FTC Sends Warning to NC Over C&R Fees

North Carolina in FTC's Crosshairs Over C&R Appraisal 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

Delivery address:
400 7th Street, SW
Washington, DC 20024

Voice: 202-326-3139

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.

VaCAP Board
Image credit flickr - lamoix
VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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12 Responses

  1. Avatar Jack Of All Trades says:

    FTC + AMC = A$$HOLES

  2. Avatar jeanie says:

    FTC is the new bully in town and REVAA’s hired muscle!

  3. Avatar Koma says:

    What to do? Stop accepting low fees! Diversify your (in most cases) business so when a client sends you a low fee you can decline.

  4. Avatar BigAl says:

    One has to wonder if the FTC Commissioners haven’t been bribed to promote the position of the very people restraining fees and fair competition.

  5. Avatar Carl says:

    If they are going after real estate boards and taking action against them, then they better take action on price fixing by amcs.

  6. Avatar Jeff says:

    Just another reason the AMC has to go. This is another cause of the AMC

  7. Retired Appraiser Retired Appraiser says:

     FTC In Appraiser’s Crosshairs

    If it’s war you want FTC, appraisers will more than happy to bring it to your door step.  Appraisers are fed with AMC and legalized extortion.  Don’t think for a second they won’t put up a fight over the tiny gains made on their behalf by a handful of state boards who cared enough to assist them in fighting back.

    Don’t issue your hollow threats towards state appraisal boards.  Bring it on or STFU.

  8. Avatar Lauren Moschette says:

    Why does the FTC talk about AMC fees like it’s the appraiser’s responsibility? It’s obvious that someone or some corporation is behind the scenes on this. Why does the FTC care about a few appraisers actually being able to pay their bills.

    • Baggins - States rights not federal management. Baggins - States rights not federal management. says:

      Exactly.  I know advocacy when I see it, and the FTC clearly just advocated on behalf of amc’s.;

      We question whether it is appropriate for appraisers to receive the full rate that the consumer  pays. Typically, the consumer pays for additional services beyond the appraisal (e.g., other services provided by the AMC

      That would be the illusion of value added services, unearned fees, basically what equates to a junk fee.  The amc does not provide services to the consumer, they provide services to the lender.  The lender should pay for their services, and nobody else.

      Any arguments about protecting consumers falls flat for this exact reason;  When cost savings are achieved by way of a lower appraisers fee, those cost savings are not returned to the consumer and are otherwise pocketed as a variable unearned and junk fee.

      The very presence of amc’s has driven up consumer charges nationally many hundreds of dollars, but rarely do appraisers see any of that fee increase.

      Additionally this is a clear message to lenders the models are not working and they should simply stop using amc’s.  Well over 50% of the entire appraiser populace quit this industry due to anti competitive practices of amc’s.

  9. Baggins - Get educated on free markets Baggins - Get educated on free markets says:

    I’m figuring this out more.  FTC insuring the business viability of amc’s through regulatory tools?  It’s like iron curtain welfare for corporations at this point.

    “One problem leads to another, one regulation creates two new problems. / It is a very dangerous situation because they accept this principal that government insurance can substitute for what they’re doing.  But it’s not insurance it’s just government interventionism to cover up their mistakes.  This is certainly what has happened in the housing program.”

    People use the term free markets quite often, but without a proper understanding of what that means, these sorts of bureaucratic calamities typically ensure.

  10. Yet the FTC sees no conflict or outright price fixing when banks make service level agreements (SLAs) with AMCs to provide sfr appraisals and all other services for less than $650?

    Or, the fact that these agreements that cap all fees within the above amount are made PRIOR to any specific loan application being made?

    Or, the fact that borrowers are quoted “appraisal fees” based on the above at the subsequent time of their applications?

    I agree with the earlier poster. I DO wonder if their motivation is honest. With only two commissioners and both prior administration carry overs only taking an interest under the new admin seems peculiar. They had nearly eight years to address this BEFORE.



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FTC Sends Warning to NC Over C&R Fees

by VaCAP Board time to read: 2 min