by Web Collins, Executive Vice President/Partner of CBRE/NE’s Valuation & Advisory Group
The Great Depression of the 1930s brought chaotic conditions to the valuation field. As a solution, the Appraisal Institute was formed in 1932 and created the first appraisal text, conducted courses to train appraisers, bestowed MAI designation and set ethics and guidelines to be followed.
The savings and loan crisis of the 1980s was the next chaotic condition, which resulted in government controls being placed over the appraisal industry. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) was the basis for appraiser licensing, regulation and guidelines. Uniform Standards of Professional Appraisal Practice were created by the Appraisal Standards Board of the Appraisal Foundation, authorized by Congress as the source of appraisal standards and qualifications. Each state within the U.S. set up their own board of registration for appraisers.
While FIRREA was intended for lending institutions, appraisals go far beyond preparation for lenders alone. Appraisals can be prepared for boards of appeal, zoning boards of review and any number of other parties outside of FIRREA and outside of the state and federal court system of the United States.
Those reviewing reports need not necessarily be appraisers or judges. Reports can end up in anyone’s hands and people with their own agenda. On an anonymous basis, complaints can be filed with state boards involving appraisers. I regularly attend national appraisal meetings. At one meeting, in casual conversation, one of the nation’s top appraisers let it be known that “he was turned in twice last week.” It is the impact of stories of this type that cause the Appraisal Institute to act time and time again!
To read the rest of the article covered by New England Real Estate Journal, click here.