The Appraiser Shortage Myth Part 43

[djd09]

Marion is the fed law guru. You are the best.

 

[Meandering]

 

[Meandering]

C & R is a joke. It always was and always will be. Mindless piffle added to the law for no obvious reason but obfuscation.

And wait for it......................

But....................................

The lender and the appraiser can negotiate a lower fee based on volume......................

But.....................................

The lender still has to pay a C&R fee, oh, and volume discounts aren't included in the C&R fee.

The really good thing about C&R is,

The FTC must be going what the Funny smelling stuff is this?

 

[TRESinc]

ok.

so EVINCERE - what's the story with NVS? what happened to cause it to fail?

inquiring minds want to know..

evincere?

 

[J Grant]

Well, if you want to go down this road, would you also support capping the actual appraiser fee that a lender could pay to a percentage of the fee collected by the lender as well? I mean you could still charge whatever you wanted, right?

How can the lender cap an appraiser fee as a percentage of the appraiser fee,? . The lender collects the fee from the borrower for the APPRAISAL, and AMC gets paid...some mystery way? . Danny, you repeatedly on this thread claimed that what the lender and borrower arrange has nothing to do with SL, none of the borrower fee has anything to do with SL, the lender pays SL for SL service- how can you claim what the lender pays SL is not a pass through of portion (%) of the borrower paid fee- either it is, or it is not.

For perspective; assuming there is a portion % of the AMC charge is a pass through from what borrower paid for appraisal - which is what a blended fee/fee split is- the AMC fee is a portion of the appraisal fee, not the other way around. Therefore, it would indeed be price fixing, if the lender set appraisal fees or capped appraisal fees.

However, the reverse, a cap on the percent charged by an AMC as a pass through from borrower paid is NOT fee capping, or fee fixing, the AMC can charge whatever TOTAL FEE they want to the lender, and lender is free to pay that to the AMC. All it would do is cap what portion of that unrestricted fee amount comes from borrower paid.

David W, the laws you speak about fees, capping and percentages applies to RE sales and brokerage, not to appraisals - (though some could argue the law could apply). However, surely you realize the laws around agency and commission and brokerage are very different than the specific regulations around appraisals, and even more specifically the set of regulations around covered transactions ( tax payer insured such as FHA, Fannie etc - and they have their own regs)

RE brokerage allows commissions and fees to be based on sale price of house, appraisal fees are not to be based on % of value.. RE commissions are usually contingent o sale/passing of title, appraisal fees are not. Laws and regulations can change- the HVCC came in with a set of laws, was sunset, DF came in, now that is up for repeal or reform (likely reform ) And a new law or regulation can be introduced specific to either appraisal or agency. Not that it might ever happen, but cost plus, or strike down of blended fee for appraisal fee only and lender to charge consumer separate ( and pay an AMC separate ) for appraisal fee - or a cap on the portion of the fee ( not the fee itself) as a pass through from borrower amount to AMC . I do understand the laws applicable around price fixing and fee fixing and that even though the total fee an AMC charges is NOT fixed, or capped, there could be resistance or pushback. They don't have cadres of lawyers for nothing...

I mentioned that the 2 way splits or 4 way splits of RE commissions are appropriate as RE commissions are in the thousands of dollars, with often times over $10,000 or over $20,000- while appraisal fees for res lending non complex are typically in the hundreds and often teh charge to the borrower is $550 or less. Your comment that the $ amount has nothing to do with a fee cap or price fix rule is correct, however, the comparison shows the margins for fee splitting with large amounts of the split going to the AMC ar not there in appraisals. The blended fee is an outdated concept, back when a management company took a small percent for their contributory portion toward a primary service such a appraisal or title work.

With the HVCC came incentive for lenders to use a third party firewall (or create one in their own ordering dept). The AMC's saw a chance to vastly expand their market share of appraisal management, and they achieved that by using the blended fee as a way to get paid without their AMC service costing the lender anything. While the lender technically "pays" the AMC by sending a payment, the funds for that payment is a portion of the $ the borrower paid for the appraisal fee. That led to tremendous AMC incentive to lower appraisal fees , if the arrangement with a lender is that the AMC can make a greater portion between the amount the lender pays the AMC and what AMC pays to appraiser. This puts tremendous downward pressure on the amount of $ an AMC wants to pay an appraiser ( the appraisal fee they pay), and because of pesky C and R regs, they continually want to get as many orders assigned in an area at the lower tier fee as possible, as they can then argue this is C and R since appraisers are accepting it , or they are simply paying these low charging appraisers "their fee:.

The problem of course is that the $margins around appraisals for all this splitting is simply too low out of a fee of what borrower pays, and lenders are loathe to charge more to borrowers- which for now leaves the best option for appraisers is to avoid low fee AMC work. The fact that a good many appraisers try to avoid AMC work and Denis, as well as other highly qualified appraisers urge appraisers to avoid AMC work due to the lower fees ( and in some cases fast TT other conditions, shows the adverse affect AMC's are having and speaks for a reverse survival of the fittest Darwinian selection of who will end up doing the lower fee AMC work- those AMC's that pay at parity of better fees won't have that problem,

Caveat: I am posting as an appraiser, not a lawyer or DF entire tome of regulations expert.

 

[J Grant]

Some lenders do arrange for cost plus with the same AMC that bills other lenders not on cost plus basis. It would be interesting to see the $ amount per order to an AMC with lender cost plus in place, vs the amounts $ paid to the AMC for an order when cost plus is not in place. .

 

[Meandering]

How can the lender cap an appraiser fee as a percentage of the appraiser fee,? . The lender collects the fee from the borrower for the APPRAISAL, and AMC gets paid...some mystery way? . Danny, you repeatedly on this thread claimed that what the lender and borrower arrange has nothing to do with SL, none of the borrower fee has anything to do with SL, the lender pays SL for SL service- how can you claim what the lender pays SL is not a pass through of portion (%) of the borrower paid fee- either it is, or it is not..

And just for Fun,

Read the RESPA (Regulation X) of title 12 (Truth in Lending Act)

What is says specifically about fee splitting and charging a borrower for fees.

Oh, oh, and the most important part,

Read the definition of Appraisal within the law, and see if it includes "management services" when the term Appraisal is used.

That one right there is where the kool aid starts.




Good job J.

.

.

 

[J Grant]

Appraisal fees are too small on res side of lending for regular work to accommodate being split up with a hefty portion doled out for AMC management.
The blended appraisal fee should go , and the appraisal fee the borrower pays goes from lender to the appraiser. A lender can charge borrower a separate $ fee or $ charge for appraisal management and processing.- paid upfront or rolled into the loan , whatever suits them. .

Then AMC;s can compete in the market like they keep telling appraisers to., make as much or as little as lenders will pay them- just get their payment and fee totally separate from what is paid to appraiser from lender.

 

[DWiley]

... how can you claim what the lender pays SL is not a pass through of portion (%) of the borrower paid fee- either it is, or it is not.

I never made such a claim, but I appreciate you spending so much time attacking a false premise.

I said that any arrangement that the lender has about fees from the borrower is something between the lender and the borrower and has nothing to do with me. I send a bill to the lender, and it is the lender who is obligated to pay. How they meet that obligation is up to the lender, not me.

What I hear is that the thing you are really upset about is lenders passing fees through to borrowers. That is a lender issue, not an AMC issue. For mortgage appraisals I don't collect any fees from borrowers

 

[J Grant]

I never made such a claim, but I appreciate you spending so much time attacking a false premise.

I said that any arrangement that the lender has about fees from the borrower is something between the lender and the borrower and has nothing to do with me. I send a bill to the lender, and it is the lender who is obligated to pay. How they meet that obligation is up to the lender, not me.

What I hear is that the thing you are really upset about is lenders passing fees through to borrowers. That is a lender issue, not an AMC issue. For mortgage appraisals I don't collect any fees from borrowers

I never said nor implied you or any AMC collected fees from borrowers. To make that clear and not muddy the topic with it.

Surely you are aware that when you bill the lender, the lender pays your AMC using funds derived as a % from the borrower total $ appraisal fee? Or what does the fee split disclosure on the appraisal where states require it relate to-fee split: X $ amount paid to appraiser and Y $ amount paid to the tooth fairy? ( comic relief) No, it is not solely a lender issue, it is also an AMC issue, because AMC agrees to be paid in a fee split manner, which costs the lender nothing when the $ to pay AMC is passed rhoguh as a percent of what borrower paid. Which gives the AMC great incentive to keep the % paid to the appraiser down. I will say appraisers tend to put the blame on AMC's, when the lenders who do this also are at fault. The lenders know very well they are getting free of $ cost to them AMC service by the the fact that the payment to the appraiser for the appraisal is low. w.