15 U.S.C. § 1639e — Appraisal independence requirements

(a) In general. When extending credit^* or providing services for a consumer-credit transaction secured by the consumer’s principal dwelling, it is unlawful to engage in an act or practice that violates appraisal independence under this section or its regulations.

(b) Appraisal independence. For subsection (a), violations include:

(1) A person^* with an interest in the underlying transaction may not, in connection with an appraisal of property offered as security, compensate, coerce, extort, collude with, instruct, induce, bribe, or intimidate the appraiser, appraisal management company, firm, or other entity conducting or involved in the appraisal—or try to do so—to make the appraised value depend on something other than the appraiser’s independent judgment.

(2) No one may mischaracterize the appraised value of the property securing the credit, or cause someone else to mischaracterize it.

(3) No one may try to influence an appraiser or encourage a targeted value to help make or price the transaction.

(4) No one may withhold, or threaten to withhold, timely payment for an appraisal report or appraisal services when the report or services were provided as the parties’ contract requires.

(c) Exceptions. Subsection (b) does not prevent a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, an appraisal management company employee, the consumer, or another person interested in the real-estate transaction from asking an appraiser to:

(1) Consider additional, appropriate property information, including additional comparable properties, when making or supporting an appraisal;

(2) Give more detail, support, or an explanation for the appraiser’s value conclusion; or

(3) Correct errors in the appraisal report.

(d) Prohibitions on conflicts of interest. A certified or licensed appraiser conducting an appraisal, and an appraisal management company procuring or facilitating one, for a covered consumer-credit transaction may not have a direct or indirect interest—financial or otherwise—in the property or transaction being appraised.

(e) Mandatory reporting. A mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, appraisal management company employee, or other person involved in such a real-estate transaction who reasonably believes that an appraiser is failing to follow the Uniform Standards of Professional Appraisal Practice, violating applicable laws, or engaging in unethical or unprofessional conduct must refer the matter to the applicable State appraiser-certifying and licensing agency.

(f) No extension of credit. For a covered transaction, a creditor^* that knows at or before loan closing that subsection (b) or (d) appraisal-independence standards were violated may not extend credit based on that appraisal unless the creditor documents that it used reasonable diligence to determine that the appraisal does not materially misstate or misrepresent the dwelling’s value.

(g) Rules and interpretive guidelines. (1) In general. Unless paragraph (2) applies, the Board, Comptroller of the Currency, Federal Deposit Insurance Corporation, National Credit Union Administration^* Board, Federal Housing Finance Agency, and Bureau^* may jointly issue rules, interpretive guidelines, and general policy statements about acts or practices violating appraisal independence in mortgage lending and mortgage brokerage services for covered transactions, as described in subsections (a), (b), (c), (d), (e), (f), (h), and (i).

(2) Interim final regulations. For this section, the Board must issue interim final regulations no later than 90 days after July 21, 2010. The regulations must specifically define acts or practices violating appraisal independence in the covered mortgage-lending or mortgage-brokerage services and define any terms used in this section or the regulations. The Board’s rules under this paragraph are treated as rules jointly issued by the agencies under paragraph (1).

(h) Appraisal report portability. Consistent with this section, the listed agencies and Bureau may jointly issue regulations about whether appraisal reports can be used by different lenders. The regulations may ensure that a report can move between lenders for a covered transaction involving a one- to four-unit single-family residence that is the consumer’s principal dwelling, or for mortgage brokerage services for such a transaction.

(i) Customary and reasonable fee. (1) In general. Lenders and their agents must pay fee appraisers a rate customary and reasonable for appraisal services in the property’s market area. Objective information from third parties, such as government fee schedules, academic studies, and independent private-sector surveys, may establish the evidence for those fees. Fee studies must exclude assignments ordered by known appraisal management companies.

(2) Fee appraiser definition. (A) In general. “Fee appraiser” means a person who is not an employee of the mortgage loan originator or appraisal management company hiring the appraiser and who is either:

(i) A State-licensed or State-certified appraiser who receives a fee for an appraisal and certifies that it follows the Uniform Standards of Professional Appraisal Practice; or

(ii) A company not subject to section 3353 of title 12 that uses State-licensed or State-certified appraisers and receives a fee for appraisals following those standards.

(B) Rule of construction related to appraisal donations. If a fee appraiser voluntarily donates appraisal services to an organization^* eligible for tax-deductible charitable contributions, the donation counts as customary and reasonable for paragraph (1).

(3) Exception for complex assignments. For a complex appraisal, the customary and reasonable fee may reflect the extra time, difficulty, and scope of the work. It may include more than the customary and reasonable fee for a noncomplex appraisal.

(j) Sunset. On the date interim final regulations are issued under subsection (g), the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, has no force or effect.

(k) Penalties. (1) First violation. In addition to the enforcement provisions referenced in section 1640 of this title, each person violating this section must forfeit and pay a civil penalty of no more than $10,000 for each day the violation continues.

(2) Subsequent violations. For a person on whom a penalty was imposed under paragraph (1), paragraph (1) applies to later violations by replacing $10,000 with $20,000.

(3) Assessment. The agency identified in subsection (a) or (c) of section 1607 of this title for the person described in paragraph (1) must assess the penalty imposed under this subsection.