CFPB Crackdown: Unfair Practices Hurting Consumers
As we all know many AMCs are not paying Customary & Reasonable fee as required by TILA. They have consistently pushed down the pay of Appraisers while making undisclosed profit off consumers and prioritizing cheapest and fastest over quality and competency. The CFPB has been in communication with individuals behind the scenes and are concerned with what has been shown enough to include AMCs in their data collection process.
Now is the time to send them everything we have. To drive legitimate change, we must encourage as many appraisers as possible to submit all relevant information to the contact details provided below.
[Docket No. CFPB-2024-0021]
Request for Information Regarding Fees Imposed in Residential Mortgage TransactionsAGENCY: Consumer Financial Protection Bureau.
ACTION: Request for information.
SUMMARY: The Consumer Financial Protection Bureau (Bureau or CFPB) is seeking comments from the public related to fees charged by providers of mortgages and related settlement services.
DATES: Comments must be received on or before August 2, 2024.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2024-0021, by any of the following methods:
- Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
- Email: 2024-RFI-ResidentialMortgageFees@CFPB.gov. Include Docket No. CFPB-2024-0021 in the subject line of the message.
- Mail / Hand Delivery / Courier: Comment Intake —Residential Mortgage Fees Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
Instructions: The Bureau encourages the early submission of comments. All submissions should include document title and docket number. Please note the number of the topic on which you are commenting at the top of each response (you do not need to address all topics). Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to https://www.regulations.gov.
All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Comments will not be edited to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory Implementation & Guidance Program Analyst, Office of Regulations, at (202) 435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov.
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- Background
People rely on mortgage loans to buy their homes, tap home equity at key life moments, and refinance those loans when interest rates decline. Mortgages come with many associated fees and costs, referred to as “closing costs,” that are due by the time the loan closes or when the borrower signs the loan agreement. These closing costs, and particularly the costs the lender imposes on the borrower as part of the cost of getting the loan, have recently risen sharply.1 From 2021 to 2023, median total loan costs increased by over 36% percent on home purchase loans. The median dollar amount paid by borrowers in 2022 was nearly $6,000 in these costs and fees. This, along with increased home prices and interest rates, have placed increased pressure on borrowers’ budgets, contributing to a lack of access to credit and decreased home affordability…
Appraisal fees and related valuation fees, including payments to appraisal management companies, also contribute to the total loan costs. Many of the fees are charged to cover the lenders’ costs associated with closing a loan…
Well done! This is long over due. Thank you for the hard work from all involved.
https://www.federalregister.gov/documents/2015/06/09/2015-12719/minimum-requirements-for-appraisal-management-companies
Count the violations? CFPB should audit the entire amc industry and lenders whom use them.
AMCs have been pocketing $100s of Millions without disclosure off the backs of Independent Appraiser since 2009. This practice has robbed our industry of time and resources for over a decade. I’m tired and broke, but still fighting for our career. Thanks Josh
When asked my fee and turn time I have put the past 5 with 2 day turn time and my standard fee. Clearly I received none because they want the lowest fees out there. One appraiser was $100 less and 75 miles away. Saw that horrible report, but that was the lowest fee and the appraiser did not know this area at all. I am sure this can be proved all over the USA
I have said it before and I will say it again and again and again….. Report “Quality” complaints are ONLY made when the value does not come in at contract or “as expected”. So as long as your 75 mile away cost cutter comes into value, there is no quality control issue or complaint. Subsequently, how does one prove that the lowest bid was the worst appraisal if the appraisal gets no complaints….. Bias exists in our profession and it always has, but the color of bias is green, the kind of green that represents the avoidance of being accused of bias or avoid having to respond to an ROV or lose business because one does not make things work.
One of the appraisal distribution platforms changed my email to an unmonitored internal email of their own without telling me, nullifying any new random invite requests and solicitation efforts for new clients, because I complained about too many amc bid request emails. I’m probably not the only appraiser this has happened to.
They also may secretly invalidate any appraiser whom clicks amc mail to spam, without actually changing the appraisers email, in order to protect their email sending systems from being blocked by email receiving systems. Clients think they’re emailing the appraiser, but the appraiser never gets the email. The lender clicks the appraiser off the approved list for being non responsive.
See how this works yet? TILA and C&R violations are not even half of the problem. If appraisers try to work only with lenders and not amc’s, we get penalized by the tech companies, covertly black listed. The tech companies want appraisers to work for amc’s, because then they bill for the order handling fee twice. Once for the lender to the amc, then again for the amc to the appraiser. TILA C&R violations are just the tip of the ice berg. Too long to list all the damages and harms caused by amc’s, but we have written extensively about that on this blog for the last 15 or so years, however long it’s been.
I’ve been appraising for 40 years. I’ve noticed that every time “things are going to get better”, they don’t. We get paid less for more work and more grief. I mean, you made $50 more than usual on this appraisal, so please do $1,000 more work for us! The AMC’s are rich and make political donations. We don’t have a chance against that unless we can come up with $billions to donate to politicians. It’s always do more for less, drive farther for less, work longer for less, put up with more irrelevant questions for less, don’t say “church” for less, why can’t you do that appraisal that’s 100 miles away where you have to drive 300 miles taking comp photos for the same price as the appraisal next door, etc., ad nauseum. Remember, SJW’s and DEi’ers, oops, I mean, appraisers, you don’t count!
My appraiser friend told me a prominent legal client dropped him because he asked for a higher fee to be an expert witness on a value dispute regarding several million dollar homes. Lawyer told him it’s just a few hours on a zoom call, and limited the fee to less than a hundred dollars, after they talked him into doing multiple appraisals on those same homes for less than a mortgage lender would pay for a single condo appraisal. He thought he’d make it up on the back end with expert testimony fees. No cigar. He’s probably going to get a subpoena to appear in court for free instead. And that’s why I don’t work with lawyers either.
If you want your blood to boil, read the public submission sent by Benjamin Nelson. Here is just a taste: “Thus, we continue to have existing appraisers that are using several reasons to justify their price increases because there is
limited competition in their industry. The (sic) are, in effect, a small pool of appraisals with
cartel-like powers to increase prices due to limited competition.”
Appraisers should flood the CFPB with public comments to silence these types of ignorant and uninformed comments.
Can you provide a link to these “submissions”?
Follow the link in the article
The link posted by Baggins does not allow public comments to be created or read ?
Here is the link to comment:
https://www.regulations.gov/commenton/CFPB-2024-0021-0001
And here is the link to read the comments:
https://www.regulations.gov/search?filter=docket%20no.%20cfpb-2024-0021
Thank you !!
What I had posted at the top was the 2015 final rule for minimum standards for appraisal management companies.
Will make an anonymous comment soon, although from the 21 so far, many of the important points are covered.
Phone a friend, send the link to your email list. Drum up more comments.
Thank you.
Yep – Ol Ben is pretty ignorant about the appraisal “business model”. Cartel-like AMC’s maybe ??
only 8 comments so far – hello – there should be more like 10k just from appraisers – come on people – let it all out and not just on a blog – then post them back on here – take some time out to do it – comment period ends – only 53 days left
Up to only 30 comments now. Either very few people care or they like the amc system the way it is. Back when Biggers rallied for C&R, he hand delivered thousands of appraisers letters directly to congress. Please, send letters asking your co workers, realty agents, lenders, or even family members to comment. Write a letter to your local state appraisal groups asking them to comment, as more than three out of four appraisers no longer work with amc’s, they may not be actively paying attention to these issues, please help them be aware. If you’re retired or moved on, write a letter anyways, detailing how amc’s played a part in those decisions and how they effected your appraisal business. Comment deadline date is Aug 2nd. I’m reading them but will comment soon.
https://www.regulations.gov/document/CFPB-2024-0021-0001
C’mon kids – time to login and rant to the Gubment while you can. I did
I wouldn’t be surprised if the government is censoring comments that do not fit the narrative they are trying to spin about the “cartel-like monopolies” that are the appraisers and FICO and the credit bureaus. I submitted a comment, but it did not appear on the list. Maybe they are filtering through the comments and that is why there are only 30 comments that have been posted.
Thank you for providing a comment. Edited post. Looks like the comment showed up. What else can you do except tell the truth.
What the amc people do not understand is although they are excited about their company and business model, appraisers are fatigued and subsequently reject the model. They’re all the same; Appraisers have to bid for every single order or there is no work. There is no steady rythm of available work unless the appraiser capitulates to every single demand and service performance standard. Being an employee, without any employee benefits. If the amc industry can’t figure out what a fair fee is by now, how to demonstrate the minimal levels of operational efficiency and send one appraisal request to one appraiser instead of a hundred, and do so with consistent rates and a consistent rythm, we can’t help them. Most of us are not interested in being graded by people whom are not qualified to perform the task, or gaining unfair leverage over our peer appraisers by climbing to their top tier top rank programs to capture the majority work share. If appraisers are qualified to be on the panel, they should all get a fair share of work for a reasonably consistent fee amount.
I find myself here well over a year after this conversation occurred and this is exactly the thing that has me ready to Forrest Gump across America. You could not have said it more perfect. What other profession that requires you to continue to educate yourself pays you less as you know more? But is it less? Are the AMCs pocketing the increase? We don’t know and that’s a huge problem. How in the world 15 years in to this am I being offered a fee that is less than I made when I was training? And I say offered lightly. I have now had a few AMCs promise steady work flow however their fee is set and low. They do not offer any additional money for a rush, fha, etc. Customary and reasonable is not flat. However that’s what in my area I have accepted so I can continue to feed myself. Well I had an unexpected child whom is now 4 and I will not accept this anymore. I don’t care if the list I’m on is charcoal at this point the disrespect and lack of loyalty is so apparent and yet so overlooked that I’m afraid I will be the Steven Avery of our profession.
I had an AMC come to me recently with a promise of steady work, which 15 years in, I have yet to find. Once again I get excited. Because while I don’t want to work for less I like my profession and am now a single mom who would like to be able to balance her responsibilities and checkbook. The owner of said AMC starts the conversation by boldly stating that they are 100% appraiser first. They are looking out for us in every facet of the game .Oh but heads up there is one client who yeah their fees are lower than I would have liked to agree to but in order to retain them as a client we had to accept that to compete with the other local AMC. So I’m sorry I tried but we will circle back at some point. I desperate in the moment agreed, however reminded him that no matter how efficient I am I still only have 24 hours in a day. The promise of more work at a lower fee is not really desirable I still can only complete so many a day. When he sent the first order with the fee I had to call him because I couldn’t even imagine it being that low. This man had the audacity to say they were appraiser first. No sir. You are not. If you were you would tell that client that is 100% unacceptable. This is a long standing financial institution they actually already know that. The additional problem here is, I have no clue what the lender is paying the AMC. What other independent contracting profession has someone else negotiating their fee. I mean it’s just all so absurd at this point I am ready to walk away. I at least have a chance at Mcdonalds to move upwards in position and pay. And have someone contributing to my livelihood. We are treated as employees is exactly the problem. 15 AMCs show up on one day with 100 orders they need tomorrow and then I don’t hear from any of them for 2 months.
I then am lambasted for the length of time I am taking, I’ll get phone calls, emails, texts, forum messages. I also have to pay an upload fee. I get unsigned contracts, borrowers listed for access on a purchase. And god forbid I ask for that contract to be signed. Most of the time I end up going to the agent to get it. Because they would just prefer I submit the appraisal and assume the contract is executed.
I could go on for days. I just would like to say. Thank you. This blog does make me feel seen. I just wish I had a stockpile of money so I could take the time to grab my bullhorn and make the people responsible actually listen.
I have a bachelors in accounting I fell in to this profession and had never worked in any aspect of real estate or lending. It’s just so obvious in my opinion. GSEs mandate lenders to utilize us in the process if they want to sell that loan on the secondary market right. They then set regulation for us to follow. Lenders therefore don’t give two hoots about our opinion unless it kills the deal. Otherwise, we carry all the liability if we don’t comply with the regulation standards. They have zero recourse. Great. No problem. If 15 years in I made more money like they all do. These people are trading inflation it’s built in to their product. lol.
I’m so sorry for the rambling. I appreciate your expertise. I am devouring this blog but it’s honestly difficult because I can’t believe the amount of corruption.
Lastly, one other bedtime story that will warm your belly. There is a local mortgage lender that does a lot of work in my area. One of the loan officers is a friend of a friend so we chat here or there sometimes. That company has a set appraiser fee for their loans, one they proudly share with the borrowers to show that they charge less than other lenders. However they use an AMC. So I know how much at least they are keeping from the fee. Because it’s set and I’m not getting that amount. So i asked him, well dont’ you think that you could look in to raising that fee since it’s been that way for a long time, that the borrower would expect that. Because if not, the AMC cant’ increase my fee. Well they could be i’m not trying to tell any tall tales here. I said how am I making a lower fee than I did 15 years ago? If you then add inflation that fee is significantly less. This man looked me in the eye and said “Well I’m still making the same commission split I made years ago. I just work a lot harder and have built an impeccable client list. Then Basically he told me I just needed to work a little harder and put myself out there and shmooze more people who then request me. People being loan officers. Loan officers who then request the AMC send me their work.
The audacity this guy had to presume I don’t work hard. I started tearing up to be honest because I thought for certain he will see what I mean he’s a numbers guy and it’s so obvious. I didn’t give him the satisfaction. I composed myself instead and said “Yeah ok so first, I’ll play along and go ahead and pretend that that’s legal. And second, sir not for nothing, I mean i’m sure you work harder than anyone, but The cost of homes in our market have over doubled in the past 10 years. Your commission is based on the loan amount so Inflation is built in to your income. You have had to do nothing different to make more money. But I’m sure all that hard work has helped to.
So yeah. I’m spent obviously with the novel rant above. I’m ready to just jump ship because I have to make money I am a single mom I have to feed my child. But me accepting shit fees is just fueling the fire and I can’t be part of that much longer. For anyone that read all of this thank you. And I’m all ears on ideas on how to fix this garbage.
Hey, it’s fine and we appreciate you telling your story. Especially here on the appraisers blogs, which is a unique forum ran by an independent appraiser and their friendly appraiser network, whom does not answer to amc interests. Sometimes I can’t believe I’m even still an appraiser, only by a miracle have I strung along this far. Could have clearly done much better mowing laws or digging ditches.
It’s shameful the way the lenders whom work with amc’s and the amc’s themselves treat appraisers. In many other business settings their behavior and operational standards would indeed be considered criminal. But not in appraisal, because the amc’s have influential people sitting on appraisal oversight boards, they are tied in with national lender and investor networks, with billions of dollars of infrastructure, legal representation, and lobbyist networks. The appraisal trade group representatives are in their back pockets as well, likely quite a few politicians these days too.
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined
https://www.irs.gov/newsroom/worker-classification-101-employee-or-independent-contractor
Talk to me about being an ‘independent contractor’ and working for amc’s.
Somewhere in the ever changing and illegally altered ethics book, aka the appraisal industry standards book commonly referred to as USPAP, there had been a guideline that appraisers shall not charge disproportionate fees for the same work. This was to prevent opportunistic unfair billing practices, you should not charge someone more just because they may have more to spend. Appraisers are supposed to be required to have reasonably consistent fees for the same work applied, across the board. That rule came from a time when appraiser panels were ran in a much more fair manner, and work was distributed at a consistent rate, in a rotational assignment manner, to all approved panel appraisers. It’s not like that anymore.
There is also the management rule, the appraiser should not provide a thing of value to be the preferred order recipient. Yet, most of the industry on the gse side is a pay to play system. And because cost savings from reduced cost of appraisal services are not returned to borrowing consumers, when an appraiser discounts more, this is a financial enticement for the amc to send them more work. And that’s what the illusionary grading and tiered ranking, mini panels, variable fees, all of that is about with amc’s. A flimsy cover so appraisers can knowingly violate the management rule with impunity, and the amc’s can disregard the federal registry guidelines on fair appraiser selection not by fee and turn time, but by competency and experience. The time frame pressures are there to force appraisers to cut corners and outsource, which further profits the amc because the appraiser can handle disproportionate volume with outsourced services and runners, and the amc can profit much more than working with quality independent contractors whom do not cut corners. CU system must have this data to see only a select body of appraisers complete a work load which is clearly beyond the ability of a normal competent and careful appraiser. Yet they do nothing about this.
Any way you slice it, amc’s are some of the most unethical players in the game. The regulatory system is beyond dysfunctional. Amc’s are legally defined in regulatory language as being ‘agents of the lender’. Meaning they represent the lender as if they were the lender themselves. The state appraisal board has no business providing oversight to national lenders representatives. As usual; the ASC, overseen by the Comptroller, asleep at the wheel.
The industry is poised to lose ten to twenty thousand appraisers soon, possibly more. What a gameplan eh? Strong arm your way in after the eappraiseit settlement should have busted out your entire company set. Buy off all the software and tech providers. Force everyone to work from you and or purchase your products. Engage in systematic intellectual property theft for decades. Lobby your way out of DF Reg Z AI C&R regulation that would have put your business set out yet again. Profit 12 billion or more dollars collectively. Buy off all the appraisal trade group representatives. Run over three quarters of all available experienced appraiser vendors out of the GSE market segment, ignore the damage this causes to consumer protection. Ignore wire fraud rules. Coordinate with GSE and FHFA executives to be granted special privileges to direct both the work product changes (appraisal modernization), and capture the majority share of the valuation services industry with all your proprietary technology you’ve invested in with all the unearned fees and junk fee billing rakes. Put everyone out of business who’s left. Then tell them they can work for menial wages as your employee if they want to keep their license. Cherry on top; Collude in midnight closed door meetings against anyone of influence whom stands up to the racketeering network and ruin their lives as well.
Welcome to vanishing segment of gse lending formerly known as independent appraisal sector put in place to protect American consumers. Quite genius actually. Criminal, but one for the history books. If only someone could stand up and tell the truth, this is plainly unethical and unfair operational standards which if applied in almost any other business sector would be subject to immediate investigation and prosecution.
Thank you for participating in the blog and please do continue to post. May I please ask what led you here? Thanks.
Amc’s, the long arm of predatory lending. Subscribe to Jeremy Bagott newsletters. Every single week and his one today was simply excellent, again.
A big shot amc exec called me not too long ago in a recruitment attempt. I could not help but laugh at the fact an amc was calling me. Then I tried to maintain my composure and asked why they were calling. The guy hung up on me. A top executive for one of the biggest amc’s in America. That’s how they all operate. If more amc employees would simply blow the whistle the truth would come out. I’ve written letters to judicial watch, OMG w/ o’keefe, lawyers, independent persons, politicians, news persons. If more appraisers engaged in this effort… Someone with an indeed and yelp account should track through the thousands of negative reviews about amc service companies and get more peoples first hand accounts…
Thanks for posting on the blogs. Tell your appraiser associates to please post here more often. This is where the truth gets told, top ranking online as well, lots of exposure, no pay wall, no login wall, not subject to advertisers directives. It’s a completely independent site. Ran by an appraiser whom refuses to work for amc’s. The only way to win is not to play. Regular jobs are not all that bad, takes the pressure off. Just keep the license and hope for a better day.
https://downloads.regulations.gov/CFPB-2024-0021-0040/attachment_1.pdf
Updated CFPB letter from appraisal groups on amc junk fees.
Please write your letter today.
https://www.regulations.gov/document/CFPB-2024-0021-0001
Four days left to comment. Just copy mine if you have not written one yourself.
https://appraisersblogs.com/appraisal-management-companies-exploit-borrowers-government-indulged-middlemen-are-wrong-rx-for-battered-borrowers/#comment-43080
There is like 400 something letters now. Hundreds of them appear to be some pre written form letter from the title industry.