Lenders May Still Profit Most from Appraisal Fees
Lenders May Still Profit Most from Appraisal Fees, writes Kenneth Harney
WASHINGTON — When you pay $450 to $550 at settlement for an appraisal on a home purchase or refinancing, do you assume that all or most of the money is going to the appraiser who comes to the house and performs the valuation?
That’s logical, but probably not correct. Despite new Federal Reserve regulations that took effect April 1 requiring lenders to pay appraisers fair fees, growing numbers of them say they are still being offered $200 to $250 — even as low as $134 — for work that gets billed out to consumers on settlement sheets at $450 and higher.
Last year’s Dodd-Frank financial reform law mandated that appraisers receive fees that are “customary and reasonable” for their local market areas, yet the largest national appraisal organization — the 25,000-member Appraisal Institute — says that is not happening. Leslie Sellers, immediate past president of the group, said in an interview that “the average fees across the country today are about $225 to $250 — nowhere near reasonable or customary” in most markets.
Who’s getting the differential between what consumers are billed and what appraisers are paid? Sellers said management companies that connect lenders with local appraisers take a percentage for their services. But often lenders “turn (appraisals) into a profit center of their own off the backs of appraisers and consumers themselves.”