VaCap Speaking out Regarding C&R Fees
CUSTOMARY AND REASONABLE FEES
When Dodd Frank was passed a few years ago there was much discussion as to what it actually meant to lenders, appraisers, and AMCs.
AMCs were quick and forceful in their definition. It was the fee they could coerce an appraiser into accepting. That was their definition. This has been a big impact on the well-being of an honorable profession.
In June the Federal Final Rules were released, and they took effect in September of this year. These Final Rules clarified many questions regarding lending, appraising, and AMC involvement. First, the Feds have made it very clear that lenders ARE NOT required to utilize the services of any AMC. Indeed, if they do opt to do so the lender is responsible for the accuracy and reliability of ALL appraisals done by their AMCs. It is clear that lenders have liability for good, honest, and competent appraisals regardless of any involvement of an AMC. AMCs do NOT protect lenders or borrowers.
Second, the Final Rule clearly mandates that customary and reasonable fee definition is left to each state to determine.
On November 17 at DPOR Headquarters on Mayland Road in Richmond is the quarterly Real Estate Appraiser Board meeting. It begins at 10 am.
It is expected that at this meeting the Board will consider customary and reasonable fees. This is important to us all. It appears that DPOR has come to the realization that C & R fees are an important issue that must be settled.
VaCap has been at the center of this issue, not only in Virginia, but also on a national basis through the Network of state appraiser coalitions that represent about 25 states now.
VaCap will speak out regarding C & R. The premise is that the current VA fee in Virginia is fair as the minimum C & R fee to be paid to an appraiser. The utilization and adoption of the VA fee meets all Dodd Frank requirements and definitions, much better that the self-serving, selfish fee maintained and promoted by AMCs.
WHAT CAN YOU DO?
You can and should attend this most important meeting on November 17 to speak or support.
You can and should join VaCap NOW especially if you believe VaCap represents your interests.
Join us on November 17 in Richmond.
Join VaCap TODAY!!!!!
- We the People… - April 9, 2023
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
Every single appraiser that reads Pat Turner’s post should provide written concurrence regarding the VaCap proposal for Virginia State Minimum reasonable fees under Dodd Frank. At AGA, we have offered an alternative proposal for a nationwide OR state by state basis for concluding MINIMUM C&R fees however our own proposal does not run (significantly) at odds with their proposal and we urge their state authorities to adopt the VaCap proposal. Should it serve their interests, VaCap may also use our proposal as an alternative example OR as additional support for their own conclusion. Coincidentally we included data for the Virginia-DC-Baltimore region in our original proposal. http://mfford.com/html/c___r_fees.htm
The American Guild of Appraisers joins with the VaCap in urging the Virginia Real Estate Appraisers Board to accept the VaCap proposed minimum fee schedule.
For the AGA
Michael F. Ford
Chairman National Appraiser Peer Review Committee
Director of Special Operations
American Guild of Appraisers, Chapter #44
The scope of work today for a conventional loan is often above or equal to what a VA or an FHA appraiser currently does now, so it may be a start in setting a floor to fees. If appraiser (A) currently works for AMC’s for a fee of $275 and overnight could get bumped up to $450, the end result could be in the range of an extra $52,000 (300 appraisals X $175) per year. Although the issues we face are much larger than fees, I think this would reduce appraiser turnover, and possibly increase the pool of trainees in the future. If this is in part the solution to declining appraiser numbers, the question is, why have the lenders over the past 7 years (HVCC) NOT started this sooner.
Bill, like I said, I’d prefer the AGA C&R proposal, but this would be in the right direction too. I agree with you that reasonable fees would go a LONG way toward not only appraiser retention; but bringing new appraisers into the profession a well. As for the banks not realizing fee impacts sooner it’s one of two reasons (1)they WANT even lower cost AVMs as long as the loans are insured and not part of THEIR portfolios, or (2) Executive Boards are still oriented to the current and next financial reporting quarters only. Long term effects of bad policy are ‘out of sight-out of mind’.
The lenders have not started “this” sooner, because they are not even advocates of it now! It is the appraisers pushing for this. A few state coalitions in their states; and the American Guild of Appraisers nationally. Why don’t you join us in the effort? http://www.appraisersguild.org or contact firstname.lastname@example.org or 301 220-4100.
In your position Mike, are you aware of any attempts either on a federal, state, or on a AGA level to establish a customary and reasonable NET fee to the appraiser? Lenders who outsource their appraisals either by way of a traditional AMC or via varying software portals have routinely been raising these fees. These fees are called delivery, technology, etc., and in my case have varied from $10 to $28 dollars per assignment. I also had a client that over a several month period reduced the net appraisal fee by an amount that was equal to what the credit card provider charged the borrower for a card convenience fee (typically 3%). If overnight the world adopts the AGA’s stance in establishing appraisal fees, but lenders are able to take back large portions ($10, $28, $300?) by way of an already established loophole system, then the appraisers efforts will be for nothing. Any attempt to establish a floor pricing system (customary and reasonable), by the AGA, state by state (via surveys) needs to establish a NET fee and not a gross fee. The net fees need to specifically be for a USPAP compliant report with clear verbiage indicating that increases in scope of work will require increases in pay.
Bill, you are 100% correct…or at least 90% correct. (Definitely an issue to be handled part and parcel with the rest-assuming we get that far. We are concerned with APPRAISER FEES (what you and I receive for doing the appraisal). Under TURD, (1) The loan officer tells the borrower what the gross “appraiser fee is going to be.” That’s the all inclusive fee the bank pays the AMC. $500 to AMC (2) (minus anywhere from $35 to $70 kick back to the bank executives that direct that AMC to be used); so there is $430 to $454 left. (3) The AMC takes a MINIMUM of $75 out (and tries to get away with up to 50%), so assuming they took $70 out and not 50%, there is still only $384 left. Im not working for $384 with OR without additional charges.
I REFUSE to pay any upload fees to anyone. They either eat the fee or I’ll mail the appraisal to them via snail mail or email. What they do with it then is their business. Nor will I pay credit card fees to them. Frankly I don’t think they are allowed to legally charge you for those, but you’d have to check your own state laws on that one. The ONE AMC I deal with usually does all that for me because half the time I cant figure out how to upload to their system and get mad at them; call them and they say just email and they’ll handle the uploads. Of course, they are personal friends *g*.
Anyway Bill, What you or I negotiate in terms of assignment fees and uploads is a function of negotiation. IF enough people tell the AMC “No. On the add-ons, then they’ll stop them.” I agree though, that it SHOULD be addressed since these are involuntary charges for the convenience of the end users, NOT us.
Frankly I think USPAP compliance inherently precludes EML transmissions because we lose ALL CONTROL over what eventually gets transmitted to the clients making loan buying decisions. Frankly The AI supporting / sponsoring MISMO and UAD was a huge mistake. You and I should only be transmitting completed, LOCKED files that cannot be manipulated in any way; not “data ready” formats.
I wonder if when the FDIC closes a bank and audits appraisals if they only look at a hard copy of our delivered file OR if they also look at the format in which the appraisal was actually transmitted and on which decisions were made? I digress.
I want ALL garbage and junk fees eliminated from the appraisal side. Since WHEN do we have to pay for lenders preferred delivery method costs? Pay me $685 to %750 for non complex assignments, and Id probably be more amenable to paying those, although I should NOT be!
XML-not eml. (NEED MORE COFFEE!)
Mike, I can’t get on board with standardized fees and professional based fees like you present, for the entire appraisal community at this time. Just last week some appraiser quasi solicitation article was bragging about the hundreds of thousands of reports some typing form filling service has already completed. Appraisers who turn their responsibility over to other persons and run the whole thing on auto pilot, do not deserve any pay boosts what so ever. Until such time as these shortcut outsource methods are officially denied by gse’s and states, it’s probably better that those appraisers earn less, rather than more. Data typing services are for the birds, and appraisers who don’t know what they’re doing in the first place. If you want to know more about this commentary, see addenda. So corny, it’s hard to believe lenders don’t immediately axe appraisers who dare to write that in there. And how can a non appraiser legally write the appraisers own appraisal report? It’s illogical, and irresponsible for the industry to continue to accept and promote those short cut methods. C&R is irrelevant, so long as one appraiser like myself sinks 12 hours into a quality analysis, while the other runs with cheap staff, outsourced services, and flips 4 or more a day. Like the guy you talked about last year at 1 an hour or some such nonsense. Can you imagine how many of those people would flood the industry if there were C&R rules enforced, which came before staging effective rules for emerging outsourced and related ‘appraisal form filling assistance programs’, and the like?
There s a lot in your post I agree with but I’m not convinced I have been clear enough in my explanation of what the C&R fee proposal actually is.
It is NOT intended to ‘set a standardized fee’, (unless everyone that reads it is content to work for MINIMUM fees as being “their” standard).
It is PURELY intended to be a minimum default fee threshold in the absence of other state adopted fees; OR where those adopted fees are being disputed as to adequacy. For example, derived from flawed studies or biased studies. In those cases a fee base already exists! It just doesn’t happen to be “reasonable.”
If NOTHING else, our C&R proposal should spark conversation on the topic. It should generate reasonable alternatives. For example-VaCap proposes the VA fee base for their area ($500?) be adopted as C&R. Its not the $515 to $585 or even $685 our proposal has but I think we’d all agree it is FAR superior to the $300 to $350 fees that currently exist. We don’t say you SHOULD work for $585. We say AMCs should NOT OFFER LESS than $585 for a non complex assignment.
Re the typing service. You are preaching to the choir. When I first saw those ads in WorkingRE (David Brauner’s publication, San Diego, CA) I wrote to him expressing my feelings that as an E&O insurance broker he should NOT be encouraging any services that promote non compliance with USPAP. he correctly pointed out in his response that he needs paid advertisers in order to continue to publish the magazine which generally informs us all.
I still vehemently oppose those specific services. MY view is that they constitute a violation of the confidentiality requirements unless the client has been advised in writing and responded in writing that they are ok with THEIR customer data being transmitted to uninvolved typing services that may or may not adequately protect their privacy. Services that may or may not be overseas; where there is no reasonable method of assuring private data is not resold to others.
Frankly, Id want to see a signed release from the borrowers holding the appraiser harmless for ANY breaches in privacy that may occur before I’d accept such services as legitimate. You & I cannot even run a credit check on a consumer without their signed authorization. Now all of a sudden some vendor thinks its ok to disclose sale or refinance information; interior photos of their home, and the possible presence or absence of permits to someone over in India? Not to mention opinions of its value or comparability to other properties in its area.
CoreLogic recently claimed they had performed analyses of over thirteen million appraisals and arrived at certain conclusions concerning “values”. I’m STILL waiting to hear HOW they managed to do that without violating USPAP (if from their appraisers); or client trust if compiled from other records.
Couple those services with the auto populate services from various providers like DataMaster, and auto complete 1004MC applications and I’m left to wonder exactly what it is the appraiser IS still doing. I don’t accept that one that abdicates ALL their mundane responsibilities will also continue to use true due diligence and professional expertise and judgment in all the other areas of he appraisal.
JH, you and I along with ALL other GOOD appraisers should not have to compete with those that do poor quality work or take shortcuts. Nor should we have to waste time fighting sub par fees with them. Join us now. Clearly you think things through. We need people like you that do so. I’d rather take time in the future helping the sub par appraisers to become better appraisers, than to keep competing for low fees with them. Help me out.
NOTE: Before end of year is a great time to join AGA if you are on the fence. The $225 discount rate for a year is for those that join before the end of the year. As far as I know, the discount won’t be offered next year when the norm is $375. Give Jan Bellas a call at (301) 220-4100 or email her at email@example.com