Appraiser Independence Requirements - AIRs on 4/1/11


On April 1, 2011, a new industry acronym will be officially born: AIR -which stands for Appraiser Independence Requirements. AIR replaces the Home Valuation Code of Conduct (HVCC), which will have no further force or effect.

The term "AIR" actually has been around for some time, used by Fannie and Freddie in their development of HVCC. Its requirements pertain to all loans sold to Fannie Mae and Freddie Mac originated for the acquisition or refinancing of 1-4 unit, primary residential properties.

The FRB issued an interim final rule on AIR, effective December 27, 2010. However, compliance was optional until April 1, 2011. Furthermore, the FRB has removed the 2008 Appraisal Independence Rules [12 CFR 226.36(b)] effective April 1, 2011. Section 1472 of Dodd-Frank essentially codifies the 2008 Appraisal Independence Rules and expands on the protections that they provide.

As part of Dodd-Frank, the GSEs are required to review rules of appraiser independence. That is, implementation of AIR is specifically required by Dodd-Frank. Both Fannie and Freddie will continue to issue future rules about AIR, such as those relating to conflicts of interest and fee disclosure by appraisal management companies (AMCs).

In an effort to provide greater protection to the consumer, as well as prevent the "over-appraisals" alleged to have contributed to the recent mortgage meltdown, Dodd-Frank and the FRB's regulatory mandates may seem to be overreaching. But the structure of AIR is really just a more precise version of HVCC.

AIR is here to stay, so let's get more familiar with it!

Article Topics:

Who Is Subject To AIR

Appraiser Independence

Appraiser Coercion

Appraiser Non-Coercion

Material Misstatement Voids Transaction


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jonathan Foxx, Lenders Compliance Group | Attorney Advertising

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