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Minutes for HB2414 - Committee on Federal and State Affairs

Short Title

Standards for real estate appraisers.

Minutes Content for Thu, Feb 8, 2018

Chairperson Barker opened the hearing on HB2414.  Because there are two hearings scheduled today, he is going to limit the conferees to four minutes to speak.  At the Chairperson's request, Jason Long, Revisor, provided an overview of the bill (Attachment 1)

Chairperson Barker recognized Dennis Dull who testified as a proponent of HB2414 (Attachment 2).  After the savings and loan crisis in the 1980's Congress created a private entity known as the Appraisal Foundation to design standards for appraisals on federal loans.  The unfair burden is that these standards must be used in every situation, and the market is not willing or able to pay in all situations for these standards.  As a result, appraisers cannot compete with realtors, lawyers or accountants who are able to provide valuation opinions because they are not bound by these standards.  The Appraisal Institute is proposing very simple standards to make it easier for appraisers to compete in that market.  Representative Humphries had questions.

Chairperson Barker recognized Douglas Potts as a proponent on HB2414 (Attachment 3).  He is the chief appraiser for Commerce Bancshares, Inc. The appraisal industry has declined by 25 percent in the last twelve years and is in a crisis.  It cannot compete to service all of the needs of a bank.  Only about one in ten loans that are being issued by banks all across the country do not require an appraisal at all.  They are allowed to use an evaluation instead. The problem in Kansas and most states is the appraisal community is being handcuffed because it cannot provide all the services the banks need.  Rather than adhering to only one standard of practice, more standards should be allowed to be used. 

There were no further proponents.  Chairperson Barker recognized Richard Livingston as an opponent to HB2414 (Attachment 4).  This bill is not a good bill for Kansas.  Changing the standards used by appraisers is not necessary nor is it in the best interest of the public.  The proposed legislation has the result of possibly being misleading or fraudulent to people who don't know what standards those appraisals are being done under.

Chairperson Barker recognized James Cannon as an opponent to HB2414 (Attachment 5).  Appraisers in Kansas and all other states are currently following a nationwide set of standards called "The Uniform Standards of Professional Appraisal Practice" (USPAP).  USPAP was created and maintained by The Appraisal Standards Board of the Appraisal Foundation by Congress.  HB2414 would adopt the standards of the Appraisal Institute.  Those standards may be good, but they weren't vetted by all appraisers. 

Questions were directed to Mr. Livingston by Representatives Smith and Houser.

Chairperson Barker noted that there was written opponent testimony from Patrick Vogelsberg, Kansas Association of Realtors (Attachment 6); Sally Pritchett, Kansas Real Estate Appraisal Board (Attachment 7); James Park, Appraisal Subcommittee of the Federal Financial Institutions Examination Council (Attachment 8); David Bunton, Appraisal Foundation (Attachment 9); Maggie Hambleton, The Appraisal Foundation (Attachment 10); John Russell, American Society of Appraisers, National Association of Independent Fee Appraisers, and American Society of Farm Managers and Rural Appraisers (Attachment 11); David GaNun, American Society of Farm Managers and Rural Appraisers (Attachment 12; and Jeffrey Voth, Greater Kansas Chapter of the Appraisal Institute (Attachment 13).

There being no further conferees, Chairperson Barker closed the hearing on HB2414.