Yours was a good post.
When you dig a little deeper, I'd like to hear your opinion on the following:
Here is an excerpt from the posted documents:
42(f)(2) Presumption of Compliance
1. In general. A creditor and its agent are
presumed to comply with paragraph (f)(1) if
the creditor or its agent meets the conditions
specified in paragraph (f)(2) in determining
the compensation paid to a fee appraiser.
These conditions are not requirements for
compliance but, if met, create a presumption
that the creditor or its agent has complied
with § 1026.42(f)(1). A person may rebut this
presumption with evidence that the amount
of compensation paid to a fee appraiser was
not customary and reasonable for reasons
unrelated to the conditions in paragraph
(f)(2)(i) or (f)(2)(ii). If a creditor or its agent
does not meet one of the non-required
conditions set forth in paragraph (f)(2), the
creditor’s and its agent’s compliance with
paragraph (f)(1) is determined based on all of
the facts and circumstances without a
presumption of either compliance or
violation.
Now, let me give you my breakdown:
1. In general. A creditor and its agent are
presumed to comply with paragraph (f)(1) if
the creditor or its agent meets the conditions
specified in paragraph (f)(2) in determining
the compensation paid to a fee appraiser.
These conditions are not requirements for
compliance but, if met, create a presumption
that the creditor or its agent has complied
with § 1026.42(f)(1).
Paragraph (f)(1) in the reference above outlines the requirement to pay independent fee appraisers C&R.
Paragraph (f)(2) is the presumption (#1) of compliance. There are two presumptions.
This paragraph reads (according to me) "A creditor is presumed to meet the C&R requirements if the creditor meets the conditions specified."
Those 'conditions' are a number of different requirements including competency, quality, etc, etc. They are outlined in Paragraph 42 (f)(2)(i)(A-F). These are the requirements for the 1st Presumption (the 2nd presumption is the VA fee or other 3rd party surveys). If you meet them, you are presumed to have complied.
Now, next the original excerpt says:
A person may rebut this
presumption with evidence that the amount
of compensation paid to a fee appraiser was
not customary and reasonable for reasons
unrelated to the conditions in paragraph
(f)(2)(i) or (f)(2)(ii).
A person (any person, I suppose) can rebut presumption for any reason unrelated to the cited conditions. So, I could rebut it by saying, "Hey, I don't care what you guys did under Presumption #1, it isn't VA fees or non-AMC fees, so I'm calling you on it; you are not paying C&R."
The ability to rebut Presumption #1 clearly exists, and a fair reading is one can rebut it for reasons unrelated to the compliance requirements of Presumption #1.
Here's the final part of the excerpt (my bold for emphasis):
If a creditor or its agent
does not meet one of the non-required
conditions set forth in paragraph (f)(2), the
creditor’s and its agent’s compliance with
paragraph (f)(1) is determined based on all of
the facts and circumstances without a
presumption of either compliance or
violation.
So, I can rebut Presumption #1 for any reason. But the regulation then says if the creditor does not meet one of the non-required* conditions set forth in paragraph (f)(2) [which is the requirements of Presumption #1]
then compliance is determined based on all of the facts and circumstances without a presumption of either compliance or violation.
In other words, if rebutted but I've followed all the non-required conditions set forth in paragraph (f)(2), then I am in compliance. It is only when I don't meet those conditions that my case is "determined based on all of the facts and circumstances" and even then, I may be found to be in compliance.
One might ask, "if they are required to show compliance, why are they called 'non-required' in the regulation?"
It seems the answer is clear in the last bolded part of the excerpt above. Note that the second section says determination will be based on the specifics of the case. If the so-called non-required conditions were required, then one couldn't presume compliance or non-compliance; if required and not followed, the lender/AMC would be in non-compliance, period. That isn't what the regulation says. It allows for an individual case to be judged based on its circumstances even if all the 'non-required' conditions weren't followed.
An explanation of this seemingly illogicality may be this: Let's say the lender follows all but one of the non-required conditions in Presumption #1. But, by happenstance, it happens to pay the same rate as the VA schedule. The lender may have tried to claim it was following Presumption #1 but it didn't meet all the non-required conditions. But, by chance, its fees are the same as the VA. I think a complaint that they were not following Presumption #1 would be found to be moot since at the end of the day, wittingly or unwittingly, they were paying what is considered C&R under paragraph (f)(3).
One can rebut Presumption #1 all they want. But if a lender is in compliance with the 1st Presumption's non-required conditions, then compliance is no longer presumed to be in place but is determined to be in place.
Note that the excerpt above does not say, "Regardless if a creditor...does not meet one of the non-required conditions". It says "if a creditor...does not meet one of the non-required conditions."
That is a significant difference that determines if the lender (or its agent, the AMC) process can be evaluated outside of Presumption #1.
Indeed, this is how Louisiana found Coestar in violation of C&R. Coestar did not provide evidence of compliance with all the conditions set forth in paragraph (f)(2). Louisiana was right to charge them on Presumption #1 because they were in non-compliance.
Had Coestar been in compliance with Presumption #1, Louisiana's case would have (a) not been raised or (b) gone nowhere.
Anyway, that's my interpretation. As I said, I'd be interested to hear yours.
