The appraisal industries failure to attract new talent has created a new and growing crisis for the mortgage industry. This blog talks of some possible ways to overcome the problem.
The number of active real estate appraisers is shrinking rapidly. Stats released by the Appraisal Institute, show that the mortgage appraiser count in 2015 has come down by 20% as compared to 2007, and will further decrease by 3% in the next five years. What this means is that 5 years down the line, delayed appraisals and quality issues will become all too common and possibly lead to a second round of housing crisis
The growing shortage can be attributed to one overarching reason — the industry’s inability to attract new talent. Increased regulations, mandatory licensing requirements, and ceiling on fees are some of the primary reasons for which new people feel dissuaded from joining the industry. In this blog, we look at some of the ways in which the industry can make the profession more lucrative for youngsters.
Make Appraisal Education All-Encompassing
Now that the Dodd-Frank Acts mandate to select an appraiser from the Appraisal Subcommittee National Registry has been amended to support the use of trainee appraisers under the supervision of a state-licensed or state-certified appraiser, lenders and AMCs must go all out to recruit and train new appraisers for the future. Emphasis must be laid on designing quality training programs to link the experience and educational requirements for appraising.
For instance, for a four-year degree program, students must spend the first two years in learning appraisal specific and general concepts, followed by a mix of education/work experience program. This would allow trainees to graduate with the experience and qualifications necessary for becoming a certified appraiser. Also, lenders and AMCs should refrain from interfering in how supervisors and trainees go about performing their duties. This would help to build better understanding between trainees and supervising appraisers and can help immensely in providing quality guidance and output.
Adhere to the Spirit of the Dodd Frank Act
It’s high time lenders and AMCs give up the practice of shopping for rock bottom prices. Paying customary fees as mandated by Dodd Frank acts customary and reasonable requirements will go a long way towards encouraging new people to take up the profession. Likewise, adhering to the “reasonable” aspect of the Dodd Frack act can help immensely in inspiring confidence among aspirants. To make sure lenders follow this requirement, Louisiana has enacted a law that requires AMCs compensate appraisers at a rate that is reasonable for appraisals in the area were the property is located. Lenders are supposed to submit how the rate used was developed to facilitate possible audits. Emulating the Louisiana model and making rate determination audit mandatory will discourage lenders from exploiting appraisers.
Having said that, sometimes lenders or an appraisal management company fail to analyze and determine a reasonable and customary fee because of the need to quickly get a guaranteed fee.as mandated by TILA RESPA rules. However, if all states perform an appraisal fee study, lenders will be in a better position to offer more precise estimates, which may ultimately benefit appraisers the most.
Facilitate Communication
Yet another problem faced by appraisers is lack of independence. The practice of keeping appraisers out of the loop of stakeholder communication, has created lot of distrust between appraisers and underwriters, and is primarily responsible for rework, appraiser fatigue and higher industry attrition rates. While burdens introduced by new regulations are here to stay, the going can get easier for appraisers if lenders encourage and facilitate communication with underwriters. This would make the process more transparent and less cumbersome for appraisers.
Conclusion
While bringing changes to the above-mentioned problems will help to improve the lot of the appraisers, the Appraisal Foundation and Government need to work hard towards changing public perception about the industry. This can best be done by educating the consumer and public on a large scale. Distributing educational and informational materials, partnering with public relations companies and participating in job fairs and campus placements are some of the best ways to attract and retain talent in the profession.
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