Appraisal Industry Reform for FHA Appraisals

Summary#

H.R. 6025, the Appraisal Industry Improvement Act, would amend the National Housing Act, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and the Federal Financial Institutions Examination Council Act of 1978. It would change who may appraise homes for FHA-insured mortgages, add rules and support for trainee appraisers, and expand the powers and membership of the existing Appraisal Subcommittee. Its stated goal is to authorize state-licensed appraisers for FHA appraisals and ensure appraisers meet education and competency requirements; it has been introduced and referred to committee, so it is not law.

  • For FHA-insured mortgages, appraisers generally would have to be licensed or certified in the state where the property is located, meet the appraisal competency rule before accepting an assignment, and complete FHA appraisal education. A qualifying federal employee could use a credential from one state or territory for FHA appraisals nationwide.
  • Appraisers already approved by FHA before the new guidance takes effect would not have to meet the new education requirement. They would still have to meet the licensing or certification and competency requirements.
  • The existing Appraisal Subcommittee could adjust annual registry fees for appraisal management companies, with approval from the Financial Institutions Examination Council.
  • The bill would add state-credentialed trainee appraisers to the national registry and let certified appraisers use help from credentialed or unlicensed trainees. The certified appraiser would be liable for the final work.
  • The Subcommittee could award grants for appraiser education, training, recruitment, and retention. The bill would also add the Department of Veterans Affairs, the Rural Housing Service, and the Department of Housing and Urban Development to the entities represented on the existing Subcommittee.

What it means for you#

  • Appraisers doing FHA work: They would have to meet the bill’s state credential and competency rules. New appraisers would also need verifiable FHA-specific education, through a course or seminar provided by FHA or an approved third party.
  • Federal employee appraisers: If their primary duty is appraisal-related and they choose to get a state credential, one state or territory credential would be enough for FHA appraisals nationwide.
  • Trainee appraisers and certified appraisers: A certified appraiser could use help from a state-credentialed or unlicensed trainee, but would be liable for the final work. The bill would not require states to create trainee-credential programs.
  • States: States with trainee programs would have to provide a roster of credentialed trainees. States would also have to report credential and license activity, sanctions, and disciplinary actions to the national registry in a timely way.
  • Appraisal management companies: Their annual registry fees could be adjusted, but only if the Council approves the change.
  • Nonprofits, colleges, and state appraisal agencies: They could seek grants for workforce and training activities; the bill does not guarantee that they would receive one.
  • Borrowers and homeowners: The bill does not directly change FHA mortgage eligibility, loan terms, or property values.

Money#

No cost estimate is provided in the supplied material.

  • HUD must issue implementation guidance within 240 days of enactment. The bill gives no cost or staffing estimate.
  • The Subcommittee could make workforce grants, but the bill sets no grant amount or funding total.
  • The Subcommittee could adjust appraisal management company registry fees, subject to Council approval. The bill does not require an increase or set its amount.

What is unclear#

  • The parent laws were not supplied, so the changes could not be checked against the full current law.
  • The bill does not define “primary duty” or “appraisal-related activities” for federal employees.
  • HUD’s guidance would set out the FHA approval requirements and a way to show prior compliance, but the bill does not set out the detailed process or its timelines beyond the deadline for issuing and starting the guidance.
  • The bill does not state grant amounts, selection rules, or how the Subcommittee would decide which workforce activities to fund.
  • The bill does not specify how much registry fees could change.

Case for#

  • The bill appears intended to let state-licensed appraisers conduct FHA appraisals while keeping requirements for state credentials and competency.
  • Requiring FHA-specific education could help appraisers understand FHA appraisal requirements.
  • Adding trainee appraisers to the registry and allowing them to assist certified appraisers could support training and workforce development.
  • Grants for training, scholarships, and career pipelines could help address appraiser workforce needs.

Case against#

  • The bill does not set detailed standards for FHA-specific courses or explain how approved third-party courses would be checked.
  • Grant authority and fee-adjustment power come without amounts or detailed decision rules in the bill.
  • State trainee programs would remain optional, so trainee credentialing and registry coverage could differ between states.
  • The bill expands the Subcommittee’s role, but does not specify how the added agency representation would affect its decisions.