Real Estate Analysis and Commentary in Hampton Roads
Model Appraiser Board Funding Bill
May 10th, 2010 7:45 AM
Appraisal groups unveil model appraiser board funding bill
Valuation Review – 05/04/10
The Appraisal Institute led a group of professional appraisal organizations in releasing model legislation for states that, if passed into law, would ensure a uniform approach to the funding of state appraiser boards.
The allocation and use of resources and money by state appraisal boards is of vital importance to the regulation of existing laws pertaining to appraisers. It is not just fraudulent or dishonest appraisers who face disciplinary actions from state appraiser boards. It is also incompetent or unqualified appraisers. The state appraiser boards have the responsibility for ensuring that the “bad apples” are dealt with and removed from the profession.
In addition, critics of proposed appraisal legislation and appraisal management company regulations argue that the state boards should be doing more to enforce existing statutes. However, many state appraiser boards are hamstrung by a lack of resources. Boards struggle to be able to hire the investigators needed for proper enforcement of existing appraiser laws.
Bill Garber, director of government and external relations for the Appraisal Institute, agreed that this situation needed addressing. “The lack of resources is routinely identified by state and federal regulators as a common deficiency in appraisal oversight and enforcement,” he said. “Many states have only one investigator on staff or they are forced to share investigative enforcement with several other licensing boards not related to real estate appraisal.
Currently, the funding of appraiser boards varies wildly from state to state. In some states, appraiser boards raise their own revenues through licensing and punitive fines, and are able to keep their funds for enforcement and administration, making them entirely self-sufficient. In other states, however, any money raised by the appraiser board is put into a general fund for the state, and can be removed for any other purpose as seen fit.
There have also been reports, in particular from Arizona, of governors taking all of the money out of the state appraiser board’s coffers in order to fund a budget shortfall, a scenario that could be repeated as many states face drastic budget cuts. “This can result in state boards putting more money into the state coffers than they receive back from the state,” said Garber.
One example of state appraiser boards’ funding comes from Mississippi, where the state legislature recently passed HB 1652, an act “making an appropriation from special funds in the state treasury for the purpose of defraying the expenses of the Mississippi Real Estate Appraiser Licensing and Certification Board for the fiscal year 2011.”
In the bill, it is revealed that the expenses for the coming year in Mississippi for the state’s appraiser board are $448,188. This is broken down into salaries and wages of $231,550, travel and subsistence of $40,000, contractual services of $150,738, commodities of $19,300 and equipment of $6,500. The board has four full-time employees.
A review conducted by the Appraisal Institute of existing state appraiser board funding statutes assigned 16 states’ statutes as strong, 17 as moderate and 11 as weak. According to the review, funding of the appraiser board is not dealt with in statute in 7 states.
To help with this situation, the Appraisal Institute was joined by the American Society of Appraisers, American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers in drafting this model legislation.
The legislation calls for the creation of a “Real Estate Appraisers Fund” in those states that have moderate or weak funding statutes. The fund is built up through the fees charged by the board for licensing, renewing and disciplinary actions, as well as whatever money is appropriated to the board from the state budget.
In order to protect state boards from being ‘raided’, there are a few detailed provisions:
Expenditures from the Fund may be made only upon appropriation by the legislature through either a general appropriation act or a special appropriation act;
No monies shall be withdrawn or expended from the Fund except as budgeted and allotted according to [State Budgeting Process] and only in amounts as stipulated a general appropriation act or a special appropriation act; and
Money in this Fund shall not be transferred or placed to the credit of the general fund.
Garber hoped that the bill would be adopted by states in the same manner as similar model legislation pertaining to the regulation of appraisal management companies. “In the broadest sense, this model bill is about improving enforcement and providing resources where they are needed most,” he said. “We hope that our chapters will be as successful as this as they have been with the recent model bill on the registration of appraisal management companies.”
Posted by Woody Fincham, SRA on May 10th, 2010 7:45 AM
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