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.
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