Reminder: The deadline for submitting comments on the Fee Simple Exposure draft is July 17.
The Body of Knowledge (“BoK”) Committee has been studying whether to recommend adding a second definition of “fee simple,” specifically the Black’s Law Dictionary’s (“Black’s”) definition, to the next edition of the Appraisal Institute’s The Dictionary of Real Estate Appraisal (“AI Dictionary”). The Board of Directors wanted to expose this idea to AI Professionals to solicit their comments.
If you have any comments, please direct them to your elected Directors and/or send them via email to comments@appraisalinstitute.org by July 17, 2024.
Comments submitted by that date will be compiled for consideration by the BoK Committee and the Board of Directors.
Background/Rationale: The term “fee simple” does not always have the same meaning in law as it generally does in real estate appraisal.
The AI Dictionary defines “fee simple estate” as follows:
- Fee simple estate. Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
- Fee simple interest. See fee simple estate. The Appraisal of Real Estate, 15th Edition, states on pages 60-61 that, “The legal profession defines the term fee simple slightly differently than the valuation profession does because legal definitions generally serve a different purpose.” For example, Black’s defines “fee simple” as follows:
- Fee simple. An interest in land that, being the broadest property interest allowed by law, endures until the current holder dies without heirs, esp. a fee simple absolute.
The AI Dictionary does include multiple definitions of various terms. For example, the AI Dictionary includes four different definitions and one description of the term “Market Value.” The Board of Directors will discuss the issue of adding a second definition of “fee simple” in the next edition of the AI Dictionary, including the input of AI Professionals, at its August 15-16, 2024 meeting.
Appraisal Institute offers comments on Alabama Parea regulations
On July 8, the Appraisal Institute submitted comments to the Alabama Real Estate Appraisers Board in support of proposed rules to implement the Practical Applications of Real Estate Appraisal or PAREA. In the letter, AI stated that, “PAREA provides another pathway for aspiring appraisers to fulfill their experience requirements to become an appraiser by taking advantage of technology. PAREA offers practical experience in a virtual environment combining appraisal theory and methodology in real-world simulations.” The Alabama Board is meeting on July 11 to consider all of the comments that were received. It is anticipated that the Board will vote to approve the regulations at that time.
House passes Appraisal Institute-backed legislation
On Monday, the U.S. House of Representatives passed H.R. 5443, the Accelerating Appraisals and Conservation Efforts (AACE) Act. Introduced by Reps. Susie Lee (D-NV) and Dave Joyce (R-OH), the legislation aims to increase the pool of available appraisers to the Department of the Interior by allowing appraisers who carry a certified general credential in one state, to perform appraisals or other valuation services in any other State if the services fall under the authority of the Department of Interior. A provision in the AACE act makes clear the Department of Interior should look within a state where the appraisal or valuation is taking place before they look to appraisers from other states.
According to the bill sponsors, the concept of granting limited reciprocity found in the AACE Act derived from an Office of Management and Budget proclamation dating back to the 1990s. It grants limited reciprocity to federal agency staff appraisers at Interior, the U.S. Department of Agriculture, etc.
AI President Sandy Adomatis, SRA, testified in support of the AACE Act during a January 31st House Natural Resources Committee Subcommittee on Federal Lands hearing.
A Senate companion bill (S. 3079) has also been introduced, and the Senate Committee on Energy and Natural Resources included it as part of a legislative hearing held in late 2023.
Appraisal Institute leads response to CFPB’s RFI on “junk fees” in mortgage origination
The Appraisal Institute was joined by the American Society of Appraisers, the American Society of Farm Managers & Rural Appraisers, and MBREA in calling for the Consumer Financial Protection Bureau (“CFPB”) to use their existing authority to mandate the separate disclosure of fees paid to appraisers and those paid to AMCs on mortgage closing forms.
In the July 8 letter, the appraisal groups said the “unused authority has allowed AMCs to abuse the conflation of where the singularly paid “appraisal fee” flows after the consumer provides payment, reaping significant financial benefits while harming consumers and lenders along the way.”
The letter was in response to an RFI released by the CFPB related to what they call “junk fees” in mortgage closing costs. In an earlier newsletter, we asked you to share your experiences with AMCs with the CFPB. As of this writing, nearly 30 responses with personal stories have been sent to the CFPB. Thanks for speaking up!
