Customary and reasonable fees - 90 days

[eld2310]

Does anyone know where the part in the bill mentions what is an AMC? I thought it was any company having more than 11 appraisers. What about the big fee shops do they fall into this catagory? What is to stop the AMCs to "hire" people with a 1099 so they do not have to pay any benefits, etc and get around what consititutes an AMC.

Here is the bill that's been published. As far as I know it's not exactly the same as the one that was signed, but close enough. Most of what's talked about here starts at Page 812 entitled "Appraisal Independence Requirements: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4173enr.txt.pdf

What you're looking for starts on Page 818, and says:

‘‘(11) A​

​

​

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PPRAISAL MANAGEMENT COMPANY.—The term
‘appraisal management company’ means, in connection with
valuing properties collateralizing mortgage loans or mortgages
incorporated into a securitization, any external third party
authorized either by a creditor of a consumer credit transaction
secured by a consumer’s principal dwelling or by an underwriter
of or other principal in the secondary mortgage markets, that
oversees a network or panel of more than 15 certified or licensed
appraisers in a State or 25 or more nationally within a given
year—
‘‘(A) to recruit, select, and retain appraisers;
‘‘(B) to contract with licensed and certified appraisers
to perform appraisal assignments;
‘‘(C) to manage the process of having an appraisal
performed, including providing administrative duties such
as receiving appraisal orders and appraisal reports, submitting
completed appraisal reports to creditors and underwriters,​

collecting fees from creditors and underwriters for

services provided, and reimbursing appraisers for services
performed; or​

‘‘(D) to review and verify the work of appraisers.’’.

 

[Caligirl]

Another problem with 'setting fees' is that the appraisal process, and report, are SOW driven. The fee depends on the SOW, as does the amount of research, analysis, etc.

Clients are not allowed to dictate the SOW, it is the appraiser's responsibility. The fee is dependent on the SOW. Consumers are paying 'customary' fees of $450 to $600 for the majority of appraisals, so there is a starting point.

 

[Renee Borne]

large apprasier firms, more than 25 employees

thanks for the info. Is there any attorney out there that knows if this leaves little room for the large appraisal firms that have split fee with appraisers? Curious as I am getting emails from large firms asking me to send my resume.

Thanks

 

[Oceanic1]

The new law doesn't state what the "customary and reasonable" fee is. But it does state what it isn't... and that's "known appraisal management company" fees.

 

[eld2310]

thanks for the info. Is there any attorney out there that knows if this leaves little room for the large appraisal firms that have split fee with appraisers? Curious as I am getting emails from large firms asking me to send my resume.

Thanks

I think the term "any external third party" would exclude single-purpose appraisal firms. I doubt that they could be considered external third parties; rather they are an extension of the appraiser.

Hopefully the self-named "appraisal" companies that provide no tangible benefit but want half the fee for just forwarding the order would have to play by the AMC rules, but I think the split fee shops that actually pay for the appraiser's overhead are safe.

 

[Ray Miller]

Another problem with 'setting fees' is that the appraisal process, and report, are SOW driven. The fee depends on the SOW, as does the amount of research, analysis, etc.

Clients are not allowed to dictate the SOW, it is the appraiser's responsibility. The fee is dependent on the SOW. Consumers are paying 'customary' fees of $450 to $600 for the majority of appraisals, so there is a starting point.

Another problem with sitting fees is the lender and AMC’s expect the rural appraiser to work for the same fee’s and turn time that an urban/suburban appraiser works for.

We may have ten to two hundred times the mileage to cover. We may have to wait days to get phone calls return to us, days to wait until the township clerk or assessor is in. County treasure and Deed office information may not be on line. Many times you have to re-drive the comparables because no one knew for sure what the subject was like and you selected the work comparables to drive the first time.. Many times the borrower is an out of state home owner and you may need to wait weeks before they will be back into the area for an appointment.

Yet they want you to appraise at dung beetle fees.


Fannie Retro Forensic Appraisal

1st day, New Pictures and drive by of the original comparables, tax cards of the original 8 hours on the road.

2nd day, drive by of the subject and drive by of the new comparables 8 hours

½ day of phone calls for assessor, township data, 5 days of waiting for assessor data call back.

8 hours for trips to four different township clerk offices and three county court houses. (most of the townships and counties do not have the assessor information on file in there offices. A lot of the assessor may live a hundred or more miles from the township and do not have data on line so you have to wait.

If you want a true picture of the market, you may spend a few days a month gathering information of sales that are not in an MLS data base. Many of the real estate offices in the area I cover don't belong to the MLS, so additional time for research. Another problem is the area may be covered by several different MLS data bases as well, so you have the added expense of MLS dues and memberships in several. All driving the cost of doing business up.

I got 24 hours in research, 5 days of waiting for data.

Then a 8 hour to write the report. All the MLS printouts, the CMA’s and all their required print outs. 75 page report.

===================================================================================
By the way the original appraiser on this report was from the Milwalukee area, the lender was in Madison and the appraisal was in Vernon County. Boosted value of subject property $65K above market at the time. Got a second one I am working on now for the same lender, boosted value $40K over market. This lender I fired after a dung beetle yelling match on the phone because of value issues several year back. It looks as if Fannie is looking at all thier work.

====================================================================================

In many cases you may need to wait on DNR information, USDA information.

So what is a reasonable TAT and Fee for this appraisal in a rural area?

What is a reasonable TAT and Fee for a standard 1004 for the rural area?

:new_multi:I agree SOW, location, data availability should drive the fee.:new_multi:

 

[residentialguy]

Another problem with sitting fees is the lender and AMC’s expect the rural appraiser to work for the same fee’s and turn time that an urban/suburban appraiser works for.

We may have ten to two hundred times the mileage to cover.

Just use the houses next door and explain that due to constraints of "customary fees", comps 1, 2 and 3 were adjusted for time of their last sale which took place in 1921, 1957, and 1946 respectively. :new_all_coholic:

 

[Renee Borne]

a lot of these appraiser firms have appraisers all the country; I doubt they are paying overhead. So if they do not pay any of the appraiser's overhead they are an AMC? what if the firm offered to pay your MLS fees then they are not considered an AMC? For example I have an appraisal office (corp) in Washing DC. I then have appraiser's all over the country that I send orders to and I take 40%. the appraiser is responisble for all overhead except the MLS fees. I have them sign a 1099 or w2 and pay the employer taxes so what would this be considered? Thanks

 

[eld2310]

That example would sound like an AMC to me. Why are you pushing for a definitve answer? Obviously we're all just guessing at this point. We'll see how it all shakes out in the coming months, but the default anwer is probably "nothing will really change".

 

[peturner]

I agree that it would be highly interesting to get millions of HUD 1 statements in order to establish a reasonable and customary fee. The result would be millions of dollars in lawsuits regarding the number of borrowers that were charged full appraisal fees for a $20 or less AVM. The HUD 1s clearly state the APPRAISAL FEE. End of discussion, even for all you legal eagles out there. APPRAISAL FEE legally means APPRAISAL FEE.
Additionally, we undertook a survey in Virginia in order to come up with at least a guideline for what a "reasonable and customary" fee was. Over 125 appraisers across the state responded.
If the appraiser stated his/her fee was $350 to $450 we broke down the study into $350, $375, $400, $425, $450. Each amount got recorded in the survey. The low response was $250 and the highest was $1,500. The mean fee was $417.26. The mode was $400 and the median was $400. Frankly I was somewhat surprised with the results, but the numbers do not lie.
Right now AMCs are telling appraisers that "their" surveys support the fees they are paying. So now, there are numerous attorneys drooling all over the U.S.
What can you do? Well, I recommend that ALL communications are done via email. Get their comments and excuses in writing. Short of that, all of you have had calls from them that say "this may be recorded for quality assurance." Next time you get that Buullllll manure tell them "that's fair....cause I am recording as well" and watch how fast they go silent.
Begin to take charge of YOUR future, not theirs.