Appraisal Modernization Act
- Bill Number
- H.R. 5975
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2025-11-21T12:57:50Z
AI-Generated Summary
Summary of H.R. 5975: Appraisal Modernization Act
Purpose
This bill aims to update federal rules on home appraisals for mortgages to make the process fairer and more consistent. It ensures that banks, appraisal companies, and appraisers treat all loan applicants, borrowers, and communities equally. It also requires a study on whether a national public database of appraisal data could be created to increase transparency in the housing market.
Key Provisions
- Consumer Right to Reconsideration of Value (Amendments to Truth in Lending Act, Section 129E):
- Defines "unacceptable appraisal practice" as issues like using unsupported opinions, inaccurate data, references to crime rates, uninspected comparable properties (homes used for comparison), or improper adjustments for differences between properties.
- Defines "unsupported" as an appraisal lacking evidence or logical reasoning.
- Requires lenders (creditors) to establish a review process for consumers to request a reconsideration of an appraisal's value or a new appraisal if they suspect errors, bias, or discrimination. This must happen before loan closing or within 60 days of denial.
- Lenders must provide clear written notices about the process at application and when delivering the appraisal, including a standard form for requests. Requests can include up to five alternative comparable properties with supporting data.
- Lenders must communicate requests to appraisers using a standard format and set timelines for responses.
- If the original appraisal has major flaws or signs of discrimination, the lender must order a new appraisal at its own cost and report issues to regulators or enforcement agencies (e.g., for discrimination, to fair housing authorities). Appraisers may reimburse costs if discrimination is confirmed.
- Lenders must keep all related documents for seven years.
- This process aligns with existing rules on appraiser independence but does not require using the original appraiser for a new one.
- Rulemaking Requirements:
- The Federal Housing Finance Agency (FHFA, which oversees major mortgage buyers like Fannie Mae and Freddie Mac) must issue final rules and guidance within one year to enforce the new consumer rights.
- Public Appraisal Database Study (Section 3):
- Directs the Comptroller General (head of the Government Accountability Office, an independent auditor) to produce a public report to Congress within 240 days assessing the feasibility of a searchable, downloadable national database of appraisal data from federal housing agencies.
- The database would cover data from agencies like FHFA, Department of Housing and Urban Development (HUD), Department of Agriculture, and Department of Veterans Affairs.
- The report must evaluate costs/benefits, risks (e.g., privacy, antitrust, safety), legal issues (e.g., under privacy laws or Freedom of Information Act), integration with existing public mortgage data, potential business impacts on the industry, and inclusion of automated valuation models (computer-generated estimates).
- It explores benefits for federal/state agencies, researchers, and fair housing groups in accessing detailed data.
- Requires consultations with stakeholders like agencies, appraisers, lenders, and fair lending experts.
- Senate Banking Committee and House Financial Services Committee must hold hearings on the report.
Significant Changes to Existing Law
- New Consumer Protections: Introduces a formal right for borrowers to challenge appraisals for errors or bias, which was not explicitly required before. Previously, lenders had some review duties, but this adds standardized processes, timelines, and mandates for free subsequent appraisals in certain cases.
- Enhanced Oversight for Discrimination: Builds on anti-discrimination laws by requiring lenders to investigate and report suspected bias in appraisals, with potential reimbursement from appraisers—going beyond current voluntary practices.
- Rulemaking Shift: Expands FHFA's role in issuing binding rules, replacing or adding to prior guidance from other bodies like the Consumer Financial Protection Bureau.
- Feasibility Study Addition: Creates a new mandate for studying a public database, which does not exist federally today, though some appraisal data is already public under laws like the Home Mortgage Disclosure Act (which tracks lending patterns).
Potential Impacts
- On Citizens and Borrowers: Empowers individuals to contest potentially unfair or biased appraisals, potentially leading to higher property valuations, better loan terms, and reduced discrimination in housing access, especially for underserved communities.
- On Government Agencies: Increases workload for FHFA (rulemaking), Comptroller General (report), and enforcement bodies (handling referrals). Could improve data sharing for oversight but raises privacy and resource challenges if a database is created.
- On Financial Institutions and Industry: Lenders face new procedural costs (e.g., reviews, possible free re-appraisals) and compliance burdens, while appraisers may need to adjust practices to avoid reports or reimbursements. A database could enhance transparency but risk exposing sensitive business data.
- On International Relations: No direct impacts mentioned, as the bill focuses on domestic U.S. housing finance.
Main Stakeholders Affected
- Borrowers and Mortgage Applicants: Gain tools to challenge appraisals and promote fair treatment.
- Lenders and Financial Institutions: Must implement new processes, bear costs for reviews/re-appraisals, and report issues.
- Appraisers and Appraisal Management Companies: Face stricter standards, potential referrals for misconduct, and reimbursement obligations in discrimination cases.
- Valuation Professionals (Including Automated Model Providers): Subject to database scrutiny for consistency and fairness.
- Government Agencies: FHFA, HUD, and others must comply with rules and data contributions; enforcement agencies handle discrimination reports.
- Communities and Advocacy Groups: Benefit from potential reductions in appraisal bias; researchers and fair housing organizations could access database data for analysis.
- Congress: Receives reports and holds hearings to guide future policy.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Strengthens enforcement of fair lending laws (e.g., Fair Housing Act) by mandating actions on suspected discrimination without needing a final court ruling—using a "reason to believe" standard based on evidence review. Aligns with privacy laws by requiring risk assessments for public data, potentially avoiding conflicts with the Freedom of Information Act or professional ethics rules for appraisers.
- Constitutional Implications: Supports equal protection under the 14th Amendment by addressing systemic biases in housing finance, which could disproportionately affect protected groups (e.g., based on race or location), without imposing new burdens on free speech or property rights.
- Political Implications: Promotes equity in the housing market amid ongoing debates on appraisal bias, potentially influencing bipartisan support for consumer protections while balancing industry concerns over costs and competition. The feasibility study could lead to future legislation on data transparency, affecting federal oversight of mortgages.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Pressley, Ayanna [D-MA-7]
Recent Actions
- 2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-11-07: Introduced in House
- 2025-11-07: Introduced in House
Bill Versions
- Appraisal Modernization Act — issued 2025-11-07 — PDF (15 pages)