Virginia Enacts Law on Reasonable and Customary Fees
Virginia Gov. Terry McAuliffe on March 23 signed into law S.B. 1445, which requires appraisal management companies operating in the state to compensate appraisers at a reasonable and customary rate. The legislation gives the Virginia Real Estate Appraiser Board authority to take administrative action against AMCs not paying appraisers customary and reasonable fees in accordance with federal law.
Prior to enactment of the legislation, Virginia law already required an appraiser engaged by an AMC to disclose as part of the appraisal report the actual fee they were paid. In 2014, the Virginia Center for Housing Research and the Virginia Tech Program in Real Estate completed a survey of Virginia residential real estate appraisers to analyze the patterns of fees earned by appraisers the previous year. Prior to release of the report, no data existed that defined customary and reasonable residential real estate appraisal fees in Virginia.
Payment of reasonable and customary fees
Several other states have provisions in their AMC laws similar to those passed by Virginia, and a few others currently are considering similar legislation. Some states simply require AMCs to provide a certification to the state appraiser licensing and certification agency stating that they are complying with federal law regarding payments of reasonable and customary fees. Other states specifically require the payment of reasonable and customary fees and grant authority to the state licensing agency to investigate complaints against AMCs related to appraisal fees and to take administrative action against those found to be in violation of state law.
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It’s a very tough issue to enforce though. The CFPB’s interpretation of RegZ rules is ambiguous at best because it provides two presumptions regarding compliance, 2 & 3, one of which does not specifically state ‘to exclude amc’s’. I’d like to say back to earth, here comes gravity, but with such confusing presumptions of compliance that do not specifically state to exclude amc fees, and with it being common that industry studies and technology company leaders being unable or unwilling to segregate and verify fee data regarding direct vs amc fees with certainty, it’s unlikely a solid and reliable fee number for C&R could be obtained. One possibly effective way to effectively enforce C&R is to mandate separation of the amc and appraisers fees, and require such separation reporting on closing documents, and have that fee information available to researchers for this specific purpose of identifying C&R rates. Then at that point, some know nothing assignment representative will immediately accuse an appraiser of violating C&R rules, when they quote higher than C&R fee study amounts. There is clearly no common standard regarding the fee distributions, allocations, or cost saving return to borrowers. It’s a tough issue. That’s why I maintain $400/450+ or bust for nearly everything these days, and the number keeps on jumping for every client that adds additional work load and time consuming stip requirements and such. I hold various clients with higher demands and over reaching review activity in the $500+. So how would C&R play out in that scenario? I’ve given up on competing with other appraisers prices. I’ve got a tough enough time just keeping up with all these never ending new regulatory requirements. Adding additional government duties seems burdensome, when the more logical solution is to mandate separation of fees and remove the financial incentive for amc’s to drive down appraisers fees for variable opportunistic profit without having to return cost savings to borrowers. Let’s be honest; an amc would probably not drive down appraisers like they do, just to save the borrower a dollar. Nice to see some progress being made, and hopefully something good will come of it. / Also source page here; CFPB top. And specific C&R link CFPB.
What to do? What to do? The C&R deal lost it’s teeth when the CFPB refused to include amc service fees as a separate line in the closing documents. I’ve learned over time, that it’s a free market, and I’m free to charge what I want. If only the other appraisers who charged less, were not providing additional profit to amc’s, we’d be on more even footing. It’s one thing to provide a more cost effective service and compete by price so the consumer would pay less. It’s quite another thing to provide an appraiser service discount, where cost savings are not returned to borrowers, and instead are pocketed by the distributor as a financial incentive to select that appraiser. If mb’s did that, such activity would probably fall under junk fee rules. What do I know though? I’m just the lowly appraiser, bottom of the totem pole, last chance for borrower cost savings, etc, etc. Actually, I’m a crucial component in the lending process, and appraisers and distributors who think the appraiser is the last stop for savings or bonus profit, are clearly not well educated on the appraisers appropriate position in the lending process. Appraisers, distributors and lenders alike should know better than to allow the distribution system to be gamed like that. Ethics first.
Can you believe they pushed this through in six short years? A legislator’s wife must have been an appraiser with son lined up to take over the business.
Now let’s slice it up:
“In 2014, the Virginia Center for Housing Research and the Virginia Tech Program in Real Estate completed a survey of Virginia residential real estate appraisers to analyze the patterns of fees earned by appraisers the previous year.”
Are you telling me that they have decided to base C & R fees on the fees appraisers were getting paid in 2014 (1990s fees)? WTF
Is this s joke Virginia or did I miss something?
Even if you take the average fees were earned in 2008 ($350) and add 5% per year (putting it at $472) you are looking at a joke of a fee. The work load on appraisers has easily doubled since 2008.
Will Virginia appraisers be paid $472 or $944 (doubled work)?
No and L NO
The profession is s joke people. If you haven’t figured that out yet God help you.
this is nothing but more verbal diarrhea.
C&R fees according to who? how are C&R fees determined? we are suppose to be getting C&R fees right now, but the AMC’s (who are owned by the banks) determine C&R fees based purely on their own profit margins, and a fine balancing act of paying appraisers the least amount they can to make more money, and still keep enough appraisers around to do the work.
this is a waste of everyones time and paper. we run appraisal businesses – we should be able to set our own fees based off of the work that is asked of us and our expenses, just like any other business.
the other day i decided to stop doing the very rural appraisals and appraisals outside my immediate area. why? because they arent worth it anymore thats why. do i get paid extra for driving an extra hour or two to the subject or to the comps? oh heck no, and i have enough business locally to satisfy me, so i am done.
the bleeding continues . . . . .
“In only 6 short years….” Good one Retired! Another Zinger! / I’m getting by, and that’s good enough for me, for now. As more appraisers retire and the phone continues to ring, the fees continue to go up. Just landed another one at $500. Getting a little bit closer to a professional wage, and the battle for fair compensation wages on. The notion of C&R, and ‘fee surveys’ looks good on paper, but does not hold up so well through bureaucratic implementation. At first, I was so gung ho for C&R fees. Years later, I really don’t care. I’m getting my requested fee, the fees keep going up, and that’s good enough for me. Retired, chill with the rhetoric please. The checks and balances system is never a joke, and god help those who abandon the tenants of checks and balances systems. Liberty is founded upon checks and balances systems. Never give up on liberty. Liberty; Too big too fail. C&R will be a dead issue, the same day that amc and appraisers fees are no longer co mingled.
most of the studies undertaken to discover reasonable and customary are flawed. If they truly want to do a study they should take a sample of fees paid to residential appraisers today and compare them to fees from 1995. Then add the rate of inflation. That would be an interesting study as to how lenders colluded to keep fees down for over 20 years.Wayne, agreed. Baggins as right as far as it went back in April, but I think we all have a pretty good idea by now how skewed the studies were and remain.
For me, the only valid metric is the federal civil service pay scale where OPM has already done the long running classifications studies and ratings based on degree of responsibilities of the appraisers involved. These predate HVCC and are applicable post HVCC as well. My contention is they generally show a range of $500 to $650 for non complex work based on three GOOD appraisals and reports per week.
Another appraiser suggested the VA pay schedule is a good alternative. I’m ok with that too since it shows (in my area) the lower end of the range of $500.
The most recent Las Vegas “Appraisal Symposium” (the Lets sell stuff to appraisers symposium) suggested the industry desperately needed new blood (trainees), but then in the criticisms they said we need to be “more professional”, and that we needed to have more work done by Certified appraisers. Apparently THEY missed the contradictions.
Then again, maybe they didn’t. They’ve already GOT certified appraisers working for trainee compensation!