COD at The Door?
Can Appraisers Collect at the Door (COD)?
In the past, it was common for appraisers to collect their fees directly from the borrower at the time of the property visit (i.e., at the door). I would take credit cards, checks, or cash while at the door. Many years ago, this was common. Now, however, that rarely happens and we usually have to wait 30- to 60-days for payment from the AMC client. So recently, when I got a COD order from HUD, I was really surprised. In fact, I thought something was bogus. I needed to check this out since it was so out-of-the-ordinary.
To check it out, I got with my All Stars and Mastermind students, as well as my peers across this great country, to ask them what they thought of a COD coming thru HUD. Some had never heard of such a request. Others told me it was an acceptable practice. In other words, there was no consensus as to what to do. So what did I decide to do?
I decided to do my own research. I searched the Fannie Mae Selling Guide for some guidance on the matter. I searched the HUD 4000.1 document for advice or instruction on collecting the fee from the property owner at the door. I queried USPAP (via some USPAP experts) about what it said about such practices. I even looked at the Idaho appraisal statutes on-line to see of they could help me answer the collect-at-the-door question. After all of this personal and secondary research, this is what I found:
- Freddie and Fannie do not allow appraisers to collect at the door. The borrower must pay the correspondent lender the appraisal fee, which then pays the appraiser once the entire loan process is complete (which includes a review, as may include a field review);
- FHA is not clear on the question. However, I had a letter from HUD saying it was OK. So I called my local HUD office and they told me to follow the mortgage letter (which itself was not clear). However, FHA does not have any restrictions on COD. Given this lack of clarity, I choose to interpret that as not allowing it;
- Idaho state appraisal statute (incomprehensible to me as a non-attorney) gave me no guidance on the question;
- USPAP says nothing on the issue since USPAP does not address an appraiser’s business plan or practices. This is because USPAP is mainly about appraisal ethics, and says essentially nothing on a appraiser’s business practices;
- For non-lender work, it is perfectly OK to collect at the door since, in this case, the property owner is likely the client; and
- Since collection of the appraisal fee is not an appraisal function, but a business function, the above authorities (except for Fannie and Freddie) do not even address this issue.
Since there is so little guidance on this issue, to be on the safe side, I have chosen not to collect any fees at the door. I expect to receive payment thru my client. Note that my research is just that – my research. If you were to research the issue, you might deduce a different answer. Therefore, the collect-at-the-door question is one only you can answer.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 35 Can an Appraiser Collect at the Door (COD) on Financial Transactions