Who’s at your front door? Home appraisers and their background checks

LB from NE

RALEIGH – A bill scheduled to be heard on the Senate floor Monday would require appraisal management companies to accept any home appraiser’s criminal background check as long as it was completed within the last 12 months and complies with existing state laws. The measure got approval from a Senate Judiciary committee on Thursday.

Currently, different lenders require different types and frequencies of background checks. The intention is to allow appraisers to have just one background check per year and use it for all jobs. The checks cost anywhere from $45-$100 each.

Rep. John Hardister (R-Greensboro)

“These are small businesses and independent contractors and allowing them to cycle just one to everyone relieves the cost for appraisers,” said bill sponsor Rep. John Hardister (R-Greensboro).

With appraisers spending their day working in private homes, appraisal management companies say the measure could be a public safety risk.  They are concerned that House Bill 651 may prevent them from requiring a more stringent and current background check, if their lenders require it.

“It’s a lot safer if appraisal companies are doing their own due diligence,” said Mark Schiffman, Executive Director of the Real Estate Evaluation Advocacy Association (REVAA). “To legislate this level of detail pushes way to far.”

Schiffman, whose trade association represents appraisal management and evaluation companies, said their members are concerned that if the state pushes the limit to 12 months, appraisal management companies may not be able to meet the requirements of their lenders, and may, if something goes wrong, be responsible for tragic outcomes if an appraiser has committed a crime within the last 12 months.

“Tell us to do background check. We absolutely understand the need for them,” he said. “When a private business goes through due diligence, they have to make sure the background checks fit with what we need in scope and time frame. They’re saying we have to accept anyone sight unseen, and that’s unacceptable.”

Lenders have moved toward more stringent background check requirements since the Dodd-Frank Wall Street Reform and Consumer Protection Act banned a consumer or lender’s right to choose their own appraiser. Dodd-Frank, which was signed into law by President Obama in 2010, brought in a wave of regulations over financial institutions as part of backlash following the Great Recession.

The measure also limits appraisers exposure to lawsuits, saying that they cannot be sued past five years after an appraisal is complete. The bill is currently scheduled to be on the Senate floor on Monday, with plans for a technical amendment.