Appraisal Fee Transparency

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Appraisal Fee Transparency Is in the Public InterestBill H.R.3619 has left the House and is now ready for consideration in the Senate.

There are a number of key issues presented in this bill. Three of them jumped out at me:

SEC. 3. TRAINEE APPRAISERS.

(12) TRAINEE APPRAISER.
— The term ‘trainee appraiser’ means an individual who meets the minimum criteria established by the Appraiser Qualification Board for a trainee appraiser license and is credentialed by a State appraiser certifying and licensing agency.”

This definition is critical to help undo the logjam that appraisers face bringing more people into the appraisal profession.

SEC. 5. REQUIREMENT TO DISCLOSE APPRAISAL FEES.

– Section 4(c) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603(c)) is amended by striking “may” and inserting “shall”.

This enables appraisers to show the amount of their fee in relation to the AMC portion so the consumer is made aware, of why the cost might seem unusually high. Appraiser routinely receive only 30% to 50% of what the consumer pays as “appraisal fee” – and why REVAA lobbies so hard to prevent this.

SEC. 6. INCLUSION OF DESIGNEE OF SECRETARY OF VETERANS AFFAIRS ON APPRAISAL SUBCOMMITTEE.

– The first sentence of section 1011 of the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3310) is amended by inserting “the Department of Veterans Affairs,” after “Protection,”.

This helps address the pro-banking bias on the ASC board as I discussed here.

Jonathan Miller

President & CEO at Miller Samuel Inc.
Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.
Jonathan Miller

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Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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24 Responses

  1. Avatar Bill Johnson says:

    Relating to the requirement to disclose appraisal fees, does this mean the consumer is provided this data in advance (estimated loan costs), where perhaps they could question the validity of the fee, or does this simply mean the appraiser now gets to express / show what their portion is in the report? If its only after, and not before, its a paper tiger with no teeth.

    The borrower sells their current home and pays out 10, 20, 30, or $40,000+ in commissions, spends thousands for loan fees related to their new home purchase, puts down hundreds of thousands of dollars as a down payment (their new dream home), and post all of this we expect them to raise a stink when if they read the appraisal (they don’t), they discover a very tiny fraction of the fee didn’t go the the appraiser whom they never met (purchase appraisal). Keep in mind they weren’t overcharged.

    Seek the truth.

    13
  2. Avatar Jason says:

    Contrary to what we have heard from those against appraisal fee transparency, consumers want full disclosure and they want to know all costs upfront.

    You can read the argument in favor of “Should Appraisal Fees & Management Fees for Mortgage Applications be Disclosed to Consumers Up Front?” at
    https://www.countable.us/bills/hr3619-116-appraisal-fee-transparency-act-of-2019/community

    11
    • The simple answer is yes, but the devil is in the details. NO ONE on the lending side is willing to include property-specific appraisal bids by actual appraisers upfront.

      What currently happens is that lenders advise their loan officers what AMCs the lender has contracted with, and what the price-fixing fee for ‘appraisal services’ has already been set at. Typically $650-$750+-.

      It is not possible under the current system to give consumers accurate estimates of their specific appraisal fees at the time they apply for a loan. The reason for this is that no appraiser has been asked what they would charge based upon the specific property complexity.

      When we typically charge from $450 to $1,500 for most appraisals; and up to $4k-$5k for very high end, high complexity property, a huge gap between what is needed and what is ‘assumed’ to be “the fee” exists. Lenders use TRID as an excuse to intimidate and bully appraisers into accepting lower fees to fit their quotes, claiming they ‘can’t’ change the TRID disclosed fee. It’s a blatant lie, but it’s one that’s used every day.

      The appraisal disclosure requirements of TRID itself must be revised to exclude appraiser fees whenever no appraiser being seriously considered for the specific job has been asked to research and bid the assignment. Then the AMC fee should be added as a cost-plus item. Not a share or percentage of an appraiser quoted fee.

      No appraisal should be permitted to be ordered until there has been researching and informed discussion between that appraiser and the AMC as to why that particular property warrants a higher fee OR longer completion time; as well as researching probable issues likely to require special handling or disclosure.

      The AMC is obligated to assure appraiser competency for EACH SPECIFIC ASSIGNMENT; not merely as a generic assumption based on license level. Presently no AMC does this. Their idea of ‘competency’ is who will do it the cheapest and fastest-regardless of quality.

      2
  3. Avatar Taunya says:

    Do we have any indication as to whether the Senate will take this up actually or not? Is there a way to get it through the system?

    I agree with Bill. The consumer should be told UP FRONT the appraisal fee is X and the management fee is X. Only problem is that the appraisal fee may be more or less. TRID turned appraisal fees into widgets. There is still loan professionals who are underdisclosing appraisal fees, even with or without a management fee. If the property is waterfront, backs to a highway and has 3 large shops, no way in hades an appraiser is doing that for a base fee!

    5
    • Avatar Bill Johnson says:

      The so called management of the appraisal by these AMC’s has got to be nearly a fixed cost (employee X at minimum wage Y multiplied by 20 minutes), and absolutely should be stated up front. As for the appraisal and the swings in time and money to complete, hell depending on distance to or traffic through the variance to the property and back could be hours.

      Per TRID guidelines, the appraisal fee should never have been a zero tolerance item (quoted up front).

      Seek the truth

      5
  4. Avatar LayDeeTee says:

    @Bill Johnson….here is the text they are amending;

    https://uscode.house.gov/view.xhtml?req=(title:12%20section:2603%20edition:prelim)

    12 USC 2603: Uniform settlement statement Text contains those laws in effect on October 15, 2019
    From Title 12-BANKS AND BANKINGCHAPTER 27-REAL ESTATE SETTLEMENT PROCEDURES

    (b) Availability for inspection; exceptions

    The forms prescribed under this section shall be completed and made available for inspection by the borrower at or before settlement by the person conducting the settlement, except that (1) the Bureau may exempt from the requirements of this section settlements occurring in localities where the final settlement statement is not customarily provided at or before the date of settlement, or settlements where such requirements are impractical and (2) the borrower may, in accordance with regulations of the Bureau, waive his right to have the forms made available at such time. Upon the request of the borrower to inspect the forms prescribed under this section during the business day immediately preceding the day of settlement, the person who will conduct the settlement shall permit the borrower to inspect those items which are known to such person during such preceding day.

    (c) Disclosure of fees

    The standard form described in subsection (a) may (THE WORD MAY CHANGES TO SHALL) include, in the case of an appraisal coordinated by an appraisal management company (as such term is defined in section 3350(11) of this title), a clear disclosure of-

    (1) the fee paid directly to the appraiser by such company; and

    (2) the administration fee charged by such company.

    What a difference a WORD makes.
    My interpretation is that since this is already a part of the settlement procedure, everything will be handled the same as it is NOW, with the exception of “MAY” being changed to “SHALL”, which removes it being an option.

    BUT…it’s just referencing the format of the FORMS that SHALL include a clear disclosure of Appraiser’s Fee and the AMC Fee separately. Wonder how long it will take for lender’s to figure out a loop hole. (?)

    6
    • Avatar Bill Johnson says:

      So in other words, I pay my cable bill up front, watch my dream team win a dream game (buy my dream house), only to later find out my total cable invoice won’t change, but rather the internal pricing for the individual channels was different than what I was told.

      What are the odds I pick up the phone to argue that fill in the blank channel should get a higher percentage of my money after I’ve already agreed to and paid the total invoice? Being a monthly bill, versus an appraisal fee paid every 10 years or so, the odds are higher I fight the cable company (will effect me next month), versus fighting for the appraiser.

      The AMC fees need to be separated and discussed at the beginning to begin the conversation, verses at the end when most just won’t care.

      Seek the truth.

      8
  5. Avatar Marion says:

    H.R.3619 – Appraisal Fee Transparency Act of 2019

    SEC. 5. Requirement to disclose appraisal fees.

    Section 4(c) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603(c)) is amended by striking “may” and inserting “shall”.

    12 U.S.C. 2603(c):

    (c) Disclosure of fees

    The standard form described in subsection (a) may include, in the case of an appraisal coordinated by an appraisal management company (as such term is defined in section 3350(11) of this title), a clear disclosure of-

    (1) the fee paid directly to the appraiser by such company; and

    (2) the administration fee charged by such company.
    https://uscode.house.gov/view.xhtml?req=(title:12%20section:2603%20edition:prelim)

    So, if passed the amended law will read:

    (c) Disclosure of fees

    The standard form described in subsection (a) SHALL include, in the case of an appraisal coordinated by an appraisal management company (as such term is defined in section 3350(11) of this title), a clear disclosure of-

    (1) the fee PAID DIRECTLY TO THE APPRAISER by such company; and

    (2) the administration fee charged by such company.

    Paid = past tense to closing
    Not going to be paid, Not Almost paid before we went BK, Not Could be paid if the state bond lasts that long
    Not Maybe paid after 3 or 4 phone calls, emails and at least 90 days have past.

    Watch that wording because you know your AMC partners are gonna run around claiming it means something other than YOU ARE TO BE PAID BEFORE CLOSING.

    4
    • Avatar Bill Johnson says:

      I’ve spent 2 hours today working through 10 past due VA appraisal invoices that are due as of the notice of value (+/- 5 days after I send it it) and technically late post 30 days. In nearly all the cases, the files were still open and the excuse most used was that loan hasn’t closed escrow yet. Lenders need to completely change how they pay appraisers, as post closing can mean 30 to 90 days out.

      Seek the truth.

      1
  6. Dave Benton on Facebook Dave Benton on Facebook says:

    And what will this do? Lol

    NOTHING!

    0
  7. Avatar Cotton says:

    What I noticed over the past month is most of the AMCs have raised their fees. I can only assume they did this due to the fact that the appraiser and consumer will now be fully aware of the fraud and deception. Now we will see what the AMCs charged to the borrower which is typically over $600 for a full 1004 appraisal verses the broadcast fees offered to the appraiser which have been $250-300. I would advise every appraiser to quote fees exceeding $400 for a 1004 or what you feel is reasonable for your market. Time to hold REVAA fully accountable for the destruction of our profession! Remember they have zero added benefit to the appraiser and consumer. They assume no risk therefore why have the AMCs been entitled to over 50% of the fee charged to the borrowers? Have a blessed day!

    3
    • Avatar Anonymous says:

      And the “Wiley Paper” has nothing to do with fees suddenly magically rising. Cotton is correct, start quoting well over $500 though. Lost income over a decade is still due to many.

      3
  8. Baggins Baggins says:

    Correct. The next recession is already rolling in on the horizon, it may be here sooner than many people think. Appraisers waiting on the government to institute fair laws which protect appraisers and consumers may not understand how the revolving door of government actually works, how big the bankster lobby is, how far their influence reaches. Nobody goes to jail and nobody will ever go to jail. It is profitable to defraud consumers and vendors. Fines based on income could solve this, that’s why fines based on income will never happen either.

    Even if a miracle happens and short term legislative advocacy shuts down the amc, similar activity will simply scoot to the direct assignment side or come forward with a new face. What’s the big deal with amc fee disclosure, direct assignment lenders are charging consumers more than they pay the appraiser too.

    The incentive for lenders and amc’s to select lowest priced appraisers is built into the improperly co mingled appraisal fee which leaves room for junk fee unearned fee raking. Fees associated outside or beyond the appraisers actual bill should be separated. Collusion, the inconvenient ethical principal already written away some time ago.

    It’s possible those disclosures could provide ammunition for enforcement of the C&R rule. If the advocates for big corporations we know as elected representatives were willing to shut the bankers down for malfeasance, they’d have done that 10 years ago. The apparent probability is that disclosure will mean nothing.

    If appraisers are tired of the way amc’s operate, they need to grow up and stop working for them, learn to say no. The government can not regulate honesty. Appraisers do not need the ear of the next legislator in line, we need a good lawyer.

    What’s your fee and turn time? I can give you a lot of order volume right now. The gates are wide open for amc work.

    1
  9. Avatar CA Appraiser says:

    Have you guys heard of Expert Mortgage Assistance? I received an email about doing work for them and can’t figure out who they are.
    https://www.expertmortgageassistance.com/mortgage-appraisal/

    1
  10. Avatar marion says:

    Of course they are the premier best, most advanced high tech integrated AMC in the country, like all the rest.

    https://www.pr.com/press-release/770736

    And would you believe their owners, flatworld, write student papers, but use the AMC’s email address.

    Assignment Writing Service Review, Papers Writing in NY …
    supportportal.flatworldinfotech.com › Papers Writing
    Rating: 4 – 24 reviews
    And we, as the essay staging.expertmortgageassistance.com/ran.php?writing-help-student review service, are ready to do our best to assist you statistics …
    There are a bunch of other articles about them, most have been deleted.

    1
    • Baggins Baggins says:

      Those guys do everything except actually loaning the money.

      https://www.facebook.com/pg/expertmortgageassistance/services/

      Cliche.

      https://www.slideshare.net/outsourcemortgage?utm_campaign=profiletracking&utm_medium=sssite&utm_source=ssslideview

      The mortgage automation solutions slide is worth a quick look. That’s these sorts of companies goals, to completely automate the process. Instructional flowcharts meant for employees or lender solicitations. People subscribing to typing services may want to look at the mechanics behind such efficiency.

      https://www.slideshare.net/outsourcemortgage/how-to-pick-and-handle-an-appraisal-vendor-a-checklist-103102740

      “How to pick and handle an appraiser vendor” We have been reduced to mini bean people.

      2
      • Baggins Baggins says:

        And this was intriguing. What broad horizons. Because when I get a loan, I also want the experts involved to have knowledge of dentistry, report writing, insurance, billing, and also be good at journalism.

        2
      • Baggins Baggins says:

        Beanie baby appraisers.

        1
      • Baggins Baggins says:

        It’s always nice to know your field review services are appreciated and not cast in a light as if the whole process is obsolete.

        “The customer had hired a service provider for checking the quality of appraisers. The provider had in turn assigned the task to individual appraisers across the country who botched up the task and left it in a complete mess. As the turnaround time was nearing the client turned to us for checking the work for quality and completeness.”

        CA Appraiser, you’re going to love their stringent review standards and amazing reductions in average turnaround time.

        I’ve seen enough of this amc to last a lifetime already. Next!

        1
        • Avatar marion says:

          Aren’t you amazed that nobody is ever checking the quality of the people who are checking the quality of the appraisers?

          HA HA. Bunch of dorks looking for suckers.

          1
          • Baggins Baggins says:

            When tens of thousands of licensed real estate people subscribe to these services and nobody bothers looking at the companies own content. 140 slideshare views. That’s due diligence in 2019, pass it down the line. Who has the time?

            They are delivering 3x the volume and also offer similar services in other languages on a global scale. One mirrored access site appeared to be in russian. I’m sure some appraisers here will really appreciate that tie in.

            Clicking to additional open windows through entire link trees across multiple sites is rudimentary research and only takes a few minutes.

            Still waiting to know if FOIA applies to the CU database. Who will dare send the request?

            2
            • Avatar Marion says:

              Well, FOIA should apply as long as the Government is in control of them and they are not private companies anymore. File the request and see if they acquiesce or if they step up kicking the GSEs out, back into the private sector, to avoid the FOIA.

              1

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Appraisal Fee Transparency

by Jonathan Miller time to read: 1 min