On April 4, Michelle Bradley, the 2016 NAR Real Property Valuation Committee Chair, testified before the House Committee on Veterans’ Affairs – Economic Opportunity Subcommittee at a hearing entitled “Assessing VA Approved Appraisers and How to Improve the Program for the 21st Century.” In the past year, the Department of Veterans Affairs (VA) Home Loan Guaranty Program has become aware of concerns with long wait times to schedule a VA appraisal and a potential shortage of appraisers, especially in very rural areas.
In her testimony, Ms. Bradley stressed the strong performance of VA loans and their low foreclosure rates, which are due to strong underwriting requirements, in particular the well-developed VA appraisal system and high quality of VA appraisers. The VA’s closed panel of appraisers ensures strict appraiser independence by removing the possibility of collusion between the lender and the appraiser.
In addressing the concerns of the Committee, Ms. Bradly testified that the long wait times to schedule a VA appraisal in rural areas are not due to a simple shortage of appraisers. Qualified appraisers are selecting to focus on non-VA assignments rather than join the VA panel. According to NAR’s 2017 Appraisal Trends Survey, appraisers cite concerns with compensation and over-regulation as reasons to opt-out of all types of assignments. Training new appraisers has become increasingly challenging given burdensome requirements for entry into the profession.
In addition, rural areas present unique problems with regards to residential appraisals, as properties are often “unique” with large distances between comparable homes, causing time and gas costs to exceed those of suburban or urban appraisers. Sometimes the sales price and the appraised value of a property are different. And while the VA has a Reconsideration of Value process that is intended to assure the buyer and the lender that the appraiser has reviewed all relevant data, this is not always understood by the buyer or their agent.
The Committee asked that the panelists, NAR included, continue to focus on the concerns of the VA appraisal system and work together to develop recommendations for improvement that could be presented back to the Committee at a later date.