Congress quietly expands trainee appraisers for FHA mortgages, risking quality collapse
S. 1635 — Appraisal Industry Improvement Act · Filed by Kevin Cramer (R-ND) · 1 cosponsor · Introduced May 7, 2025 · Referred to committee
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What it does
This bill allows state-licensed appraisers (not just federally certified ones) to conduct appraisals for FHA-insured mortgages, provided they meet competency standards and complete FHA-specific training. It also creates a new category of 'state credentialed trainee appraisers' who can assist licensed appraisers, establishes a modest annual registry fee ($20) for trainees, allows the Appraisal Subcommittee to adjust fees if they cause harm, and authorizes grants to state agencies for appraiser workforce training.
Why we flagged it
The bill's core mechanism is to relax federal appraiser certification requirements by allowing state-licensed appraisers and trainee appraisers to perform FHA appraisals, framed as workforce development but functionally a deregulatory move that trades federal oversight for state-level credentialing.
- Section 6 adds Department of Veterans Affairs, Rural Housing Service, and HUD to the Appraisal Subcommittee—substantively unrelated to appraiser licensing standards or trainee programs; appears to be a governance restructuring rider.
What the text implies
- Trainee appraisers may conduct appraisals with minimal independent oversight, creating moral hazard: a trainee working under a licensed appraiser's supervision may pressure valuations upward to close loans, with the licensed appraiser bearing nominal liability.
- State credentialing standards for trainee appraisers are not federally mandated—states may set minimal requirements, creating a race-to-the-bottom in appraiser quality across FHA-insured mortgages.
The full analysis lists 5 implications of this text.
Who stands to gain
state appraiser licensing agencies (grant recipients); appraisal management companies (expanded workforce reduces labor costs); mortgage lenders (lower appraisal costs, faster closings)