S.2452 is a bill intended to “amend the Truth in Lending Act to provide protection to consumers with respect to certain high-cost loans, and for other purposes.” Among other things, it’s intended to establish a duty for mortgage brokers and lenders to consider the best interests of their clients first. Lenders will be required to conduct a meaningful analysis of the borrowers’ ability to repay the loan (duh).
Tucked into the bill, however, is a bonding provision for appraisers that could be catastrophic for many. Once you understand the way bonds work, it’s not difficult to understand why the “Qualifying Bond” provision of S.2452 has so many appraisers squirming. If passed, it will add one more straw to the already straining backs of appraisers.
This is language from the Bill regarding the “qualifying bond” requirement for appraisers:
(2) QUALIFYING BOND- The term ‘qualifying bond’ means a bond equal to not less than 1 percent of the aggregate value of all homes appraised by an appraiser of real property in connection with a home mortgage loan in the calendar year preceding the date of the transaction…