Appraisal Industry Improvement Act

Bill Number

S. 1635

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2025-05-07: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Last Updated

2026-05-05T15:50:59Z

AI-Generated Summary

Purpose

The Appraisal Industry Improvement Act (S. 1635) aims to modernize and expand the pool of qualified appraisers for mortgages insured by the Federal Housing Administration (FHA), a government program that helps people buy homes with lower down payments. It ensures appraisers meet education and skill standards while addressing workforce shortages in the appraisal field. The bill also updates related federal oversight and funding mechanisms to support fair and efficient property valuations in home loans.

Key Provisions

• Appraiser Qualifications for FHA Mortgages (Section 2):
• Allows appraisers who are licensed or certified by any state (where the property is located) to perform appraisals for FHA-insured loans, with flexibility for federal employees to use credentials from one state nationwide.
• Requires appraisers to follow the Uniform Standards of Professional Appraisal Practice (USPAP, a set of ethical and performance guidelines for appraisers) and complete FHA-specific training on appraisal rules.
• Training must be provided or approved by the FHA, the Appraisal Foundation (a nonprofit that sets appraiser standards), or state agencies.
• Existing FHA-approved appraisers are grandfathered in (exempt from new training if approved before implementation).
• The Secretary of Housing and Urban Development (HUD) must issue guidance or rules within 240 days of enactment, effective 180 days after issuance, with a transition period for demonstrating prior skills.

• Annual Fees for Appraisal Management Companies (Section 3):
• Permits the Appraisal Subcommittee (a federal oversight body) to adjust registry fees if they cause problems or don't fit the subcommittee's needs, ensuring fees support oversight without excess burden.

• State Credentialed Trainee Appraisers (Section 4):
• Adds "state credentialed trainee appraisers" (entry-level individuals meeting basic standards set by the Appraisal Foundation and state agencies) to the national registry of appraisers.
• Establishes low annual fees (up to $20) for trainees and requires states to report their credentials, sanctions, and actions.
• Allows certified appraisers to use trainees (credentialed or unlicensed) for assistance in federally related appraisals (those tied to loans from banks or government programs).
• States are not required to create trainee programs.

• Grants for Training and Workforce Development (Section 5):
• Authorizes the Appraisal Subcommittee to provide grants to state appraiser agencies for education, training, and other efforts to build the appraiser workforce.

• Appraisal Subcommittee Membership (Section 6):
• Adds the Department of Veterans Affairs, Rural Housing Service (part of the Department of Agriculture), and HUD to the Appraisal Subcommittee, expanding its representation from federal housing and loan agencies.

Significant Changes to Existing Law

• Expansion of Eligible Appraisers: Previously, FHA appraisals under the National Housing Act (a 1934 law) implied stricter requirements, often favoring certified appraisers over licensed ones. This bill explicitly allows state-licensed appraisers, broadening access while maintaining standards.
• New Education Mandate: Introduces verifiable FHA-specific training for new appraisers, not previously required uniformly, building on the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA, which regulates appraisers for federal loans).
• Trainee Integration: FIRREA is updated to formally recognize and roster trainees nationally, including fee structures and their role in appraisals—previously, trainees were handled inconsistently at the state level.
• Fee and Grant Flexibility: Adds authority for fee adjustments and new grants under FIRREA, shifting from rigid structures to adaptive ones for better oversight and workforce support.
• Subcommittee Expansion: Broadens the Federal Financial Institutions Examination Council Act of 1978 to include more housing-focused agencies, enhancing coordination.

Potential Impacts

• On Government Agencies: HUD/FHA will need to develop and approve training programs, potentially increasing administrative workload but improving appraisal consistency. The expanded Appraisal Subcommittee could lead to better federal-state coordination on appraiser oversight.
• On Citizens: Homebuyers using FHA loans (often first-time or low-income) may face fewer delays or shortages in appraisals, speeding up loan approvals and reducing costs. This could increase access to affordable housing.
• On International Relations: No direct impacts, as the bill focuses on domestic U.S. housing and appraisal standards.
• Broader Effects: Could alleviate appraiser shortages in rural or underserved areas by incorporating trainees and licensed professionals, potentially stabilizing the housing market.

Main Stakeholders Affected

• Appraisers and Trainees: Licensed, certified, and new trainees gain more opportunities to work on FHA loans but must complete additional training.
• State Agencies: Appraiser licensing boards will handle new reporting, credentials, and potential grant-funded programs, increasing their role in workforce development.
• Federal Agencies: HUD/FHA, Appraisal Subcommittee, VA, and Rural Housing Service will oversee implementation, training, and expanded membership, affecting their budgets and operations.
• Lenders and Borrowers: Banks and mortgage companies benefit from a larger appraiser pool for FHA loans; homebuyers (especially veterans, rural residents, and low-income families) gain easier access to financing.
• Appraisal Management Companies: Face potential fee changes, which could affect operational costs.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: Strengthens compliance with FIRREA and USPAP by mandating education, potentially reducing appraisal errors or biases in FHA loans (e.g., fair housing concerns). The grandfathering clause avoids retroactive burdens, and the trainee provision clarifies supervision rules to prevent unqualified work.
• Constitutional Implications: None significant; the bill aligns with Congress's authority over interstate commerce and housing policy under the Commerce Clause, without infringing on states' rights (states retain control over licensing).
• Political Implications: Introduced bipartisanship (by Senators Cramer, R-ND, and Gallego, D-AZ) signals broad support for housing affordability amid workforce shortages. It could influence future debates on real estate regulation, emphasizing training over restrictions, but implementation delays might draw scrutiny from industry groups.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Cramer, Kevin [R-ND]

Cosponsors (1)

Sen. Gallego, Ruben [D-AZ]

Recent Actions

• 2025-05-07: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
• 2025-05-07: Introduced in Senate

Bill Versions

• Appraisal Industry Improvement Act — issued 2025-05-07 — PDF (10 pages)