Nc To Use VA Fees For C&R

[Mr Rex]

The NC Appraisal Board just adopted the VA fee schedule as a presumption of compliance for Customary and Reasonable fees. Scheduled to take effect on January 1, 2017.

An AMC may pay a fee that differs from the VA fee, but must be able to show compliance with SL 2016-61 if a complaint is filed regarding the fee offered or paid to the appraiser.

The minimum fee for a non-complex assignment according to the VA schedule is $500 for eastern North Carolina and the minimum fee in Western North Carolina is $575.
Appraisers can file and customary and reasonable complaints with the board for orders received after January 1, 2017.

 

[timd354]

The NC Appraisal Board just adopted the VA fee schedule as a presumption of compliance for Customary and Reasonable fees. Scheduled to take effect on January 1, 2017.

An AMC may pay a fee that differs from the VA fee, but must be able to show compliance with SL 2016-61 if a complaint is filed regarding the fee offered or paid to the appraiser.

The minimum fee for a non-complex assignment according to the VA schedule is $500 for eastern North Carolina and the minimum fee in Western North Carolina is $575.
Appraisers can file and customary and reasonable complaints with the board for orders received after January 1, 2017.

How is that a change from the existing law and regulations? Paying an appraisal fee that is equal to or higher than those on government fee schedules has always resulted in a presumption of compliance under C&R and AMC's have also always had other available methods to show compliance.

 

[Mr Rex]

Now there is a real benchmark for C&R

 

[timd354]

Now there is a real benchmark for C&R

It is one that has always existed and there is no requirement that AMC's actually use it as there are numerous other ways they can use to prove compliance with C&R

 

[Mr Rex]

So do tell of the numerous ways of proving compliance. Edumacate me as to why this is not a great announcement.

 

[timd354]

So do tell of the numerous ways of proving compliance. Edumacate me as to why this is not a great announcement.

The announcement changes exactly nothing as the following 2 consumptions of compliance are part of the existing regulations (which the recent announcement by the NC has not changed) and the VA fee schedule has always been an acceptable presumption of compliance under the alternative presumption provision highlighted in red below (see the following link from the cfpb for more info: http://www.consumerfinance.gov/eregulations/1026-42/2013-30108_20150718#1026-42-f-2-ii)

Requirement to provide customary and reasonable compensation to fee appraisers. In any covered transaction, the creditor and its agents shall compensate a fee appraiser for performing appraisal services at a rate that is customary and reasonable for comparable appraisal services performed in the geographic market of the property being appraised. For purposes of paragraph (f) of this section, “agents” of the creditor do not include any fee appraiser as defined in paragraph (f)(4)(i) of this section.


· Presumption of compliance. A creditor and its agents shall be presumed to comply with paragraph (f)(1) of this section if:

1. The creditor or its agents compensate the fee appraiser in an amount that is reasonably related to recent rates paid for comparable appraisal services performed in the geographic market of the property being appraised. In determining this amount, a creditor or its agents shall review the factors below and make any adjustments to recent rates paid in the relevant geographic market necessary to ensure that the amount of compensation is reasonable:
   1. The type of property,
   2. The scope of work,
   3. The time in which the appraisal services are required to be performed,
   4. Fee appraiser qualifications,
   5. Fee appraiser experience and professional record, and
   6. Fee appraiser work quality; and
2. The creditor and its agents do not engage in any anticompetitive acts in violation of state or Federal law that affect the compensation paid to fee appraisers, including:
   1. Entering into any contracts or engaging in any conspiracies to restrain trade through methods such as price fixing or market allocation, as prohibited under section 1 of the Sherman Antitrust Act, 15 U.S.C. 1, or any other relevant antitrust laws; or
   2. Engaging in any acts of monopolization such as restricting any person from entering the relevant geographic market or causing any person to leave the relevant geographic market, as prohibited under section 2 of the Sherman Antitrust Act, 15 U.S.C. 2, or any other relevant antitrust laws.

· Alternative presumption of compliance. A creditor and its agents shall be presumed to comply with paragraph (f)(1) of this section if the creditor or its agents determine the amount of compensation paid to the fee appraiser by relying on information about rates that:
is based on objective third-party information, including fee schedules, studies, and surveys prepared by independent third parties such as government agencies, academic institutions, and private research firms;

1. Is based on recent rates paid to a representative sample of providers of appraisal services in the geographic market of the property being appraised or the fee schedules of those providers; and In the case of information based on fee schedules, studies, and surveys, such fee schedules, studies, or surveys, or the information derived therefrom, excludes compensation paid to fee appraisers for appraisals ordered by appraisal management companies

 

[Mr Rex]

The VA has always been acceptable, but what about Joan Trices that said $350 was C&R?

 

[timd354]

The VA has always been acceptable, but what about Joan Trices that said $350 was C&R?

Without access to fee data, no one can say whether or not $350 (for a non-complex appraisal) is C&R or at least would be defendable as being C&R. That's the main problem with C&R and why it is very difficult to enforce...nobody can really say for sure whether any fee can be supported by presumption 1 or 2 under Dodd-Frank unless they have access to fee data (which unless you area lender or AMC is very difficult to come by). Sadly, under the first presumption of compliance, if an AMC can prove that appraisers in a certain area have recently worked for the fee being paid (no matter how small the fee is), then they are presumed to comply with C&R. Notice, that under the first presumption of compliance, AMC fees paid to appraisers are not excluded from this calculation as the are in the second presumption of compliance. Thus, if you competitors are advertising lower fees and accepting work at those lower fees, then it is pretty easy for a AMC to meet the first presumption of compliance based on that lower fee.

The bottom line is that nothing really has changed and nothing will change anytime soon. By the way, I don't approve of how the regulations were written, but they are what they are.

 

[Mr Rex]

So establishing a baseline from a reliable source is not a good thing? Your AMC/lender bloodlines are showing Tim.

 

[BRCJR]

The law gives an Appraiser a place to file a compliant that will be looked at.

What were the options before the law, other than to "get better clients"?