Will the National Appraisal Complaint Hotline backfire on Appraiser Independence?

The National Appraisal Complaint Hotline is scheduled to go live on March 29^th. The American Society of Appraisers (ASA) and the National Association of Independent Fee Appraisers (NAIFA) wrote a letter to the Appraisal Subcommittee (ASC) urging them to delay the implementation of the appraisal complaint hotline system. This may come as a shock, since the whole idea behind the hotline was to protect appraiser and Appraiser Independence. So why are two national appraisal organizations fighting it? The ASA and NAIFA strongly feel this has been poorly designed and will have severe ramifications to appraisers and state licensing boards. Among the concerns:

• The  ASC designed the Appraisal Complaint Hotline system behind
  closed doors, and has failed to allow stakeholders to comment on it prior to final implementation
• Congress  intended the hotline to provide appraisers with an ability to report   efforts to undermine their independence, not as a catch-all mechanism to   be used against appraisers by persons disgruntled because the appraised  value did not meet their needs or for other non-specific or non-serious  reasons
• The  hotline’s open-ended and unfiltered complaint system will impose enormous  financial burdens on appraisers and on state appraiser licensing agencies.
• Ironically,  its current design will greatly increase incidents of pressure on      appraisers rather than prevent them

Much of the concern revolves around anyone being able to report anything to this hotline. The ASA and NAIFA fear that any time a borrower is unhappy with their value, they’ll report the appraiser. Any time a contracted sale price is not met, the realtor, seller or other party involved will report the appraiser. The ASC does not require there be documentation, verified USPAP or other state violations or even anything improper done by the appraiser. Anyone who feels motivated to do so will be able to report an appraiser to the Appraisal Complaint Hotline with virtually no accountability. Isn’t this the opposite of what it was intended for? Wasn’t the intent per Dodd-Frank to protect appraisers and Appraiser Independence? Wasn’t this hotline supposed to be for appraisers to report when undue influence or pressure was being put on them? The ASA and NAIFA are arguing the way the ASC has set this up will actually increase the pressure and undue influence put on appraisers. Appraisers will live in fear of being “punished” every time an appraised value does not meet a sale price by the displeased parties reporting them to the hotline with no evidence of any wrong-doing, just simply upset “the value didn’t come in” or “the appraiser killed the deal”.

The ASA and NAIFA did sit down with representatives from the ASC to discuss this letter and their concerns. It will be very interesting to see what happens next. Will the National Appraisal Complaint Hotline backfire on Appraiser Independence?