to do one appraisal in that neighborhood, he's probably going to miss some things. >> i agree. i think the uniform standard of professional appraisal practice provides the appraiser guidance with what to do in such 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.

but i believe what -- the concern of the national association of realtors is, 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 nellas county, florida. it's a county which is not monolithic. there are areas that 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 and reaching an opinion that an area is improving have reported that to their clients and they've made the appropriate positive adjustments to comparable sales to make sure those comparable sales are adjusted to reflect what they would have sold for on the effective date of the appraisa appraisal, and the result that has been reported is that you

better rethink those data 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 an improving market in a specific area. >> the gentleman yields back. the gentleman from california, mr. miller, you're recognized for five minutes. >> thank you, madam chairman. some problems i have, and i guess this panel really doesn't -- we don't have a mortgage broker on here. we don't have a person who deals in all these problems but the data i see in 80% of all the appraisals being done are refinances. let's put those in one category. that's just somebody refinancing their home, whatever. hvc was so efficient at changing the landscape that even though congress came back and said no,

we don't like that, fhfa and fha have lever listened, still listening to the concept of afcc, which was a disaster, it was ordering an appraisal, it was when a mortgage broker called an originator and could do something. they are excluded. he many times trying to represent a client or a realtor and comes in with a mortgage broker and tries to figure out what the house will sell for and how the buyer will buy it and they can go out and go to a lender if the appraisal didn't come in the same line we could say what is the difference in the appraisal. is there an error in the appraisal or are there different issues we need to consider? 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 just not being done. you go to one lender and they do an in-house appraisal. they're not giving their appraisal to the other lender. now somebody has to go back and

pay for two appraisals or three appraisals when it could have been done the first time by understanding what the house is really worth based on somebody's understanding of what an appraisal should be and who should do an appraisal, and you know, geography, should that play a matter? well i think it does, and i think appraisals are wonderful. i have no problem with that, but if he's two hours away and got one appraisal in a neighborhood, that makes it real tough. when you're dealing with a marketplace that's tough is the appraiser likely to say, well, i think i should forego taking this job when i can go to the computer and come up with something and present an appraisal. so i think there's an inherent conflict in the industry when you put that onus on the individual to say no, i will turn the work down. it's been a bad market. it's been tough. people are trying to grow their businesses back. but portability is huge, and it's not taking place, and the problem i have is especially in the industry today, you're appraising many distressed homes at a value and unless the

appraisers are out there on site looking and making sure it's distressed or not distressed, they don't know. you have to drive up to the door and look and understand what you are dealing with. when it applies to a new market place, i don't agree it will come back. i don't believe it. there's nothing showing me it's going to happen, until the industry comes back full swing and this economy turns around. so you've got 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've got appraisers going out there, appraising it on values less than it would cost to do the improvements today, and buy land, land is supposed to be free. builders in communities that are buying lots for less than it costs to do the improvements. you have to have them appraising it on values less than it costs to do the improvements. even all the requirements are

being considered. i don't mean that at all. you have to have somebody local who understands the issue and the market. they can come up with a realistic value based on current market conditions. if that doesn't happen, you are going to continue to distress the marketplace. new product can't be built unless you are looking at fair market value for that home in today's market. when you have a buyer willing to buy and a seller willing to sell and the appraiser comes down here, everybody is looking at each other and scratching their head saying what do we do? that's where the problem is today. you need to be able to say i think you made some mistakes, but you are excluded from that. you can't do that. conflict of interest the way most are looking at it, and you have to get back to some realistic approach to the concept of value at market rate and putting a lender together with that buyer and seller to be able to move forward in the marketplace, and i think we are hurting ourselves and hurting this economy by not realistically looking at that, and i guess when you look at the

state appraisers expected to be selected from individuals assigned based on completely the performance of an appraisal, knowledge of an area and type of a product, miss stevens, is that happening? if not, what steps are being taken to make sure that that appraiser understands what they're looking at? i'm not impugning appraisers. i am saying we are restricting it and that we're not coming full circle and correcting it. >> we are hearing from many of our appraisers and clients that is not happening. we are not sending people into an area who are familiar and one of the big problems is, again, that most of the function of today's residential lending market is vested in hiring people based on fee and turn around time. we're not saying that all of the amcs working out there are not doing a good job, but we are

saying that there are instances where people are travel great distances to work on a residential assignment when there qualified professional people in the area who would do that job if the fee were commensurate with their -- >> the problem with traveling that great distance is it's a cost factor for the appraiser. they're traveling. they're not doing something else. it's time lost in a car, when they could do two appraisals somewhere else, and i think that's the inherent conflict being placed on the industry today is, nobody wants to turn the job down, and i don't blame them, but 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. i know you have been generous madam chairman e and my time is way up and i had eight more questions but i yield back and i thank you very much. might i be able to insert the record a written statement by william kidwell, mortgage advisory group, immag.

>> without objection. >> thank you, madam chairwoman. >> mr. miller, i'm going to ask a few more questions so if you would like. >> mr. gregoire, out of the appraisers one of the most common complaints, i know i just say that. what can be done in your opinion to fix that problem? [ inaudible ]. >> -- stevens -- >> 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 and wanted to let me know about an assignment that he was given yesterday. they are a nationwide appraisal management company, has a conventional 1044 mc appraisal for a purchase located on a property located in caro, georgia. i don't know from caro, georgia, is, but it is in georgia, not in

florida. if you're interested in working with us on this and future appraisals please reply to this e-mail with your estimated turn time and fee. this appraiser is licensed, certified in florida, not in georgia. that is an example, and i don't know how many other 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, whether or not he's a designated appraiser. >> and the problem with that, and i do like appraisers. i'm not impugning anybody. please, don't anybody mischaracterize what i am saying. everybody is shopping for business today, and when a lender receives an estimate from this appraiser and says we'll do your appraisals for this amount of money the lender says that's a good deal, it doesn't matter

that they're many miles away. i'll let you continue. >> thank you. as to how it can be corrected, first off, i believe that the consumers should be entitled to an appraisal report that is commensurate with the fee that the consumer pays for the appraisal report. they're not getting that now. they are getting 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 the claims of the quality control and the adherence to, of the appraiser's qualifications, in most cases, it is not. it is simply a means of syphoning off money. very often the appraisal management company is associated with or affiliated with the lender, and it is a means for

the lender to -- >> done on a contract basis. done on a contract basis. >> yes. so we have to think that the consumer gets, needs to get what they are paying for, and if the lender wants to use the services of an appraisal management company to broker these valuation services, the amcs claim that they're operating as an agent for the lender. well, 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 who is getting the benefit. make the lender pay for that benefit. >> i agree. i'm admitting i'm getting old but i've been in the real estate and building industry for over 40 years, and 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 their usually in-house appraiser, because they were taking the risk to lend me the money. they went out and did what i considered a fair market appraisal. they did a good job.

when we would buy or sell a house they would appraise the individual house and they based it on, they appraised the house on the block away and they appraised the house the mile down the road and they really understood the area. what we did with hvcc was overturn the apple cart to such 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 proprietary. 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. i took notes on what you said earlier. you talked about geography, you talked about fully capable, and you talked about guidance. every one of them was followed with an if. and approximately doesn't matter if. fully capable if. provide guidance if. the problem is defining if. if opens up a 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 are trying to provide 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 stifling the ability of the economy to recover because we decimated values in homes with

the downturn of the economy. we're not doing what's necessary, that we've hit a bottom, to start building it back up or letting it come back up on a natural basis. we are stepping it, steps, and we're stopping it right there because we've mandated things that don't work. i hope somebody's starting to listen. 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've got to fix it. it's got 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 selectric 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 need to make sure that people who are regulating

this 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 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 was saying is we all make 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 anywhere. 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 really good for everybody. thank you, madam chairwoman. >> thank you. i'll recognize myself for five minutes. in that line of thinking, miss stephens, 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 fundamentals of the state appraiser certification and licensure, 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 customary fee is for an independent appraiser in the field trying to make a living in their small business. >> okay. mr. kelly, did you have a response to that? >> yes, i do. the -- we believe that appraisers should be paid appropriately. fees for appraisers, compensation for ara