Actually C&R is based on reasonable fee surveys aka the going current market rate.

Just like per hour standards for legal representation, hiring a plumber, dealing with a general contractor.

All people whom a consumer can contract with directly.

The socialistic aspect befalls the appraisal community, because the consumers of the product can not contract with us directly for FRT’s and instead have to go through an middle manager whom jacks the consumer price up and drives the vendors fee down.

Hence the concept of C&R based on fee surveys, meant to inhibit the ability of intermediaries power to disrupt the free market. Lack of C&R is price controls. Which erodes the product quality and drives providers of the service or product out of the market space, also harming the consumer whom no longer has reasonable access to vendors whom provide the product or service.

“Customary and reasonable” is communism.

Yep, it’s insane. I was getting paid $325 more than twenty five years ago.

The other one is “why did you set the inspection appointment on the due date”? I didn’t set the appointment, the borrower told me that the due date was the only date they were open for me to inspect the house. Now, the AMC is angry and snippy with me. My inference is that I’m supposed to pressure the borrower into setting a much quicker inspection date. Again, that’s not my job. It’s the lenders job to stress the importance of “time is of the essence” to the borrower and maybe even tell them that an appraisal is required and to cooperate with the appraiser when he calls. But, I guess that’s just too much to ask.

I don’t know if any of you guys are experiencing this sort of thing, that is, more and more work being piled on us that simply is not part of our purview. We’ve succumbed to it way too many times. Don’t do it.

Please see my post below regarding sending a complaint to the CFPB,
https://consumerFinance.gov
and FTC,
(go to http://www.reportFraud.ftc.gov)

How about an effort to fine AMCs that pay low ball fees that are NOT REASONABLE and CUSTOMARY? We all need to email or mail a letter to the CONSUMER FINANCIAL PROTECTION BUREAU (www.consumerFinance.com) – they are the authority for enforcing the Act with regard to AMC fees (Truth in lending, dodd-frank, etc) AND also submit a complaint to the FTC (go ro http://www.reportFraud.ftc.gov) they investigate bad business practices, financial fraud, etc.
Here is what I received from the federal reserve board:

Thank you for your recent correspondence to the Federal Reserve concerning a complaint against an appraisal management company.
While the Federal Reserve publishes a wealth of consumer credit information (http://www.federalreserve.gov/consumerinfo/default.htm), the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated the transfer of authority for enforcing such rules under Regulation Z (Truth in Lending) from this agency to the Consumer Financial Protection Bureau (CFPB). You may therefore wish to contact the CFPB at 202-435-7000 or visit the consumer complaint section of the CFPB’s website at http://www.consumerfinance.gov/

I hope this information is helpful.

Sincerely,
Board Staff

Absolutely!

Colleen, I’m on the Virginia Board again. I would love to chat sometime

Desiree , I am still appraising, but I am on the MD State Appraiser’s Board, so I am unable to teach while I serve. I am in my second term, which ends this year, so not sure if I will pick up teaching again. I may just write articles or courses. Who knows what our futures hold sometimes. Again, I am so happy to see your growth.

Coleen, I have such fond memories of your classes at NOVA when I was a trainee – your instruction was incredibly valuable, and I still recall that time as if it were yesterday, even though the appraisal industry has changed so much since then. I’m curious, are you still teaching or appraising today?

Mr Ford recently posted in another thread. I tried to find the comment again but had deleted the link. On an older article from years ago. He said;

(from memory). Not finished, just waiting. Meaningful change may not be possible with the current administration.

Or something close to that. The thing is there is such a concerted attack on the appraisal profession, the AGA may be working overtime on just existing defense of appraiser management. This is a great concept to explore though; Integrating AGA into the TAF. Finally, new management. As far as advertising, just search Mike Ford in the above search link. His articles were among the best researched and most meaningful content ever posted to this site. His forecasts and concepts are even more valid today then they were at the time. He called almost everything that would happen with precision accuracy. Thank you.

I suspect that the AGA & their AFL-CIO connection is the only possible solution at this point. The problem is that they are not putting in little to no effort to win over appraisers. Passive marketing doesn’t cut it. If they truly want people to join their organization they should be submitting articles to this site and other sites stating how many appraiser signups are required to actually get the ball rolling. They need to explain their plan of attack as well. Otherwise, why would any of us gamble $300 on their membership?

Merely an observation from the cheap seats.

Good analysis but we all knew this already. The question is, what is anybody going to do about it? Complaining to each other in this and other forums isn’t working. At the very least contact your congressional delegation, write the CFPB and make a stink to the people who CAN do something.

As a certified residential real estate appraiser with 25 years of experience (part of 10,000 appraisals / +10 billion dollars) thanks for the opportunity to peel back the curtains related to closing costs, junk fees, appraisal management company (AMC’s) fees, and specifically what I know about (appraisal fees).

From a historic perspective (thousands of personal examples) its extremely important to understand what was charged to the consumer locally for the most popular appraisal forms some 20 years ago. In short, for a typical non-complex, non-rush conventional loan appraisal (forms 1073/1004) the fee collected by the appraiser was around $400 (add $50 for FHA loans). Multi-unit appraisals (form 1025) were at $700, with rent surveys (form 1007) and operating income statements (form 216) being priced at $75 each. Important to note is the fees quoted above were based on appraisal industry standards of the time which when compared to today took some 25% less time to complete (regardless of technically advances). Additionally, neither the appraiser nor the consumer paid any hidden appraisal junk fees. Meaning, the appraisal fee charged to the consumer was the same fee paid to the independent business owner appraiser.

Fast forward to 2009 (HVCC) / 2010 (Dodd Frank) and up to today and the following is true. The typical non-complex, non-rush conventional loan appraisal (forms 1073/1004) fee today is locally around $325. Multi-unit appraisals (form 1025) are near $500, with rent surveys (form 1007) and operating income statements (form 216) being priced at $50 each. When adjusting for 20 years of inflation the following is fact, $400 = $663.17, $700 = $1,160.54, and $75 = $124.34 (CPI inflation calculator). Additionally, and as previously stated, based on increased scope of work (SOW) requirement concerns, the time to complete the typical appraisal takes 25% longer today then from 20 years ago. Meaning, for the consumer to pay an equal fee for services from 20 years prior the above noted inflation adjusted fees should be as follows, $663.17 = $828.96, $1,160.54 = $1,450.67, and $124.34 = $155.42.

Based on the detailed analysis above (repeatable throughout the country via other millions of appraisals/appraises), and with what is presented below, for any party including the CFPB to place blame on the appraiser for the so-called increase in mortgage closing costs is at best laughable, and worst negligent and criminal.

Specifically related to the CFPB’s concern over increases in mortgage closing costs (junk fees), its important to distinguish between fact and fiction. In comparing the above adjusted for inflation plus SOW work appraisal fees (forms 1004/1073 – $828.96 / form 1025 $1,450.67) to what is available by way of a currently known government agency fee schedule ((VA appraisal fees) the following is fact. With an effective date of Dec 1st 2021 (no raise in nearly 3 years) VA fees in my county of practice are $700 for forms 1004/1073 and or discounted to the consumer some $128.96 below post inflation/SOW adjustments. Additionally, with the VA charging $950 for a multi-family appraisal (again my county of practice) this represents a discount of $500.67 to the consumer from the inflation/SOW fee. Bottom line, specifically related to appraisal fees, a blanket statement from the CFPB indicating that mortgage costs are increasing are not only false from the highlighted years of 2021 to 2023 (combined 36% increase), but are FALSE DATING BACK TO 2004!

As previously indicated, locally the current ACTUEL FEE being paid to the appraiser for the most popular forms (1004/1073) is $325, however as presented to the consumer, the appraisal fee on their loan forms is often double to triple this amount. Without required separation of fees, the borrower, the general consumer and unfortunately many other government agencies falsely believe the appraiser is getting what is been stated on the loan documents. This false belief contributes to the lie that the appraiser is gouging the consumer for profit when in fact even if paid in full (full loan stated appraisal fee), the fee paid to the appraiser would be below when adjusted for historic inflation.

The deception surrounding the appraisal fee (actual fee paid to the appraiser versus what is referred to as the appraisal fee on the loan docs) can be pinned on the use of appraisal management companies (AMC’s) popularized post HVCC/Dodd Frank (2009/2010), and or other appraisal platforms used by lenders. Without separation of fees on the loan docs, or the requirement of lenders to separately track, the borrower, the public, nor any government agency have had the ability to track these type of junk fees for 15 years. The junk fees are in essence the difference between what the appraiser gets paid and what the borrower is being charged. Based on hundreds of dollars per loan (example $300) over 15 years, combined with over 10 million appraisals, these junk fees are in the range of 3 billion dollars.

In closing, (1) the CFPB needs to historically understand the appraisal fee to judge what is truly customarily and reasonable (C&R) and apply those standards as outlined in Dodd Frank (most likely 10 to 20% above VA standards / no local increase in 3 years). (2) Work from a cost-plus system where the appraisal fee is separate from any AMC fee (often hundreds), and separate out other appraiser platform fees (an additional 5 to 15% taken form the appraiser). (3) Provide enforcement/penalties to those parties who do not pay appraisers C&R fees per Dodd Frank requirement. (4) To create competition, create a system to monitor the amount of these junk fees which often go by names of, technology, review, platform, etc. (5) For full transparency, make public any findings related to those who have contributed to the increase in closing costs, and as in the case of the actual fee being paid to the appraiser, those who get paid less today compared to 20 years ago (saving the consumer money).

For the past two decades we have been devoted to consumer protection principals, specifically in the realm of real estate appraisals. Price is not the same thing as value. Only to be told by special interest focused persons whom enjoy rich taxpayer funded incomes that the efforts do not matter, that consumer protection is better served by automated process controlled by the very same companies whom on multiple occasions have dealt with exculpatory evidence in a manner which excuses their behavior and places the blame on well intentioned appraisers instead. As if independent 1099 appraisers have any meaningful influence on mortgage lender policies and procedures, or government regulations, which we do not.

Who is really at fault? The every day workers or the persons whom instructed them and prescribed industry policy? Appraisers like myself have been consistently shut down for over two decades for simply prescribing to the notion that the principals of consumer protection should come first. Let’s talk equity. Restraint of trade. Racketeering. Or if the issue is to complicated for the people; simply call the appraisers racist instead.

For all the appraisers whom so boldly proclaim they are only a few years from retirement or have already exercised that privilege. For the gloriously well compensated people on the government payrolls. What about us? What about all the independent appraisers whom dedicated their lives to the ethical principals? Appraisal modernization. Their win will be a hollow victory.

Thanks again – it has been a distressing decade having to work under this so-called business model. I’m mad as hell and not gonna take it anymore 😉 Well, I’ve been mad as hell since 2010 😉

Thank you. Appreciated. The second link mentioned the IVPI proposal. Still available online and I’ve posted this below comment and link many times before. The IVPI proposal. 2008.

Missing the IVPI proposal yet?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf

Thanks for the good info again Bags. We fought like hell during HVCC and Dudd-Fwank implementation but always got bullied out due to our lack of resources. Remember the IVPI Proposal? I’ve still got a copy 😉 As low hanging fruit our profession has been used as Chattel for a cash grab by the AMC’s, REVAA and the lenders and gubment officials who are getting the lobbying checks.

Industry persons in the know called everything that would happen with the implementation of amc companies. 2012.
https://appraisersblogs.com/appraisal/naihp-letter-to-cfpb-regarding-appraiser-independence-regulations/

The ‘interim final rule’ summary piece by a valuation focused magazine. 2010. This was a piece before the CFPB botched the interpretations, allowing amc’s to self certify the fees they paid independent appraisers were C&R.
https://www.valuationreview.com/Resource.ashx?sn=VRSP106InterimFinalRuleReport

Congressional research summary document. 2012. The regulation of real estate appraisers. 12 pgs.
https://crsreports.congress.gov/product/pdf/RS/RS22953/11

More on the final rule. The legendary; volume discount. Abused from minute one by amc’s, and continues today. Put thousands of appraisers out of work overnight. And has caused three out of four licensed appraisers to refuse to be of service to consumers in the mortgage lending realm today, Cost savings from discounted appraisal service are not returned to the consumers, instead kept by the amc. Consumers save nothing. So much for the ‘volume discount’ theory. There is no discount. Rather a bribe. Improperly co mingled fees. Pay to play.
https://www.consumercomplianceoutlook.org/2011/third-quarter/valuation-independence/

FOUND IT! Yes! READ THE COMMENTS. Federal Reserve Board interim final rule on Reg Z C&R billing for appraisers. 2010. First link is rule, click pdf for full read on the federal register. Click second link for open comments, mostly from appraisers. How right all the appraisers were. Amc’s would decimate the industry. Amc’s had already destroyed many appraisers careers. Appraisers were begging for relief. The CFPB nullified the basic meaning of C&R, allowing amc’s to self certify instead of being forced to rely on third party surveys which did not include amc fees, or simply use the VA panel fee tables. The original intention of the rule was to require a $10k/$20k daily recurring fines against any individual amc that failed to comply with C&R compensation rules.
https://www.federalreserve.gov/newsevents/pressreleases/bcreg20101018a.htm
https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1394&doc_ver=1

Rising demins. When a substantial portion of appraisal work which sustained every day appraisers and helped us train people with more simple tasks simply vanished. The lending thresh hold which required an appraisal jumped from $250k to $400k. First link; The rule. Second link; Comments. Many from appraisers.
https://www.federalregister.gov/documents/2019/10/08/2019-21376/real-estate-appraisals
https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1639&doc_ver=1

AMC companies final rules. Click pdf in the first link for the federal register posting. Clarifies it is lenders responsibility to provide oversight of amc’s if they choose to work with them, and amc’s are agents of the lender. Second link are the open comments.
https://www.federalreserve.gov/newsevents/pressreleases/bcreg20150430a.htm
https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1486&doc_ver=1

Better then where are the politicians now… Where are appraisers today? Below; Image snip from Dave Biggers monthly news letter to Alamode subscribers on the C&R rule before the CFPB got involved. Before he betrayed everyone and sold the company to Corelogic. But up until that point he was our hero. The most respected man in the appraisal industry.

Cleanup, other. Research links. Source of the above FRB material.
https://www.govinfo.gov/content/pkg/FR-2010-10-28/html/2010-26671.htm
https://www.federalreserve.gov/apps/foia/dfproposals.aspx