Lenders May Still Profit Most from Appraisal Fees
Lenders May Still Profit Most from Appraisal Fees, writes Kenneth Harney
WASHINGTON — When you pay $450 to $550 at settlement for an appraisal on a home purchase or refinancing, do you assume that all or most of the money is going to the appraiser who comes to the house and performs the valuation?
That’s logical, but probably not correct. Despite new Federal Reserve regulations that took effect April 1 requiring lenders to pay appraisers fair fees, growing numbers of them say they are still being offered $200 to $250 — even as low as $134 — for work that gets billed out to consumers on settlement sheets at $450 and higher.
Last year’s Dodd-Frank financial reform law mandated that appraisers receive fees that are “customary and reasonable” for their local market areas, yet the largest national appraisal organization — the 25,000-member Appraisal Institute — says that is not happening. Leslie Sellers, immediate past president of the group, said in an interview that “the average fees across the country today are about $225 to $250 — nowhere near reasonable or customary” in most markets.
Who’s getting the differential between what consumers are billed and what appraisers are paid? Sellers said management companies that connect lenders with local appraisers take a percentage for their services. But often lenders “turn (appraisals) into a profit center of their own off the backs of appraisers and consumers themselves.”
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Good article. I’m glad to see more and more articles and discussions on C&R fees. Too many experienced appraisers have left the business making room for the inexperienced AMC appraisers. I’ve heard of a licensed appraiser in my area doing 5 appraisals a day at $125 each. Would love to get my hands on of his reports! Here is another article covering the same issue https://www.foxbusiness.com/features/are-you-paying-500-for-an-appraisal-that-costs-200
I refinanced my one bedroom condo two years ago and had to pay for two appraisals totaling $1175. The first appraisal was done by an appraiser in WV about 60 miles away. All the sales in the appraisal were either foreclosures or short sales. There were about 35 sales at the time, 6 of which were distressed sales. He appraised my condo for $200,000. A second appraisal was ordered when I told the lender I was not going to refinance with them unless they used a local appraiser familiar with my market. I accepted to pay for the second appraisal which came in at $300,000 in line with the other sales of one bedroom condo in the building. I called the second appraiser a few months ago to have my condo appraised again. I had a buyer interested in buying it. When he quoted his fee of $350, I assumed he was giving me a $300 discount (nice I thought). Later he told me that he only got paid $250 for the previous appraisal. That he normally charged $450 before AMCs became mandatory and that he now gets paid between $200-250! I was outraged! What a rip off! How could this be allowed?
Something like 10 years later. Still on about this issue. Still waiting for a solution. Watching what once was an unsophisticated ruse for some spare change turn into a major money making scheme and increasingly sophisticated operational platform which knows no boundaries. What was once uncommon is now overwhelmingly common for almost all distributors out there, amc or not. Keywords; Junk fees & unearned fees.