Nov/Dec 2023 RMM

In Reverse Appraisal Issues Are Just One Part of a Year of Adapting By Thomas A. Barstow A FEW YEARS ago, I was discussing current events in a journalism class I teach when a student mentioned how more states were decriminalizing marijuana. That sparked a lively discussion about whether all states should do so or whether a national law should be passed. The students who felt adamant about decriminalization made logical and informed arguments. But I felt a responsibility to point out that even though they might think those with different points of view are wrongheaded, they needed to tread carefully about how they applied their knowledge. If they use pot and get caught in a state where it still is illegal, they might regret that decision for the rest of their lives. I thought about that recently as I listened to arguments about appraisal bias and differing points of view about whether it is a systemic problem and how the valuation process involves some level of subjectivity. The various viewpoints are worth discussing and analyzing and are certainly interesting. But ignoring current trends could be disastrous. As you know, after the mortgage crisis in the mid-2000s, regulators at the time put in place rules that separated lenders and appraisers so lenders did not unfairly influence valuations. Recent events, however, have led federal regulators to publish preliminary guidelines noting that lenders have a responsibility to ensure a fair appraisal process. You might think that is contradictory and unfair because of the rules put in place years ago—and you probably make good points—but it won’t really matter if you get caught in a situation where you are accused of bias. Intentional discrimination has been illegal for decades. Yet, unintentional or subconscious bias can get you into trouble, as well. That is why you need to develop detailed policies and procedures for handling bias claims, according to the attorneys at Weiner Brodsky Kider PC. The Washington, DC, law firm counsels NRMLA and its members on legal matters. “Lenders have some responsibility when they know— or should have known—that discriminatory practices may be afoot, even though they generally are supposed to be hands off with respect to appraisal matters because of appraisal-independence requirements,” says Jim Brodsky in the article Appraisal Bias (p. 28). “They have a legal obligation to intervene.” The article offers numerous tips on what companies should do to protect themselves. The federal government’s work on appraisals is just one of many issues that evolved this year and will continue into 2024 and beyond. Writer Joel Berg explores some of the trends in a pair of articles, starting with the cover story Adapting, Part 1 (p. 18) that looks ahead to 2024 and then continuing with the second article Adapting, Part 2 (p. 24) that primarily focuses on lessons learned in 2023. This year hasn’t been easy for anyone in the mortgage industry—forward or reverse—and next year looks like it will be a challenge, too. In Reverse continued on page 4 REVERSE MORTGAGE / NOVEMBER–DECEMBER 2023 3