The Federal Reserve Board on Monday announced an interim final rule meant to prevent the possibility of coercion in the appraisal process. The rule also seeks to ensure that appraisers receive reasonable payments for their services.
The interim final rule prohibits appraisers and appraisal management companies hired by lenders from having interests in the properties or the credit transactions, as well as prohibits lenders from extending credit based on appraisals if the lenders know beforehand of violations involving appraiser coercion or conflicts of interest.
Creditors and settlement service providers are also required by the rule to report appraiser misconduct to the appropriate state licensing authorities.
The interim final rule is required by the Dodd-Frank Act, and public comments will be due 60 days after the interim rule is published in the Federal Register which the Fed says is expected shortly.
Compliance will be mandatory beginning April 1, 2011.
SOURCE: Federal Reserve Board