A
crisis-driven
regulatory
legacy 

Despite
FIRREA’s
implementation,
the
2008
financial
crisis
underscored
persistent
issues
within 
the
appraisal
industry.
Fraudulent
or
inaccurate
valuations
deepened
the
crisis,
revealing 
systemic
weaknesses
including
regulatory
gaps
and
conflicts
of
interest.
Congress
responded
by 
passing
the

Dodd-Frank
Act,
which
added
new
responsibilities,
such
as
requiring
state
regulation 
of

Appraisal
Management
Companies
(AMCs)—but
without
sufficient
funding. 

Similarly,
the
2008
Housing
and
Economic
Recovery
Act
(HERA)
removed
Licensed
Appraisers 
from
eligibility
for
HUD/FHA

appraisals,
reducing
appraiser
availability,
particularly
in
rural 
areas.
These
measures,
reactive
rather
than
strategic,
highlight
the
ad
hoc
nature
of
appraisal 
regulation. 

Current
regulatory
structure 

The
U.S.
appraisal
regulatory
framework
is
complex
and
multi-tiered: 

•

The
Appraisal
Subcommittee
(ASC):
The
federal
agency
that
oversees
state
and
AMC 
programs,
monitors
and
reviews
The
Appraisal
Foundation
(TAF),
and
allocates
funding 
via
the
National
Registries. 

•

The
Appraisal
Foundation
(TAF):
A
private
nonprofit,
sets
national
appraisal
standards 
(USPAP)
and
qualifications
through
the
Appraiser
Qualifications
Board
(AQB).
•

State
Regulatory
agencies:
License
and
supervise
appraisers,
and
AMCs. 

While
the
system
aimed
for
collaborative
governance,
it
has
evolved
into
a
fragmented, 
inefficient,
and
outdated
structure.

Key
institutional
challenges 

The
Appraisal
Subcommittee
(ASC) 

•
Governance
inefficiency:
Composed
of
seven
federal
agencies,
the
ASC
board
is 
bureaucratic,
slow,
and
ineffective. 

•
Eroded
authority:
Its
jurisdiction
has
shrunk
from
90%
of
transactions
in
1990
to
5–10% 
today. 

•
No
enforcement
power:
The
ASC
cannot
compel
compliance
from
TAF
and
state 
enforcement
is
limited
and
minimally
effective. 

•
Political
misuse:
Some
board
members
have
used
the
ASC
for
political
objectives, 
damaging
credibility. 

•
Resource
mismanagement:
Despite
holding
$30
million
in
reserves,
the
ASC
lacks
a
plan 
to
use
those
funds. 

•
ASC
has
lost
key
staff
leadership
over
the
past
year
who
have
not
been
replaced.
Given 
the
current
restrictions
on
new
hires,
the
agency
could
cease
to
function
effectively
or 
altogether.  

The
Appraisal
Foundation
(TAF) 

•
Revenue
model
concerns:
USPAP
updates
were
seen
as
revenue-driven
rather
than 
necessary,
leading
to
criticism
and
a
halt
in
revisions
post-2020.
TAF
now
has
no
clear 
revenue
stream. 

•
Lack
of
accountability:
Though
monitored
by
the
ASC,
TAF
operates
without
meaningful
oversight. 

•
Barriers
to
entry:
AQB’s
experience
requirements
remain
a
significant
hurdle
for
aspiring 
appraisers,
with
limited
success
from
initiatives
like
PAREA. 

•
Recent
accusations
of
fraud
and
improprieties
at
the
Appraisal
Institute.
As
the
only 
current
PAREA
provider,
these
allegations
could
further
erode
confidence
in
PAREA.
•
Governance
issues:
Concerns
over
conflicts
of
interest
and
constitutional
challenges
have 
emerged
regarding
a
private
nonprofit
wielding
such
significant
and
unchecked
federal 
authority. 

State
regulatory
programs 

•
Underfunded:
Many
states
lack
the
resources
needed
for
effective
appraisal
and
AMC 
oversight. 

•
Burdened
by
AMC
mandates:
State
appraisal
regulatory
agencies
often
struggle
to 
regulate
corporate
entities. 

•
Impacted
by
USPAP
revisions:
Frequent
changes
made
enforcement
and
compliance 
difficult,
though
this
has
stabilized
in
recent
years.

A
path
forward:
Three
potential
options 

1.
Enhance
the
existing
system 

•
Strengthen
ASC’s
enforcement
capabilities. 

•
Reform
board
structure
and
governance. 

•
Remove
ASC
from
the
Federal
Financial
Institutions
Examination
Council
(FFIEC).
•
Create
a
strategic
plan
for
ASC
reserves. 

•
Provide
sustainable
funding
for
TAF
and
state
programs. 

•
Simplify
overlapping
regulations. 

2.
Reduce
federal
involvement 

•
Create
a
self-regulatory
organization
(SRO),
modeled
after
FINRA
or
PCAOB.
•
Shift
federal
oversight
to
the
Treasury
or
SEC. 

•
Establish
a
multi-stakeholder
advisory
group. 

•
Reduce
inefficiencies
and
align
incentives. 

•
The
ASC’s
$30
million
in
unused
funds
could
be
used
to
fund
the
start
up.

3.
Transition
to
state
control 

•
Eliminate
federal
oversight
entirely. 

•
Allow
states
full
regulatory
authority,
including
the
option
to
privatize.
•
This
approach
matches
international
models
but
risks
inconsistent
standards
and 
challenges
for
nationwide
lenders. 

Conclusion 

What
was
once
a
pioneering
regulatory
structure
has
become
outdated
and
ineffective.
Only
a 
small
fraction
of
transactions
now
fall
under
federal
oversight,
weakening
the
system’s 
relevance.
Legislative
efforts
have
historically
followed
crises
rather
than
leading
with
proactive 
vision,
resulting
in
a
disjointed
regulatory
environment. 

The
time
for
reform
is
now.
Whether
through
targeted
enhancements,
a
shift
toward
a
new 
appraisal
regulatory
model,
or
a
decentralized
state-based
system,
the
goal
must
be
a
modern, 
efficient,
and
accountable
framework
that
protects
our
nation’s
financial
system.
A
well
functioning
appraisal
regulatory
system
is
critical
not
just
for
the
profession,
but
for
the
stability 
and
integrity
of
U.S.
real
estate
and
international
financial
markets. 

James
R.
Park
is
the
president
of
Collateral
Risk
Network.

This
column
does
not
necessarily
reflect
the
opinion
of
HousingWire’s
editorial
department
and
its
owners.

To
contact
the
editor
responsible
for
this
piece:



[email protected].