ASC History

The ASC owes its existence to the Savings and Loan Crisis of the 1980's. In 1990, Representative Doug Barnard, Chairman of the Commerce, Consumer, and Monetary Affairs Subcommittee of the Committee on Government Operations, on opening a hearing into Title XI's implementation, remarked:

"Appraisal problems were first brought to light . . . in 1984 in our report on criminal misconduct inside U.S. financial institutions. The report concluded that fraud and self-dealing by officers, directors, and insiders caused or contributed to 50 percent of all financial institution failures recent to the time of the report and that faulty or fraudulent real estate appraisals were systematically used by corrupt or incompetent financial managers to overvalue collateral and to make unsafe, unsound, and even fraudulent real estate loans look adequately secured."

Another Subcommittee report, issued in 1986:

"[C]oncluded that faulty and fraudulent appraisals were widespread and that abusive appraisals constituted a prominent factor in the insolvency of hundreds of financial institutions as well as contributing to billions of dollars of losses to the Federal deposit insurance funds, [the Veterans Administration], and [the Federal Housing Administration], to private lenders and mortgage insurers, as well as to issuers of and investors in mortgage-backed securities."

These facts, among other things, led Congress, in August 1989, to enact the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, better known as FIRREA or the "Savings and Loan Bailout Bill." Title XI of FIRREA, the "Real Estate Appraisal Reform Amendments," was specifically targeted at solving the appraisal-related problems discussed in prior Congressional testimony. In general, Title XI required federally regulated financial institutions, such as federally insured banks, thrifts and credit unions, to use State certified or licensed appraisers to perform appraisals in connection with federally related transactions.

Title XI created what, we think, is a unique, complementary relationship between the States, the private sector, and the Federal government. Title XI recognized that the States were in the best administrative position to certify and license real estate appraisers and to supervise their appraisal-related activities. Title XI authorized the private sector — a private not-for-profit organization, The Appraisal Foundation (and its two independent boards, the Appraiser Qualifications Board and the Appraisal Standards Board) — to establish uniform minimum appraiser qualifications standards and uniform standards of professional appraisal practice which would be applied by the States. Title XI then created the ASC to oversee the activities of the States and The Appraisal Foundation. All ASC operations, including Title XI-related functions of The Appraisal Foundation, are funded by State certified or licensed appraisers, each of whom pays a $25 annual National Registry fee to the ASC . Title XI also authorized the Federal financial institutions regulatory agencies -- the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, and National Credit Union Administration -- to adopt regulations regarding real estate appraisals made in connection with federally related transactions, including, when appraisals are required, who must perform the appraisals, and the manner in which appraisals must be performed.