FTC Sends Warning to NC Over C&R Fees
North Carolina in the FTC’s crosshairs…
VaCAP learned that the Federal Trade Commission (FTC) has issued a warning to North Carolina over HB-829 mandating Customary and Reasonable Fees. This is the second time in the last couple of months that the FTC is accusing a state of violating antitrust laws over Customary and Reasonable fees. An article titled “FTC Warns NC Appraisal Fee Bill Could Break Antitrust Law” was published on Law360 on July 6, 2017. See excerpts of the article below. To see North Carolina Bill H-829, click here or see below.
So what can be done? Contact The FTC with your comments.
Lisa B. Kopchik, Attorney
Federal Trade Commission
Bureau of Competition
Division of Anticompetitive Practices
Washington, DC 20580
400 7th Street, SW
Washington, DC 20024
Excerpt from the Law 360 article
The letter warned that if the Legislature follows through with enacting the bill, the FTC may take action similar to its complaint lodged in May against the Louisiana Real Estate Appraisers Board. That complaint similarly accused the Louisiana board of violating antitrust law and restricting competition by adopting a rule that limits the ability of appraisers to set their own fees.
The competition watchdog filed an administrative complaint against the board challenging regulations that it said effectively require appraisal management companies, which act as agents for lenders in arranging for real estate appraisals, to pay fees that are at or above the median according to surveys commissioned and published by the board.
Excerpt from the FTC letter
To the extent that the legislative intent behind HB-829 is for the Board to require AMCs to pay appraisal fees based on a survey, this approach also removes the free market from any role in determining the price of appraisal services, and might inflate appraisal fees above competitive levels. In other states that have commissioned fee surveys, methodology issues have resulted in a report of appraisal fees that may not accurately reflect market rates, and may have been significantly higher than market rates. These fees, when paid by AMCs, are then passed on to consumers. Where surveys report only median or average fees, rather than a range, the surveys fail to account for the variability of appraisal circumstances and fluctuations in the real estate market.
We are concerned that, if HB-829 were enacted, real estate appraisal fees in North Carolina might not be based on competitively set market rates, and that AMCs – and, ultimately, consumers – might face higher prices for real estate appraisal services.