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US issues new rules for appraisers

Bloomberg News / October 19, 2010

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WASHINGTON — Real estate appraisers must be free from outside pressure or any financial interest in properties they review under regulations unveiled yesterday by the Federal Reserve Board.

The rules, required by the Dodd-Frank financial-overhaul law enacted in July, will be effective April 1. The public can comment for 60 days after the rules are published in the Federal Register.

The regulations are intended to curb abuses, such as homeowners getting loans based on misstated appraisals, that helped inflate the housing bubble. Its bursting helped cause the worst financial crisis since the Great Depression.

One part of the rules prohibits “coercion and other similar actions’’ that would cause appraisers to value properties for reasons “other than their independent judgment.’’

The interim rules apply to creditors, appraisers, mortgage brokers, realtors, title insurers, and other firms that provide settlement services.