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GAO-11-158R 1 (2010-10-19)

handle is hein.gao/gaobaanva0001 and id is 1 raw text is: 



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        A   bcountabity  I integrity I Reability
United States Government Accountability Office
Washington, DC 20548


         October 19, 2010

         The Honorable Christopher J. Dodd
         Chairman
         The Honorable Richard C. Shelby
         Ranking Member
         Committee on Banking, Housing,
           and Urban Affairs
         United States Senate

         The Honorable Barney Frank
         Chairman
         The Honorable Spencer Bachus
         Ranking Member
         Committee on Financial Services
         House of Representatives

         Subject: Status of Study Concerning Appraisal Methods and the Home Valuation
         Code of Conduct

         This letter responds to a requirement in the Dodd-Frank Wall Street Reform and
         Consumer Protection Act of 2010 that we report within 90 days on the status of a
         GAO study mandated by the act on real estate appraisal issues. Enacted on July 21,
         2010, the act requires us to study the effectiveness and impact of options for selecting
         appraisers, different valuation methods, and the Home Valuation Code of Conduct
         (HVCC), which was designed to enhance appraiser independence. The act requires us
         to report to you on the results of our study within 12 months.

         Background

         Valuing real estate for sale or refinancing is key to mortgage lending, providing
         evidence that the collateral value of the property is sufficient to avoid losses if the
         borrower is unable to repay the loan. Lenders have several options open to them for
         selecting appraisers. These options include in-house appraisers; independent
         appraisers; and appraisal management companies, which often subcontract with
         independent appraisers. To develop an appraisal, appraisers may use one or a
         combination of three approaches-cost, income, and comparable sales:


GAO-11-158R Appraisal Methods Status Report

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