Customary and reasonable fees - 90 days

[rijman]

RE: "the lenders will" << a clearly incorrect assertion

The Law intentionally omitted the addition of "lenders" as being one of the authorized Parties legally tasked with promulgating Regulations to implement Subtitle F (which includes C&R Fees) for good reason i.e. Lenders, their Third Party Agent (and or subsidiary) AMCs, and Appraisal orgs are parties with vested interests which do not meet the Law's "Independent and Objective" criteria.

Are you suggesting that lenders will have no say in what is a C&R fee? Who do you think will decide what is a C&R fee and which independent and objective criteria to use as the basis for the lenders appraisal fees?

"Joan N. Trice is the founder and Managing Director of the Collateral Risk Network. The CRN is a for profit enterprise owned by Allterra Group, LLC."

Is Joan Trice trying to make a profit in the appraisal industry? How dare her!

 

[George Ellerman]

Why Pizza Hut can't sell $30 pizzas? Mediocre product, dirty restaurants.

http://www.youtube.com/watch?v=Vyfc10qDcR4

(hotter girls, poorer remix: http://www.youtube.com/watch?v=pt_1UJVnYYI&feature=related )

Why Appraisers can't sell full fee appraisals? Price collusion between lenders and a
few AMCs putting the screws to appraisers. Classic oligopsony.

I prefer a loaded Papa John's Pizza, a cold beer, and a scoop of "oligopsony" for dessert !

:new_all_coholic:

 

[ezradams]

Although the Financial Reform Act (including appraiser independence section 1472) is fully in affect, we'll probably end up waiting the 90 day discussion period to act.

After that date, lenders and third parties will be legally required to pay C & R.

Now, what will be C & R? Let's keep it simple. Any AMC survey is illegitimate as defined in the Federal Financial Reform Act. Any survey by appraisal groups (ie: Joan Trice) is also illegitimate since it is not being performed in an accurate manner. (I mean, really, send me your fees and I'll just include them in my study?) The only accurate study has been performed by a la mode....county by county with over 250,000 individual appraisals included! The only true government fee schedule covering residential appraisals cross the country is the VA. I'm not aware of any in depth academic studies. (Anybody out there know of any covering the complete country?)

So, whether you like it our not, as per the Federal Financial Reform Act (which is currently the law of the land), lenders and third parties will need to pay based on the only known evidence.

Subsequent to the 90 day discussion period you will not even be allowed to accept work for less than C & R as defined in the law. (I guess you could accept it, but since the lender will be required to pay more, why take less?)

I personally don't like the idea of a government set fee schedule. (How do you handle future increases etc?) But on the other hand, let's say the minimum C & R for a non complex conventional URAR with 1004MC ends up in the $400+/- range, it's a Hell of a lot better than the crap $200-$250 being paid by some of the large AMCs.

It is imperative that we get involved NOW in those discussions at the FDIC, Comptroller of the Currency, NCUAB, and FHFA. You can be certain the banks and TAVMA already have their hands in the pot.

Anybody out there making contact with these agencies? If you don't do it now you only have yourself to blame when the final C & R is decided at an AMC derived $250.

 

[WorkingTogether]

With courtesy to all, the philosophy that at least now lenders (note: LENDERS--AMCs are neither lenders nor appraisers and if in doubt, either seek the state licenses of the principals and/or officers of the AMCs and/or require that all appraisals ordered by AMCs must be co-signed by the AMC) will have to pay fees appraisers CHARGE will be more than appraisers were heretofore paid as wages by the AMCs and certain "follow-the-leader" lenders still misses the point. That is almost like saying "thank goodness I supposedly don't have terminal cancer." "Customary and reasonable fees" are what appraisers CHARGE in exchange for providing competent appraisal products that the lenders were supposed to have been ordering and relying on all along as part of a legitimate loan process. Wouldn't it be beneficial if appraisers demanded that the law be applied which would mean that it has long been established that fees are set by those operating in an appraisal business and, as far as the lenders are concerned, the HUD1 statement must honestly state THAT fee?

 

[ezradams]

With courtesy to all, the philosophy that at least now lenders (note: LENDERS--AMCs are neither lenders nor appraisers and if in doubt, either seek the state licenses of the principals and/or officers of the AMCs and/or require that all appraisals ordered by AMCs must be co-signed by the AMC) will have to pay fees appraisers CHARGE will be more than appraisers were heretofore paid as wages by the AMCs and certain "follow-the-leader" lenders still misses the point. That is almost like saying "thank goodness I supposedly don't have terminal cancer." "Customary and reasonable fees" are what appraisers CHARGE in exchange for providing competent appraisal products that the lenders were supposed to have been ordering and relying on all along as part of a legitimate loan process. Wouldn't it be beneficial if appraisers demanded that the law be applied which would mean that it has long been established that fees are set by those operating in an appraisal business and, as far as the lenders are concerned, the HUD1 statement must honestly state THAT fee?

Working Together:

That makes sense, but the new law says otherwise. So, until we can get Congress and the Senate to pass new legislation, we're stuck with the current law.

Let's make the best of it.

 

[WorkingTogether]

Let's tell that to the unemployed, etc., too. Should make them feel better at least. Marion posted a comment a page back regarding the wording of the law. Appraisers can either continue to be pleased that their lot is "improving" and, therefore, make the best of it, or maybe they can stand up for what is "customary and reasonable" and make the lenders prove that their appraisers are charging outside the range of what is "reasonable and customary" for a given geographic area based on whatever survey they want to use as a measuring stick.

 

[Mike Kennedy]

Are you suggesting that lenders will have no say in what is a C&R fee? Who do you think will decide what is a C&R fee and which independent and objective criteria to use as the basis for the lenders appraisal fees?

Is Joan Trice trying to make a profit in the appraisal industry? How dare her!

Your first question above indicates that you perhaps either haven't read the Law or merely skimmed it?

Here you go:


‘‘(A) IN GENERAL.—The Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal
Housing Finance Agency, and the Bureau shall jointly prescribe
regulations to implement this section.

‘‘(g) RULES AND INTERPRETIVE GUIDELINES.—
‘‘(1) IN GENERAL.—Except as provided under paragraph
(2), the Board, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the National Credit Union
Administration Board, the Federal Housing Finance Agency,
and the Bureau may jointly issue rules, interpretive guidelines,
and general statements of policy with respect to acts or practices
that violate appraisal independence in the provision of
mortgage lending services for a consumer credit transaction
secured by the principal dwelling of the consumer and mortgage
brokerage services for such a transaction, within the meaning
of subsections (a), (b), (c), (d), (e), (f), (h), and (i).

‘‘(2) INTERIM FINAL REGULATIONS.—The Board shall, for
purposes of this section, prescribe interim final regulations
no later than 90 days after the date of enactment of this
section defining with specificity acts or practices that violate
H. R. 4173—814

‘‘(i) CUSTOMARY AND REASONABLE FEE.—
‘‘(1) IN GENERAL.—Lenders and their agents shall compensate
fee appraisers at a rate that is customary and reasonable
for appraisal services performed in the market area of
the property being appraised. Evidence for such fees may be
established by objective third-party information, such as
government agency fee schedules, academic studies, and independent
private sector surveys. Fee studies shall exclude
assignments ordered by known appraisal management companies.


Re your second question: kindly copy and paste ANY suggestion or statement made by me on this Forum, or any other Medium, which supports your implied assertion. Ms. Trice is certainly free to run any business she sees fit to. This is America. I wish her well in her endeavors.

The Law defines the acceptable sources of appraisal fee market data. It requires them to be "Independent and Objective". If any of the established Appraiser Orgs attempted to publish a survey for consideration by the Parties named above - I would post exactly the same opinion that THEIR "survey" would be equally less than "Independent and Objective" disqualifying it as well.

In this instant, financial involvement with AMCs clearly indicates her company, or for that matter ANY other party owning a similar For-Profit, or Not-For-Profit Company which counts among it's members a large grouping of AMC Employees while claiming to be "Independent", does not meet the Law's requirements for an "Objective and Independent" source.

p.s. If you missed several posted links to the Law, PM me your email and I'll be glad to email you a PDF version.

 

[ezradams]

Let's tell that to the unemployed, etc., too. Should make them feel better at least. Marion posted a comment a page back regarding the wording of the law. Appraisers can either continue to be pleased that their lot is "improving" and, therefore, make the best of it, or maybe they can stand up for what is "customary and reasonable" and make the lenders prove that their appraisers are charging outside the range of what is "reasonable and customary" for a given geographic area based on whatever survey they want to use as a measuring stick.

WorkingTogether:

Take a look at my previous post. The Federal Financial Reform Act is very specific about what surveys can and cannot be used. AMC and lender sanctioned surveys are verboten. Nonetheless, we must be vigilant in our efforts and keep our eye out for lender/AMC mischief.

Again, we need to be in contact with the agencies mentioned in section 1472 of the Federal Financial Reform Act to press our points. I'm reasonably close to DC and am willing to travel with appraisers looking to make a difference.

 

[hastalavista]

The next time you talk to a "real life" appraiser ask him/her if they know the law also directs the ASB to promulgate AVM regulations. Add to that the Appraisal Foundation recently formed a new Appraisal Practices board which has board members who advocate for new methods of valuation and we just may have licensed AVMs in the near future.

Try getting R&C when an AVM is your licensed competition.

Or ask them what they think the GAO report may look like, you know the one the new law directs the GAO to complete.

Ask them how they feel about the new powers granted to the ASC (higher registry fees, more regulation form Washington)?

Maybe talk about the new Bureau of Consumer Financial Protection and who will now set the deminimus.

NS-

I just finished a day-long seminar in Monterey, CA, sponsored by our local AI chapter. It was all-residential topics. Our Forum's own, Rich Heyn, gave a presentation he and is partner is developing for a webinar on the new law.

The presentation was excellent and covered a lot of information (without hype or slant). Unfortunately, while Rich was able to go over all the highlighted points of the law, no one really has a good idea how this is going to actually be rolled out. He did cover the points you raise above, and I think most of us at the presentation were a little concerned about what the consequences will actually be. Two things I believe will happen:
A. Expect our fees to to be registered with the ASC to increase (a mandatory increase is part of the law).
B. Expect that the fees that AMCs are going to have to pay for each appraiser they have registered as contractors to be passed-on to the appraiser direct. If I recall correctly, it is $25 per appraiser; so if one works for a lot of AMCs, one can do the math.

One thing I didn't consider before but did during the presentation- regarding the C&R fees.
Regulatory language is very carefully crafted. I was told this by an FDIC supervisor at a conference I was at and had an opportunity to ask her some questions. She was reviewing a directive FDIC had issued, and the language had a lot of "should", "shouldn't", and "may"s in it. I asked her why not use specific language like "must", "shall", or "cannot"? She told me that laws and regulations are intentionally written with careful use of the words. Shall and must mean exactly what we think: one has to do something or must do something. Words like may or should don't have that same force, and it allows some interpretation by those who are regulated and those who enforce the regulation.

Evidence for such fees may be established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management companies."

(my bold)

The law, as I read it, does not require that C&R be set by objective third-party studies. It simply says surveys or studies are one way they can be set. And, if they are used, then they must (shall) exclude AMC fees.
But the "must" is only a requirement if the surveys are used. And since they may be used (but not must be used), its anybody's guess if they will or will not be used.

When you think about the short time period (60-days now) remaining, I doubt they will be used.

I think in Rich's presentation, the Federal Reserve Board is charged with establishing the basis for the C&R fees. The date is supposed to be 10/20. I guess we'll wait and see.

:new_smile-l:

 

[Meandering]

The law, as I read it, does not require that C&R be set by objective third-party studies. It simply says surveys or studies are one way they can be set. And, if they are used, then they must (shall) exclude AMC fees.
But the "must" is only requirement if the surveys are used. And since they may be used (but not must be used), its anybody's guess if they will or will not be used.

When you thing about the short time period (60-days now) remaining, I doubt they will be used.

I think in Rich's presentation, the Federal Reserve Board is charged with establishing the basis for the C&R fees. The date is supposed to be 10/20. I guess we'll wait and see.

Thank you Denis

To all of you,

we, and not me alone, but we,

are going to Washington next week. We have some appointments and we will be presenting information for Independent Appraisers.
We will see what information we can get about fees.

Meanwhile there is information we need to take with us not concerning fees and I will post a request for your help in a little bit.


Be well everyone.

.