The Executive Committee of Association of Appraiser Regulatory Officials and the Illinois Coalition of Appraisal Professionals have issued separate letters to Treasury Secretary Timothy Geithner voicing concerns about federal regulations and policies that allow Broker Price Opinions to be used in establishing real property collateral values for mortgage modifications.

Of primary concern to both groups is the lack of required valuation qualifications needed by individuals who perform BPOs. As the AARO Executive Committee stated in their letter to the Treasury, “Individuals performing BPOs lack meaningful (or sometime, any) valuations qualifications, may not be objective, and unbiased or even independent of the transaction for which they’re opining a value, and are not properly accountable to anyone for their BPO work.”

ICAP expressed similar sentiments in their letter, available at www.icapweb.com/upload/09%20Treasury%20ICAP.pdf, saying that they are “concerned that the use of shortcuts or alternate valuation products (like BPOs) by individuals lacking professional or regulatory oversight poses an unacceptable risk to the financial industry, taxpayers, and the public.”

The AARO Executive Committee and ICAP letters add additional concern to a letter sent by the Appraisal Institute and other appraisal organizations to the Treasury Secretary last month that cautioned the government against the acceptance of BPOs and advocated the use of professional, federally regulated real estate appraisers to perform all valuation assignments. To view the Appraisal Institute’s letter, visit www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2009/Homeowner_Stability_Plan.pdf.