Short title

This Act may be cited as the

Appraisal Modernization Act

Reconsideration of value

(1)

In general

Section 129E of the Truth In Lending Act (15 U.S.C. 1639e) is amended—(A)by redesignating subsections (j) and (k) as subsections (k) and (l), respectively; and(B)by inserting after subsection (i) the following:

(j)

Consumer right to reconsideration of value or subsequent appraisal

(1)

Definitions

In this section:(A)

Unacceptable appraisal practice

The term unacceptable appraisal practice means an appraisal report that—(i)uses unsupported or subjective terms to assess or rate the property without providing a foundation for analysis and contextual information;(ii)uses inaccurate or incomplete data about the subject property, the neighborhood, the market area, or any comparable property;(iii)includes references, statements, or comparisons about crime rates or crime statistics, whether objective or subjective;(iv)relies in the appraisal analysis on comparable properties that were not personally inspected by the appraiser when required by the appraisal’s scope of work;(v)relies in the appraisal analysis on inappropriate comparable properties;(vi)fails to use comparable properties that are more similar, or nearer, to the subject property without adequate explanation;(vii)uses comparable property data provided by any interested party to the transaction without verification by a disinterested party;(viii)uses inappropriate adjustments for differences between the subject property and the comparable properties that do not reflect the market’s reaction to such differences; or(ix)fails to make proper adjustments, including time adjustments for differences between the subject property and the comparable properties when necessary.(B)

Unsupported

The term unsupported means, with respect to an appraisal report or an appraiser’s opinion of value, that the appraisal report or the opinion of value is not supported by relevant evidence and logic.(2)

Review

In connection with a consumer credit transaction secured by a consumer’s principal dwelling, a creditor shall have a review and resolution procedure for a consumer-initiated reconsideration of value or subsequent appraisal that complies with the following requirements:(A)The creditor shall complete its own appraisal review before delivering the appraisal to the consumer.(B)The creditor shall have policies and procedures that provide the consumer with a process to submit 1 request for a reconsideration of value and subsequent appraisal prior to the loan closing or within 60 calendar days of denial of a credit application if the consumer believes the appraisal report may be unsupported, may be deficient due to an unacceptable appraisal practice, or may reflect discrimination.(C)At the time of application and upon delivery of the appraisal report to the consumer, the creditor shall provide a written disclosure to the consumer describing the process for requesting a reconsideration of value or subsequent appraisal, which written disclosure shall include a standardized format for the consumer to submit the request for a reconsideration of value, including—(i)the name of the borrower;(ii)the property address;(iii)the effective date of the appraisal;(iv)the appraiser’s name;(v)the date of the request;(vi)a description of why the consumer believes the appraisal report may be unsupported, may be deficient due to an unacceptable appraisal practice, or may reflect discrimination;(vii)any additional information, data, including not more than 5 alternative comparable properties and the related data sources that the consumer would like the appraiser to consider; and(viii)an explanation of why the new information, data, or comparable properties support the reconsideration of value.(D)The creditor shall obtain the necessary information from the consumer if the consumer’s request for reconsideration of value or subsequent appraisal is unclear or requires more information.(E)The creditor shall have a standardized format to communicate the reconsideration of value to the appraiser, which format shall include—(i)the name of the borrower;(ii)the property address;(iii)the effective date of the appraisal;(iv)the appraiser’s name;(v)the date of the request;(vi)a description of any area of the appraisal report that may be unsupported, may be deficient due to an unacceptable appraisal practice, or may reflect discrimination;(vii)any additional information, data, including not more than 5 alternative comparable properties and the related data sources that the consumer would like the appraiser to consider;(viii)an explanation of why the new information, data, or comparable properties support the reconsideration of value;(ix)a definition of turn-time expectations for the appraiser to communicate the reconsideration of value results back to the creditor;(x)instructions for delivering the reconsideration of value response as part of a revised appraisal report that includes commentary on conclusions regardless of the outcome; and(xi)a reference for appraisers on how to correct minor appraisal issues or non-material errors not related to the reconsideration of value process.(3)

Subsequent appraisal and referral

(A)

In general

If the creditor identifies material deficiencies in the appraisal report that are not corrected or addressed by the appraiser upon request of the creditor, including through a consumer-initiated reconsideration of value, or if there is evidence of unsupported or unacceptable appraisal practices, the creditor shall—(i)at the request of the consumer, order a subsequent appraisal at the creditor’s own expense; and(ii)forward the appraisal report and the creditor’s summary of findings to the appropriate appraisal licensing agency or regulatory board.(B)

Discrimination

If the creditor has reason to believe that an appraisal report reflects discrimination, the creditor shall—(i)order a subsequent appraisal, at the creditor’s own expense;(ii)forward the appraisal report and the creditor’s summary of findings to the appropriate local, State, or Federal enforcement agency; and(iii)upon a final determination of discrimination by the appropriate local, State, or Federal enforcement agency, receive a reimbursement from the appraiser covering the cost of the subsequent appraisal ordered by the creditor.(C)

Definition

(i)

In general

Except as provided in clause (ii), in this paragraph, the term reason to believe means that the creditor has reviewed the applicable law and available evidence and determined that a potential violation of Federal or state antidiscrimination law exists. The available evidence may include the appraisal report, loan files, written communications, credible observations by persons with direct knowledge, statistical analysis, and the appraiser’s response to the request for a reconsideration of value.(ii)

Exception

The term reason to believe does not mean that there is a final legal determination of discrimination.(4)

Document retention

The creditor shall retain all documentation and written communications related to the request for reconsideration of value or subsequent appraisal in the loan file during the 7-year period beginning on the date on which the consumer submitted the credit application.(5)

Rule of construction

This subsection is consistent with the exceptions to the appraiser independence requirements found in subsection (c). Nothing in this subsection shall be construed to require a creditor to submit a reconsideration of value to the original appraiser before ordering a subsequent appraisal from a subsequent appraiser.

(2)

Rules and interpretative guidelines

Section 129E(g) of the Truth in Lending Act (15 U.S.C. 1639e(g)) is amended—(A)in paragraph (1), by striking paragraph (2), the Board and inserting paragraphs (2) and (3), the Bureau; and(B)by adding at the end the following:

(3)

Final rule

Not later than 1 year after the date of enactment of this paragraph, the Federal Housing Finance Agency shall issue a final rule after notice and comment and issue such guidance as may be necessary to carry out and enforce subsection (j).

Public appraisal database

(1)

Covered agencies defined

The term covered agencies means—(A)the Federal Housing Finance Agency, on behalf of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation;(B)the Department of Housing and Urban Development, including the Federal Housing Administration;(C)the Department of Agriculture; and(D)the Department of Veterans Affairs.(2)

Feasibility report

No later than 240 days after the date of enactment of this Act, the Comptroller General of the United States shall issue a public report to Congress assessing the feasibility of creating a publicly available appraisal database that consists of a searchable and downloadable appraisal level public use file that consolidates appraisal data held or aggregated by covered agencies, which shall include—(A)the costs and benefits associated with establishing and maintaining the public database;(B)the benefits and risks associated with either the Federal Housing Finance Agency or the Bureau of Consumer Financial Protection being responsible for the public database and whether there is another Federal agency best suited for implementing and administering such database;(C)any safety and soundness, antitrust, or consumer privacy-related risks associated with making certain appraisal data factors publicly available, including whether—(i)there are any existing legal requirements, including under the Home Mortgage Disclosure Act of 1974 (12 U.S.C. 2801 et seq.) and section 552 of title 5, United States Code (commonly known as the Freedom of Information Act), or additional actions Federal agencies could take to mitigate such risks, such as modifying or aggregating data, or eliminating personally identifiable information; and(ii)there are any data factors that, if made public, may violate conduct, ethics, or other professional standards as they relate to appraisals and appraisal or valuation professionals;(D)the feasibility of consolidating or matching appraisal data held by covered agencies with corresponding data that is required and made public under the Home Mortgage Disclosure Act of 1974 (12 U.S.C. 2801 et seq.);(E)whether the publication of any appraisal data factors may pose unfair business advantages within the valuation industry;(F)the feasibility of including all valuation data held by covered agencies, including data produced by automated valuation models;(G)the feasibility and benefits of making the full appraisal dataset, including any modified fields, available to—(i)Federal agencies, including for purposes related to enforcement and supervision responsibilities;(ii)relevant State licensing, supervision, and enforcement agencies and State attorneys general;(iii)approved researchers, including academics and nonprofit organizations that, in connection with their mission, work to ensure the fairness and consistency of home valuations, including appraisals; and(iv)any other entities identified by the Comptroller General as having a compelling use for disaggregated data;(H)what appraisal data is already available in the public domain; and(I)the feasibility of incorporating legacy data held by covered agencies during the period beginning on January 1, 2017 and ending on the date of enactment of this Act, and whether there are specific data points not easily consolidated or matched, as described in subparagraph (D), with more recent data.(3)

Purpose

The database described in paragraph (2) shall be used to provide the public, the Federal Government, and State governments with residential real estate appraisal data to help determine whether financial institutions, appraisal management companies, appraisers, valuation technologies, such as automated valuation models, and other valuation professionals are serving the housing market in a manner that is efficient and consistent for all mortgage loan applicants, borrowers, and communities.(4)

Consultation

As part of the information used in the report required under paragraph (2), the Comptroller General of the United States shall conduct interviews with—(A)relevant Federal agencies;(B)relevant State licensing, supervision, and enforcement agencies and State attorneys general;(C)appraisers and other home valuation industry professionals;(D)mortgage lending institutions;(E)fair housing and fair lending experts; and(F)any other relevant stakeholders as determined by the Comptroller General.(5)

Hearing

Upon the completion of the report under paragraph (2), the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives shall each hold a hearing on the findings of the report and the feasibility of establishing a public appraisal-level appraisal database.