APPRAISER REGULATION UPDATE

It was reported in the last issue of the "Real Estate Bulletin" that the Real Estate Commission was considering recommending legislation to the North Carolina General Assembly to regulate persons who appraise real estate in our State. Since announcing these plans in February, the Commission has met and discussed the issue of appraiser regulation with representatives of various appraisal and banking organizations and with state and federal governmental agencies involved in appraisal-related activities. The Commission has also consulted real estate licensing officials in other states, and Commission Vice-Chairman J. Edward Poole has met with Representative Doug Barnard who has introduced in Congress the "Real Estate Appraisal Reform Act of 1987" (H.R. 3675).

Real Estate Commission Chairman Gilbert L Boger addresses a March 17 meeting in Raleigh concerning the proposed legislation.

In attendance were appraisal and banking industry representatives and governmental administrators in Raleigh.

In addition, as previously announced in the "Bulletin," the Commission held a Forum in Raleigh on April 14 to afford interested persons an opportunity to corpulent on the issue of appraiser regulation. An overflow crowd of approximately 200 persons attended, giving the Commission members much valuable insight into the concerns of persons and organizations which would be most affected by any governmental regulation of the real estate appraisal industry.

Following is an excerpt of the opening remarks of Commission Executive Director Phillip T. Fisher at the Forum, outlining the Commission's efforts to date in examining the many aspects of this complex issue and summarizing the basic concerns of the Commission and others with regard to the proper approach which should be taken to regulate the conduct of real estate appraisers, should it be determined that any regulation is warranted.

Approximately 200 persons attended a Forum on appraiser regulation Inducted by the Commission on April 14.

"The Commission has for some time discussed and considered whether a need exists for regulating, in some form or fashion, the real estate appraisal industry. Then, in November of last year, when Georgia Congressman Doug Barnard introduced,in Congress his 'Real Estate Appraisal Reform' bill, the,, Real Estate Commission accelerated its consideration of this issue; it being the position of the Commission that regulation of this activity might be a more proper role for state government rather than at the federal level.

"First, the Commission staff crafted a bill calling for the 'voluntary certification' of real estate appraisers. However, after much discussion and debate, the Commission determined that a 'voluntary' plan of regulation would simply not afford consumers adequate protection. For example, under 'voluntary certification,' if someone certified by the State as an appraiser were to render an appraisal

in a blatantly improper or incompetent manner, the Commission could merely remove the appraiser's right to refer to himself or herself as 'certified;' the appraiser could then simply remove the word 'certified' from his business cards and advertisements and continue to perform appraisals. Consequently, the Commission sent us back to the drawing board to draft a bill which would require all real estate appraisers to be licensed by the Commission and would empower the Commission to remove from the business, anyone who violates the Appraiser Licensing Act or the Commission's Rules.

"On February 18, staff presented and the Commission tentatively approved a proposed bill calling for the licensure of appraisers. Notice of the Commission's decision to consider the licensing of real estate appraisers was given in the last issue of the Commission's newsletter, the 'Real Estate Bulletin,' which was distributed to all persons holding North Carolina real estate broker or salesman licenses. As a result, 325 persons requested and were sent copies of the proposed bill. In addition, copies were sent to all known real estate appraisal organizations, associations, institutes and societies.

"Many comments [more than 80 letters] were received. The Commission also consulted with various appraisal organizations, and the North Carolina Association of REALTORS, the N.C. Banker's Association, the North Carolina League of Savings Institutions, the Mortgage Bankers Association of the Carolinas, the North Carolina Department of Revenue, the North Carolina Housing Finance Agency, the Veterans Administration and the Department of Housing and Urban Development. The purpose of the consultation was to obtain as much input as possible from persons who would be most affected by any regulation of the appraisal business.

"Two schools of thought quickly emerged. On the one hand, certain groups advocated a program of 'voluntary certification' of appraisers because they feared chat the General Assembly, in its deliberation of a licensing bill, would very likely require chat all persons currency engaged in appraising be 'grandfathered in;' chat is, they would be allowed to obtain licenses without having to meet any education or experience requirements or pass a written examination. On the ocher hand, many persons who are currently engaged in the appraisal business supported the licensing approach for chat very reason; that is, they felt chat persons already in the business should be 'grandfathered in.' And Therein lies the rub.

"The Commission, still resolved that licensing afforded a greater measure of consumer protection, attempted to balance those opposing interests and concerns with regard to the 'grandfather' question and to somehow satisfy the likely concerns of the General Assembly by including a limited or qualified grandfather provision in its bill, wherein the license examination requirement would only be waived for persons who have had a certain amount of experience in real estate appraising.

"In addition to the major issue of 'grandfathering,' we have also received comments and suggestions concerning ocher provisions of the February draft of the bill. In response to these comments, the February 18 draft was revised on March 22 and a copy of the 2nd draft together with a summary of the changes was sent to the persons who had received the earlier draft and to various ocher persons and organizations.

"That brings us to today and to the fundamental questions which remain before the Commission; namely, whether There exists a demonstrated, compelling need to regulate the real estate appraisal business in North Carolina, and, if so, what would be the most effective form of regulation from the standpoint of protecting consumers of real estate appraisal services?"

Since the Forum, the Commission has met and considered the comments and viewpoints expressed by the many Forum participants and by persons who had submitted written comments. Despite the many sincere and understandable concerns expressed by persons who have advocated a "no grandfathering" voluntary certification program of regulation, the Commission continues to support the concept of mandatory licensing as a more effective means of enforcing a meaningful regulatory program for real estate appraisers. The Commission also recently approved several technical changes in the licensing bill which is currency under development.

However, recognizing chat many obstacles must be overcome in the passage of any proposed regulatory legislation (including the necessity of demonstrating to the General Assembly in a convincing manner that there exists a dear need for such legislation), the Commission determined chat the issue of appraiser regulation should be taken under advisement at tills time pending further study.

Your further comments concerning The issue of regulation of real estate appraisers should be addressed to the North Carolina Real Estate Commission, P.O. Box 17100, Raleigh, North Carolina 27619-7100. In addition, copies of the most recent (May 4,1988) draft of the appraiser licensing bill under development by the Commission are available without charge from the Commission office. And a transcript of the April 14 Forum is available for $36.50 per copy from Pace Reporting Service, P.O. Box 252, Cary, North Carolina 27512 (Phone 919/469-0199).