S. 4218: VA Appraisal Modernization Act

This bill, known as the VA Appraisal Modernization Act, aims to amend existing laws concerning appraisal fees related to housing loans guaranteed by the Department of Veterans Affairs (VA). Here's a breakdown of what the bill proposes:

Appraisal Fees Adjustment

The bill establishes a new section in the VA loan regulations regarding appraisal fees. The key points include:

• The Secretary of Veterans Affairs must define and set appraisal fees for housing loans guaranteed, insured, or made under these regulations.
• These fees will be adjusted annually, starting on January 1, 2027, based on the increase in home purchase prices as determined by the quarterly House Price Index published by the Federal Housing Finance Agency.
• The fees will be published on the VA's website and appraisers will be directly notified.

Designation of Counties

The bill creates provisions for identifying specific counties as either "high-demand" or "remote" based on certain criteria:

• High-Demand County: Designated if appraisal completion times exceed established standards or if over 15% of assignments remain unassigned due to appraiser shortages.
• Remote County: Designated if there are fewer than five appraisers within 30 miles or if appraisers travel more than 40 miles on average to complete assignments.
• The Secretary will maintain and update lists of these counties quarterly.

Increased Appraisal Fees in High-Demand Counties

The bill requires that appraisal fees in high-demand counties be increased to a minimum of 125% of the standard appraisal fee. If a county remains designated as high-demand for four quarters or more, fees may be increased up to 150% of the standard fee.

Mileage Reimbursement

Additionally, the bill mandates that appraisers in high-demand or remote counties will be reimbursed for their mileage at a rate set by the General Services Administration, calculated based on the distance from the appraiser's office to the property assessed.

Reporting and Studies

The Secretary of Veterans Affairs is required to provide a report to Congress within 180 days of the bill’s enactment. This report must include:

• The potential effects of the new appraisal fee regulations on government spending.
• How these changes might affect the number of appraisers joining the VA network.
• The impact on appraisal completion times in high-demand counties.
• How these revisions may influence the use of VA housing loans.

Additionally, the Secretary must conduct a study to examine:

• The possibility of securing contracts for appraisers in areas where demand exceeds supply.
• Ways to restructure the VA appraisal process to align more closely with processes used by the Federal Housing Administration (FHA).

Clerical Amendments

The bill also includes various clerical amendments to ensure the new regulation fits seamlessly within the existing legal framework.

Relevant Companies

• RAD - Rite Aid Corporation may be impacted as it provides financial services including mortgages that could include VA-backed loans.
• PHM - PulteGroup, Inc. is involved in homebuilding and may play a role in housing desires, with VA-backed loans affecting home buying processes.
• KBH - KB Home may also be directly impacted, standing as a representative builder reliant on the housing market facilitated by VA loans.