Appraisal Fee Transparency Bill Falls Short
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No system that continues to allow (or limit) defining appraisal complexity to the lender or AMC will ever achieve reasonable, or fair compensation for the appraiser…. We need to do much better than “half a loaf” in our appraisal legislative efforts. Especially when that half loaf does no more than enshrine continued price-fixing by lenders; with the support & blessing of REVAA…
WorkingRE published news of recent House of Representatives action. The Bill addresses consumer disclosure of AMC fees among other issues.
While the American Guild of Appraisers applauds the efforts of those that worked in good faith on this, it still falls very short of what is most sought (& required) by appraisers
“Reasonable Fees,” related to the specific properties’ individual appraisal complexities. We do concur with Mr. Turner’s concluded action recommendations at the end of the article; with the following additions.
We need to do much better than “half a loaf” in our appraisal legislative efforts. Especially when that half loaf does no more than enshrine continued price-fixing by lenders; with the support and blessing of REVAA.
No system that continues to incorporate appraisal fee price-fixing by lenders or their correspondent ‘loan officers’ & AMCs can be considered acceptable.
No system that continues to allow (or limit) defining appraisal complexity to the lender or AMC will ever achieve reasonable, or fair compensation for the appraiser.
I no longer use the secondary Dodd-Frank descriptor of ‘customary’ fees because REVAA & their affiliates have bastardized that term and concept so badly it has become meaningless.
Originally advertised by the now thoroughly discredited & defunct Coester VMS – “National One Size Fits All” AMC/Appraisal fees were promoted. That and ‘lowest fee possible’ are the sole metrics on which all AMC marketing is (apparently) now based. Complex appraisals that by law require completion by Certified level Appraisers are routinely assigned to lower License Level appraisers. Appraisers that lack the skill, experience and license level (State Certification) to legally perform them.
Lenders were & still are offered a single fee for AMC service that includes any appraisal fee, regardless of complexity. This was well before the property was screened or analyzed for complexity, or even reviewed by an appraiser to determine complexity; fee adequacy and completion time needs.
Any effective or meaningful regulations must also incorporate specific procedures in which the TRID disclosed appraisal fee is not ‘locked in’ until AFTER the appraiser tentatively assigned to do the job has screened the property to determine its required license/certification level complexity and fee adequacy.
H.R. 3619 needs to be amended by the various House Committees & in any Senate versions before final adoption and passage into law.
Consumer protection also requires honest assurance and disclosure that the person performing the work is qualified by experience and license level to be doing the work. Adequate compensation relative to the complexity is also required so that credible, & proper analyses are made.
We urge all who have worked to get the Bill adopted to this point, to continue their work to resolve the deficiencies identified above.
Reasonable fee ‘tests’ must minimally be at levels not lower than the Regional VA fees charged for similar property types. Even then, additional metrics should be considered addressing specific assignment complexity with higher fees as warranted.
Anything less, continues to result in consumer fraud.
We suggest the following, or similar derivative. It’s generally based on federal civil service guidelines for appraisers. (sample dated 2015 should be updated for COLA/Inflation)
HERE HERE!! Thank you Mike Ford for that lucid and meaningful response .
This can totally get resolved if appraisers would just stand firm on their fees. If all appraises only accepted a reasonable fee based on the complexity of the assignment there would be no fee issues in our world. Doesn’t stop AMC’s from gouging consumers but it does fix the race to the bottom for what appraisers are paid. The AMC model should have always been a cost plus, not a cost minus like it is today. We have never played in the low fee game and always said what we needed to do the assignment and if they didn’t like it, thank you, next.
I work a single county Greg (San Diego), that has +/- 900 appraisers all within +/- 25 miles of me. If 50% stood there ground perhaps the fee needle would move, but that still means I’m competing against 450 other appraisers that based on location (20 minutes from me) are all considered my competition in the lenders eyes. I agree with you in concept, but in certain areas of the country, it would be more difficult but not impossible.
Seek the truth.
Bill, I get what you are saying but I am living proof that it can work. I am located close to downtown Atlanta and there are a couple thousand appraisers that cover my market. I have no trouble getting a fair fee. Those that don’t want to pay it are not clients and should not be worth having as a client. Yes, if everyone did it it would be a non-issue but sadly far too many appraisers are terrible business people and don’t understand their own worth. If they wish to be that way they fall on their own sword. We operate differently and always have.
CoreLogic stock down 16% today. How’s that for “Transparent”?
Check today’s ZeroHedge front pages for more meaningful information on those issues. It’s not quite that straight forward. Economic instability is on the up and up. Don’t worry, another rate cut is in our future.
Great article, good points.
But let me ask you, how exactly does a non licensed telecom assignment person who has incredible production quotas so much they don’t even have time to read appraiser notes or the appraisal reports assess reasonable complexity and competency of a licensed appraiser per individual order?
Requesting mandatory appraisal licensing for everyone involved in the distribution of appraisal orders.
The depth of regulatory requirements and complexities involved in this industry are simply too great to place such trust in non licensed individuals without adequate experience. Especially not without adequate accountability as individual personal licensing provides. The past 10 years where distribution shifted from accountable licensed people to unaccountable non licensed people is proof positive the current methods of distribution of frt requests is wholly inadequate.
Baggs, great question but it is NOT OUR OBLIGATION to assure that AMCs meet THEIR obligations to the lender, OR that the lender meets their obligations under FIRREA. Our only obligation is to provide USPAP compliant appraisals and reports.
A practical working model existed long before HVCC in which appraisers were paid either in advance or when they showed up to do the property appraisal. FNMA pretends they refuse to buy any such loans today to assure appraiser independence but fee payment has never been a factor of independence or bias when orders are placed by AMCs, to begin with.
If anything, withholding fees has greatly increased the level of pressure on appraisers to “accommodate” AMCs and their lender clients.
In days past, the pressure from a borrower was minimal. Generally amounting to little more than a lament such as “I PAID for it!” It was easy to respond properly and professionally.
Now, AMCs and lenders can and often do, (1) withhold payment claiming no payment is due until they ‘accept’ the appraisal (2) acceptance is predicated on making changes they want (3) refusal to cave into those demands gets a phony desk review performed by the AMCs trained monkeys to justify ordering a new appraisal & (4) The AMC or lender then seeks to create a false paper trail of Dodd-Frank compliance by turning the appraiser into the state !
Now, in order to maintain independence appraisers are forced to take on mega monopolies like corelogic or their clients-such as Wells Fargo (a frequent repeat offender in this regard).
No AMC or lender should be able to use withholding fees already paid by a borrower to coerce appraisers. They should also be prohibited from using borrower appraisal fees for ANY of their operating expenses as if it was their money until the file is closed.
Yet they routinely use YOUR fee to pay for prior appraisals and expect you (& the borrower) to provide the free float for their cash flow convenience.
Appraisers has their chance back when TRID was being implemented. The lending and AMC industry have very deep pockets. Good luck with this fight.
True. We addressed it in writing but frankly by that time I think the ship had sailed and we were in the “it’s already done-but let’s hold public hearings anyway stage.”
We keep trying to deal with legislators when we really have to deal with the legislative aides and analysts BEFORE specific proposals are put into writing for bills. AI has pro lobbyists on retainer but they tend to take limited aspects of issues for about a year or so, and obviously (correctly) represent their client’s interests that may not coincide with the broader appraiser communities.
Collectively we are learning. It starts by going to National and State board meetings and opening effective dialogue with legislators or their other influential constituents. We are getting better at that collectively, though there’s still unofficial turf building by each of the organizations. It’s improving but still needs work if we are ever to become truly effective as a profession.