H.R. 5975 — Appraisal Modernization Act

This section requires creditors, for consumer credit transactions secured by a consumer's principal dwelling, to establish a review and resolution procedure allowing a consumer to submit one request—prior to loan closing or within 60 calendar days of credit denial—for reconsideration of value (ROV) or subsequent appraisal if the consumer believes the appraisal is unsupported, deficient due to an unacceptable appraisal practice, or discriminatory. Defines unacceptable appraisal practices to include nine specified issues (e.g., using unsupported or subjective terms without analysis, inaccurate data on the property or comparables, references to crime statistics, unverified comparable data from interested parties, inappropriate adjustments) and unsupported appraisals as those lacking relevant evidence and logic. Requires creditors to (1) complete an appraisal review before delivering the report to the consumer; (2) provide written disclosures at application and report delivery, including a standardized consumer request form specifying borrower details, property address, reasons for challenge, and up to five alternative comparable properties with supporting data; (3) seek clarification if consumer requests are unclear; and (4) use a standardized format to forward ROV requests to appraisers, including turn-time expectations and instructions for revised reports. Further requires that, if material deficiencies or unacceptable practices are identified and not corrected, creditors order a subsequent appraisal at their own expense upon consumer request and refer the report to the appropriate appraisal licensing agency or regulator; if discrimination is suspected, creditors must order a subsequent appraisal at their own expense and forward the report. (Thus, this process enables consumers to challenge potentially biased, inaccurate, or discriminatory home appraisals that could affect loan approval, terms, or pricing.)

This section defines covered agencies as the Federal Housing Finance Agency (on behalf of Fannie Mae and Freddie Mac), the Department of Housing and Urban Development (including the Federal Housing Administration), the Department of Agriculture, and the Department of Veterans Affairs. It directs the Comptroller General of the United States to issue a public report to Congress, no later than 240 days after enactment, assessing the feasibility of creating a publicly available, searchable, and downloadable appraisal-level database consolidating appraisal data held by covered agencies. The report must address— (1) costs and benefits of establishing and maintaining the database; (2) benefits and risks of the Federal Housing Finance Agency or Bureau of Consumer Financial Protection administering it, or whether another agency is better suited; (3) safety and soundness, antitrust, and consumer privacy risks of public disclosure (including under the Home Mortgage Disclosure Act and Freedom of Information Act), potential mitigations such as data aggregation or removal of personally identifiable information, and data factors that could violate appraisal professional standards; (4) feasibility of matching with Home Mortgage Disclosure Act data; (5) risks of unfair business advantages in the valuation industry; (6) feasibility of including all valuation data, such as from automated valuation models; (7) feasibility and benefits of providing the full dataset to federal agencies, state regulators and attorneys general, approved researchers (e.g., academics and nonprofits focused on fair housing valuations), and other entities with compelling needs; (8) existing public appraisal data; and (9) feasibility of incorporating legacy data from covered agencies since January 1, 2017. The database is intended to provide residential real estate appraisal data to evaluate whether financial institutions, appraisal management companies, appraisers, automated valuation models, and other professionals serve the housing market efficiently and consistently for all mortgage applicants, borrowers, and communities. In preparing the report, the Comptroller General must consult specified stakeholders, including federal and state agencies, appraisers, lenders, fair housing experts, and others. Upon report completion, the Senate Committee on Banking, Housing, and Urban Affairs and House Committee on Financial Services must each hold a hearing on the findings and feasibility of the database.