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Rural Communities Continue to Struggle with Shortage of Appraisers

CSBS released this week a report highlighting the shortage of appraisers in rural communities, a challenge further exacerbated by a retiring appraiser workforce and limited waiver options for communities unable to hire and train enough appraisers for the area.  CSBS and state regulators based their observations on CSBS survey data, reporting from examiners and regulators across the country, and data from the Appraisal Subcommittee of the FFIEC.

Every year, CSBS conducts annual outreach to the community banking industry as part of the annual CSBS-Federal Reserve Community Banking in the 21st Century Research and Policy Conference. As part of this initiative, in 2017 CSBS deployed its Five Questions for Five Bankers to industry stakeholders to understand the challenges and opportunities faced by community banks. These survey respondents consistently noted that regional shortages of qualified appraisers have led to significant delays in the home purchase process. Kentucky, New Mexico, and Utah all reported a shortage of appraisers. In addition, state regulators from Michigan, Montana, Nebraska, North Dakota, Tennessee, and Wisconsin similarly noted that federal appraisal rules cause significant burdens particularly in rural areas. 

Key Observations of the report:

  • Some rural and underserved areas do not have enough appraisers. 
  • The National Registry of Real Estate Appraisers does not accurately reflect local shortages of appraisers.  
  • The Title XI waiver process is unclear, lengthy, and underutilized. 
  • Congress acknowledged with the passage of the “Economic Growth, Regulatory Relief, and Consumer Protection Act” that obtaining appraisals for certain rural transactions are an issue and that an avenue for relief is needed.   
  • Appraiser licensing and credentialing processes create barriers to entry. 

This is not the first time state regulators have expressed concern about the lack of appraisers in rural communities. In 2017 and earlier this year, CSBS sent letters supporting limited appraisal waivers for certain communities. And this August, North Dakota was the first state to request a real estate appraisal waiver that would allow local banks to make valuation assessments on their own.

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