AMC Fined for Reasonable and Customary Fees Violation

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The Louisiana Real Estate Appraisers Board Holds the First Hearing for AMC’s Not Following the Laws and Rules for Determining Minimum Reasonable & Customary Fees

The Louisiana Real Estate Appraisers Board Holds the First Hearing for AMC’s Not Following the Laws and Rules for Determining Minimum Reasonable and Customary Fees

As a result of a thorough investigation conducted by The Louisiana Real Estate Appraisers Board (LREAB), an adjudication hearing for an appraisal management company was held to determine if that firm is following the laws and rules pursuant to minimum reasonable and customary fees, as required by the Dodd/Frank Act and Louisiana laws and Appraisers Board rules. The case alleges the appraisal management company Coester VMS was not compliant with the state’s AMC laws and rules, which require an AMC to compensate appraisers at a rate that is reasonable and customary for the appraisal service being performed within the market area of the property being appraised.

The LREAB alleged that Coester VMS Appraisal Management Group did not use one of the two stipulated methods to establish minimum reasonable and customary fees. These two methods are fees set by an objective third party or the factors set forth in Section 31101 of the Rules and Regulations of the LAREAB. Coester VMS stipulated to the violations, as charged, and agreed to:

  1. Follow the current Louisiana Fee Survey beginning 30 days after the effective date of the agreement.
  2. Submit a quarterly report to the Board for a period of 12 months that will list all appraisal orders made in Louisiana, the fee paid the appraiser for each report, and the date payment was made to the appraiser. Such reporting will begin 60 days after the end of 2Q 2015 end date. Such reports will be kept confidential by the board.
  3. Pay a fine of $5,000
  4. Be monitored for the next 12 months
  5. Waive all rights to contest/appeal this case

This agreement to accept charges brought by an AMC regulatory authority is a seminal event that signals violators of law  or rules that they will be held accountable for their actions.

This agreement is a step in the right direction toward a goal of transparency for consumers, appraisers, and financial institutions. The Louisiana Real Estate Appraisers Coalition hopes that this will advance transparency for the appraisal industry in the future. Appraisers are reminded to report any violations of the current AMC laws and rules to the Louisiana State Appraisers Board to ensure the law is adhered to fairly across the board for everyone.

The Louisiana Real Estate Appraisers Coalition is a member driven advocacy group that works on behalf of the Louisiana real estate appraisal industry. For more information about the Coalition you can visit their website www.LAREAC.org

We were contacted by Joseph Mier regarding this article. Apparently, what we published  here was the draft version. For the final revised press release, please click here. AppraisersBlogs Team

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16 Responses

  1. This isn’t true you’re going to see a notification from Louisiana board that this completely incorrect.

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  2. Joe says:

    Correct Press Release:

    Louisiana Real Estate Appraisers Board Resolves AMC Complaint
    Baton Rouge, LA – – On June 4, 2015, the Louisiana Real Estate Appraisers Board (LREAB) approved entering into a “Stipulations and Order” with Coester VMS Appraisal Management Group. The Order will resolve a pending complaint that alleged that Coester violated Louisiana law that requires AMCs operating in the state to “compensate appraisers at a rate that is customary and reasonable for appraisals being performed in the market area of the property being appraised, consistent with the presumptions of compliance under federal law” (La.R.S. § 3415.15, La. Admin Code. tit. 46, pt. LXVII, § 31101). The case had been scheduled for an adjudicatory hearing before the LREAB on June 4.
    In its complaint, the LREAB alleged that Coester did not utilize an objective, third-party fee study to establish their reasonable and customary fees, nor did they review the specific parameters of each assignment (property, scope of work, timeframe, appraiser qualifications, appraiser experience and professional record, an work quality) to ensure that the amount of compensation paid to the appraiser was reasonable (La. Admin Code. tit. 46, pt. LXVII, § 31101 (A)(1) and (3).
    In the Stipulations and Order, Coester agreed not to contest the Complaint brought by the LREAB. In addition, Coester agreed to:
    Follow the current Louisiana fee schedule for a period of 12 months beginning 30 days after the effective date of the Order;
    Submit a quarterly report to the Board for a period of 12 months beginning 60 days after the end of the quarter beginning July 1, 2015 that lists all appraisal orders made in Louisiana, the fee paid to the appraiser and the date payment was made; and
    Pay administrative costs of $5,000.
    In response to the resolution of this case, Joseph Mier, SRA, AI-RRS, RAA, President of the Louisiana Real Estate Appraisers Coalition, stated that, “This is an important recognition that the Louisiana Appraisal Board is serious on enforcement of the laws and to hold registered AMC’s accountable for practices that are not permitted by Louisiana law. This is a step in the right direction for transparency for consumers and for the health of the appraisal industry going forward. Working together with Louisiana appraisers, the Louisiana Chapter of the Appraisal Institute and the national Appraisal Institute, we hope that this will help to advance transparency for the appraisal industry in the future. Appraisers are reminded to report any violations of the current AMC laws and rules to the LREAB so that the law is adhered to fairly across the board for everyone.”
    Adding
    This is an Industry issue that has been a long time coming due to the bad business model that came into the industry when the mandates came from the Dodd/Frank Rules.

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  3. Randall R. Davis, SRPA, SRA says:

    “….Follow the current Louisiana Fee Survey…..”??? The state had a survey completed for fees? How was that done and by whom?

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  4. bubba jay bubba jay says:

    *YAWN*

    whatever.

    this is a cute story, but dont get your hopes up people.

    “what do you mean Bubba?”, you ask?

    i will show you.

    go to the top left hand corner of this page and hit “home”.

    scroll down to the bottom where it says “Page 1 of 41”, and click on “Last”.

    on the very first page of this website, 41 pages ago, back in 2011, two of the eleven articles on that page were about R&C Fees. that was over four years ago. nothing has changed, and we probably still wont be getting C&R Fees for mortgage work four years from now, or 20 years from now either.

    again, cute story, but i doubt it will change a thing.

    the bleeding continues . . . . .

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  5. Martin Randolph says:

    Did I read it correctly? The fine was $5,000? That’s not enough to put gas in the corporate jet for a quick $2,500 lunch in Aspen. I would like to know how many appraisals went through the company (not just in LA.) and how much the average fee paid was compared to the reasonable and customary fee.
     

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    • bubba jay bubba jay says:

      funny, i was thinking the same thing.

      i find it humorous how appraisers can get fined for a grand or two – (and their names posted and reputations ruined/blacklisted too BTW), for a subjective report or minor flaws.

      BUT, if an AMC breaks the LAW, the fine is just $5,000.  ooh! yeah, that will send a strong message to everyone else, wont it?

      lets face it – it would be very difficult to find anyone truly on our side these days.

      the bleeding continues . . . . .

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  6. Martin Randolph says:

    $5,000 fine is the equivalent of a “time out” for a misbehaving two year old. Now if it was $500 for each instance that would leave a mark. They fine NASCAR drivers $50,000 for a minor rules violation.

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    • bubba jay bubba jay says:

      dont worry Martin, i think it pretty obvious at this point that nobody is willing to help appraisers because it has no effect on any of their bank accounts. all this will eventually bite the AMC’s in the keester though, when appraisal businesses start folding because it just isnt worth staying in business any longer. more work creep, longer hours and less pay is a recipe for financial disaster, and we all reaching that breaking point right now. good luck finding any appraiser to do mortgage/AMC work in the next few years.

      the bleeding continues . . . . .

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      • Martin Randolph says:

        When I started appraisals averaged 9 pages and we were paid $350. Now mine are running 40-50+ pages and I’m lucky to get $350. There are still only 3-4 pages that anyone is interested in. Except the 18 yr old “senior, supervisor, appraisal review specialist”.

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