TRID Impact on Appraisal Fees
The Consumer Finance Protection Bureau (CFPB) has mandated new residential mortgage application and disclosure procedures, which take effect Oct. 3, 2015.
Here’s a link to a brief article about this.
When a consumer applies to a mortgage lender, the lender requests certain information from the consumer before the clock starts ticking in terms of ‘timing requirements’ on the consumer’s application. When the application is considered “complete”, the lender has 3 business days to provide the consumer with the Loan Estimate document.
What’s of concern among lenders and appraisers is the speculated inability to change appraisal fees, which is disclosed at the beginning of the process, if complex issues involving the property are discovered AFTER assignment acceptance by the appraiser.
From the link above, these are the items that a consumer must provide to the lender for the application to be considered “complete”:
- monthly income;
- social security number;
- property address;
- estimated value of property; and
- requested loan amount.
A very simple solution to the ‘no changing appraisal fees’ is for the lender to not initially request the consumer provide item #5, until the appraiser has ample time to review property characteristics and provide a fee bid back to the lender. NOTE: this is not the same as asking the appraiser to provide a preliminary value estimate – as we used to do pre-HVCC under threat by loan officers, brokers, AMCs, etc.
However, as simple as this seems, it’s doubtful that lenders (and their AMCs) will do this for fear of losing the potential borrower, and due to the additional days of delay in processing the loan application.
So appraisers are basically trapped. The new situation is very similar to the VA process where one fee is paid for all non-REO properties, despite complexity issues.
It’s time to get your appraisal fees up with every client you do business with. Yes, you may lose a bit of business initially, but will make it up in the long run because many appraisers are leaving the business.