In response to the failure of a large number of savings and loan institutions in the 1980s, Congress conducted several hearings to determine the root cause of the crisis and took steps to ensure that a similar crisis would not occur in the future.
During the course of its investigation, Congress was surprised to learn that appraisers, the individuals determining the value of the underlying collateral of loans, were generally unregulated. While professional licensure issues generally fall into the domain of state governments, Congress was concerned about protecting the future integrity of deposit insurance funds.
Accordingly, when passing legislation in 1989 to address the financial institution crisis (this law became known as the Financial Institutions Reform, Recovery and Enforcement Act or FIRREA), Congress included a provision known as Title XI mandating the regulation of real estate appraisers by the states. The regulatory program contained three components:
As a result of FIRREA, each state set up an appraiser licensure/certification agency, which is responsible for granting certificates and licenses and disciplining appraisers who violate the laws and rules of the profession. The Appraisal Subcommittee maintains a national registry of licensed and certified appraisers throughout the United States, but does not discipline individual appraisers for misconduct.
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