MBA Amicus Brief: Lenders Not Liable for Actions of Independent Appraisers
WASHINGTON, D.C. (April 21, 2023) — The Mortgage Bankers Association (MBA) today filed an amicus brief in response to a Statement of Interest filed by the Consumer Financial Protection Bureau (CFPB) and Department of Justice (DOJ) examining the liability standard that would apply to lenders for the acts of independent, third-party appraisers.
“Appraisal bias is unacceptable, and MBA is working with policymakers and industry stakeholders to develop solutions that ensure borrowers receive fair, equitable, accurate appraisals,” said MBA President and CEO Bob Broeksmit, CMB. “Following the Great Financial Crisis, Congress and regulators established rules to ensure appraiser independence by limiting the role of mortgage lenders in the appraisal process. By federal design, lenders have extremely limited control over the actions of appraisers and are subject to other legal responsibilities that prevent them from influencing or participating in the appraisal process.”
MBA is concerned, however, that the arguments made by the CFPB and DOJ in the Statement of Interest would hold lenders liable for the actions of an appraiser who is neither an employee nor an agent of the lender. MBA’s brief, filed in the U.S. District Court for the District of Maryland in Nathan Connolly and Shani Mott v. Shane Lanham, 20/20 Valuations, LLC, and loanDepot.com, LLC, respectfully requests that the Court recognize that a lender is not liable for the alleged actions of an independent appraiser who was not chosen by the lender.
“Our members have a substantial interest in this case because there is no existing legal authority to hold a lender liable for the acts of a third-party appraiser. In fact, the liability that does exist is for improperly interfering with an appraiser’s independent judgment,” added Broeksmit. “We disagree with the CFPB’s and DOJ’s statement that tries to extend liability to lenders for bias arising from the use of independent appraisers.”
MBA’s brief does not address the specific allegations contained within the lawsuit, nor does it take a position regarding the conduct of the appraiser. Rather, the brief outlines MBA’s disagreement with DOJ’s and CFPB’s Statement of Interest, which attempts to impose requirements on lenders beyond the existing federal legal framework for their interactions with third-party appraisers.
Both consumers and lenders are harmed by inaccurate and biased appraisals. MBA and its members have made improving the valuation process and reducing the risk of appraisal bias a top policy issue, and have prioritized it both as part of its CONVERGENCE initiative to promote more sustainable, affordable housing for minority and low- to moderate-income families and communities, and as part of the Building Generational Wealth Through Homeownership campaign.
MBA has also submitted recent comments to government agencies, including the Department of Housing and Urban Development, on feedback related to appraisals in response to the Biden Administration’s Interagency Task Force on Property Appraisal and Valuation Equity (PAVE).