As a potential remedy, appraisers are advocating for more transparency in closing documents. Currently, a homebuyer sees how much they’re paying for appraisals, but not how much goes to each party. Appraisers have proposed breaking out the fee on closing documents to show how much goes to the appraiser and the AMC, thinking consumers will question why an intermediary receives more than the appraiser.
In June, the Consumer Financial Protection Bureau (CFPB) issued a request for “information regarding fees imposed in residential mortgage transactions,” framing the call for comments as an investigation into “junk fees,” or those collected by AMCs.
However, the incoming Trump administration serves as a serious impediment to the possibility of CFPB issuing rules on the issue. Trump regularly espouses threats of eliminating the CFPB in its entirety, threats that pre-date Trump’s foray into politics in 2015.
Project 2025 — the controversial blueprint for Trump’s presidency written by the conservative think tank The Heritage Foundation — advocates for just that. It calls for the abolition of the CFPB and the repeal of its regulations.
While ending the CFPB would require legislative action, Trump could fire CFPB Director Rohit Chopra and replace him with someone more aligned with his policy goals. (More likely Chopra would resign on inauguration day.)
It’s unclear how much Trump will directly implement from Project 2025. After initially embracing the blueprint for a second term, Trump disavowed it when it became a political liability during the 2024 campaign. However, he is hiring people involved in creating the document. Russ Vought, one of the Project 2025’s architects, has been nominated by Trump to lead the Office of Management and Budget, a position he held during Trump’s first term.
Bye Bye, PAVE task force?
President Joe Biden made diversity, equity and inclusion (DEI) a guiding principle within his administration. The Property Appraisal and Valuation Equity (PAVE) initiative — co-chaired by Department of Housing and Urban Development (HUD) chair Marcia Fudge and White House Domestic Policy Advisor Neera Tanden — aims to apply DEI values to the appraisal industry.
The PAVE Action Plan outlined the task force’s goals in 2022. Among them are addressing discrimination in appraisals, helping homeowners and shoppers challenge valuations suspected of containing bias and diversifying the profession. Demographically, appraisers are getting considerably older as a result of the exodus from the profession, and they are overwhelmingly white.
Trump and Republicans are downright hostile to DEI initiatives so it would be surprising if he retained the task force, particularly given that it will lose its two co-chairs on Jan. 20 when Trump is inaugurated. Project 2025 calls on HUD to “immediately dismantle” the PAVE initiative.
Scott Turner — Trump’s nominee for HUD secretary — served as executive director of the White House Opportunity and Revitalization Council in Trump’s first term and worked closely with former HUD secretary Ben Carson.
The council’s primary focus was implementing and raising money for Opportunity Zones, a program created by the Tax Cuts and Jobs Act of 2017. Opportunity Zones give massive capital gains tax breaks to investors who invest in counties deemed underserved by a formula of various economic variables.
Turner’s work on the council doesn’t specifically relate to DEI, so it’s hard to glean his personal views on the PAVE initiative. Regardless, it’s impossible to imagine he would push to retain it.
Appraisal legislation has support, but may not be a priority
Two pieces of proposed legislation related to the appraisal industry have bipartisan support. While they’re limited in scope, they could make minor improvements that benefit the industry.
In March, Sen. Jon Tester (D-MT) and Sen. Kevin Cramer (R-ND) introduced the Appraisal Industry Improvement Act, which would expand eligibility for performing appraisals. The bill has been read twice and referred to the Senate Committee on Banking, Housing and Urban Affairs.
Among the changes proposed, it allows state-licensed appraisers to work on mortgages insured by the Federal Housing Administration (FHA). It also permits state-licensed appraisers to work across all states. FHA appraisals are an attractive segment of the appraisal market because appraisers don’t work with AMCs for those jobs.
The Portal for Appraisal Licensing Act of 2023 would create a national platform for appraisers and AMCs to manage licenses and certifications. It’s intended to streamline processes that are presently fragmented, which can cause headaches for appraisers who work in multiple states.
House of Representatives members from both parties introduced the bill in April 2023. It was introduced in the Senate the following July by Sen. Mike Rounds (R-SD) and Tester. The bill has been read twice and referred to the same committee as the Appraisal Industry Improvement Act.
While the bills have the support of both the Appraisal Institute and the Real Estate Valuation Advocacy Association (REVAA) — trade groups that represent appraisers and AMCs, respectively — the results of the 2024 election make their future cloudy at best.
Tester lost his reelection bid to Republican Tim Sheehy, which removes a cosponsor from both bills. Sen. Sherrod Brown (D-OH), the chair of the banking committee, was ousted from his seat by Republican Bernie Moreno.
Republicans also now have the majority in the Senate, which means they will control the committee. While it’s unclear how this will impact the two pieces of legislation, it’s a change that introduces uncertainty into the process.
