Appraiser Independence
The legal requirement that appraisers must be free from improper influence, coercion, or pressure from parties with a financial interest in the transaction outcome. Violations can result in penalties for both the appraiser and the party exerting pressure.
Appraiser independence is protected by federal law (Dodd-Frank), USPAP Ethics Rule, and GSE guidelines. It prohibits lenders, real estate agents, borrowers, and AMCs from conditioning engagement on a minimum value, withholding payment for unfavorable results, requesting specific comparables, or threatening to remove an appraiser from a panel for delivering low values. The appraiser must disclose any pressure in the certification section of the report. The Home Valuation Code of Conduct (HVCC), now superseded by Dodd-Frank, was an earlier attempt to ensure independence.
Related Terms
Dodd-Frank Act (Appraisal Provisions)
The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..
Appraisal Management Company (AMC)
AMCA third-party company that manages the appraisal process on behalf of lenders, handling appraiser selection, order assignment, quality review, and delivery.
Uniform Standards of Professional Appraisal Practice (USPAP)
USPAPThe nationally recognized ethical and performance standards for the appraisal profession, established by The Appraisal Foundation.
USPAP Ethics Rule
The USPAP rule establishing requirements for appraiser conduct, management, confidentiality, and record keeping.
More in Legal & Regulatory
View allFIRREA (Financial Institutions Reform, Recovery, and Enforcement Act)
FIRREAThe 1989 federal law that established the modern appraisal regulatory framework, requiring state licensing of appraisers and USPAP compliance for all federally related real estate transactions..
Competency Rule
A USPAP rule requiring that an appraiser must have the knowledge and experience necessary to complete an assignment competently, or must take steps to acquire it before accepting the assignment..
The Appraisal Foundation
The Congressionally authorized organization that sets appraisal standards (USPAP) and minimum appraiser qualification criteria.
De Minimis Threshold
The transaction value below which a federally related real estate transaction does not require an appraisal by a licensed or certified appraiser.