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Customary and reasonable fees - 90 days

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Joan Trice said:
Pat,

I wish it were so simple. Many lenders bundle fees and it has been perfectly legal. Also going forward lenders "may" report the appraisal fee not "shall". They shall pay reasonable and customary but the reporting part is optional. Most lenders with whom I have spoken will report because they don't want the invitation for lawsuits.

The intent of the law is clear. I don't care what AMCs say about the fees they are paying. They don't get to decide what is R & C. The lenders will. Both lenders and AMCs will be exposed so all parties will be seekign indemnifications.

I am hearing that there are a few AMCs who are continuing to negotiate fees downward. They clearly don't understand the law. Every AMC who is in the Collateral Risk Network does understand. We met a few weeks ago and had legislators, regulators, Lenders and AMCs in deep discussion.

Historic fees only lead to what is customary. What is reasonable will come from fee surveys. So for goodness sakes respond to every fee survey possible.

I need several thousand more responses so please spread the word, www.feesurvey.com

And if you have an AMC who doesn't get it have them particpiate in the webinar on Sept 8 that is advertised in the Buzz.

jtrice@allterragroup.com
Click to expand...

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

‘‘(4) REGULATIONS.—
‘‘(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.

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.

Subtitle F—Appraisal Activities
SEC. 1471. PROPERTY APPRAISAL REQUIREMENTS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et
seq.) is amended by inserting after 129G (as added by section
1464(b)) the following new section:


"‘‘(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."

http://collateralrisknetwork.com/about.php

"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."

Ms. Price, perhaps you can clarify exactly how a survey conducted by ANY company which represents the Chief Appraisers of many, if not most, of the largest Appraisal Management Companies, and Lenders, can repeatedly claim to be "Independent and Objective"?

IMO, Mr. John Doe, American Consumer, would conclude such a relationship fails to meet the definition of "Independent" and "Objective", therefore, any "survey" produced by such a company would, and should, be rendered irrelevant and given no weight by the Agencies stipulated in the Law.

Thanks in advance.
 
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I must be missing something: why is there apparently as much excitement from adults (professionals) about "customary and reasonable" as there usually is from excited children on Christmas eve and morning? If appraisers who operate a business independently, whether as an individual or as a company, are truly independent business and/or professional people like other people who operates businesses or professional entrprises in the U.S., isn't it inherent on them to establish fees and prices that they project are necessary in order to open and successfully operate a business? I wonder how many of those appraisers who are pushing for appraisal fees (er, wages if, in fact, the "monies" are what a lender offers rather than what an appraiser needs to charge) to be established by everyone other than the owner and operator of the busiesss are conversely opposed to the supposed ramnifications of the national health bill? If I am not mistaken, when a lender orders a credit report, a title commitment, a mortgage survey and/or orders other services necessary to effect the succcessful consummation of a mortgage loan such as document delivery and recordings, does not the lender directly pass on those charges to the borrower for payment or reimbursement rather than padding those fees and charges--I believe there might be class action lawsuits concerning lenders overcharging for certain fees. The points are 1) the provider of each of those services from the title company to the FedEx delivery person sets the fees they need to charge and 2) the lenders become a conduit by which expenses that are charges of a borrower are actually collected from and paid by a borrower. This has definitely not been the case with the "bundling" of a management fee with the real costs of an appraisal, even though the borrowers all along have assuredly thought the fee they were paying for an appraisal was being transferred to a competent appraiser to evaluate the single largest investment most people make in a lifetime--a home.
 
Think of it like a pizza shop: Pizza Hut had the market on pizza shops for years. They charged what they wanted. You would have to pay up to $30 to get a large pie with everything. Now, here comes all of those other pizza shops and they start offering large pies with everything for $10. It forced Pizza Hut to start offering their large pie with everything for $10.
 
Scott,

No, it's not like Pizza Hut at all. There have been over 100,000 appraisers competing in the market for years. Only after HVCC did the fees drop.

Cause: Loss of the open market due to HVCC.....simple.
 
WorkingTogether said:
I must be missing something: why is there apparently as much excitement from adults (professionals) about "customary and reasonable" as there usually is from excited children on Christmas eve and morning? If appraisers who operate a business independently, whether as an individual or as a company, are truly independent business and/or professional people like other people who operates businesses or professional entrprises in the U.S., isn't it inherent on them to establish fees and prices that they project are necessary in order to open and successfully operate a business?
Click to expand...

Let us suppose there are a group of bullies who threaten the little kids and either take a bit over half their lunch money every day or beat them up and take it all if they refuse to pay up. Now, there are some big kids who don't have to worry about it (because they are bigger) but because there are so many small groups of bullies pulling this they can only guide the little kids somewhat, call their attention to "safe routes" and encourage them to try and stand up for themselves. Now then, a rule gets passed that if a kid shows up at school without the amount needed for lunch (they know what they charge for lunch and that a letter was sent to the parents, and thus what the kids SHOULD have in their pockets) the person or person's who took part of the money will get tracked down and forced to surrender 10x that amount for lunch (because it is assumed they either are ripping off other kids too or that they have funds from before) and expelled and sent to juvee hall.

So, why shouldn't all kids at the school who aren't bullies get all excited???
 
So the lenders will set C&R fees? THE lenders will? I do not have the time to read through all of this thread. I have work to get out and much of it is other than lender assignments. Why? I am glad you asked.

Because the only clients I work for that want the appraisal of a property fast and cheap are the lenders other than VA. VA still requires competency and accuracy and will enforce the VA requirements.

It isn’t the courts, attorneys, insurance companies, government agencies, probate departments, etc that have requested fast and cheap. It is the lenders. The lenders control the “Grizzly Bear” share of the appraisals that are needed in America. The lenders have the overwhelming responsibility of assuring the nation that the property evaluations are accurate and well supported or else there could be a financial crisis. (Ya think!) Interestingly enough, it is the lenders lack of quality control, accountability and enforcement of “lenders guidelines” that have fueled the financial instability of this nation. Then the “Grizzly Bear” refuses to recognize and accept the responsibility for the lack of quality control, blames every other profession for the fall out, appraisers, brokers, government, etc. Then dodges accountability bullets with the “Grizzly Bear” created HVCC charade that does nothing more than give credibility to 3rd party outsourcing, AMCs for example, to relieve the lender of the very responsibility and REQUIREMNT they had already failed to take seriously! It is the lenders responsibility to use ethical appraisers and to have credible and defendable appraisals included in the loan files. It isn’t the “other than lender” clients and users of Appraisals that has brought this nation to its financial knees. It has been the lenders in their desire for faster and higher profits. Then the passing on or “sharing” of their responsibilities with 3rd party venders, AMCs, resulting in millions, if not billions, of dollars of profit taken from appraisers, charged to consumers. Many of the 3rd party providers of appraisal services are owned or partially owned by the lenders themselves. While the consumer and many lenders are devastated by the financial collapse the 3rd party service providers are experiencing high yield profits. (Country Wide anyone? The lender failed, the AMC moved on to B of A) J

It is the lack of quality control and accountability that has resulted in the current fiasco over what is a “Customary and Reasonable” appraisal fee”. Without the AMC mentality and the appraisers that allowed the split fees to get to the “less than acceptable” amounts, we would not be watching the government take control of the independent fee appraiser, mortgage broker and eventually (mark my words) the real estate agent industries.

My next writing and future presentation:

“What is a customary and reasonable turn time?”

Give me more that 3-4 appraisal assignments per week and a 5 day turn is unreasonable if quality, diligence and accuracy are expected. (VA has a 10 work day turn time on residential assignments by the way)

A quote found in an mail circulating from CA:

Nothing short of the individual appraiser setting his or her own fees for an assignment, AFTER reviewing available Subject data and establishing the Scope of Work, is acceptable in my opinion. Per the USAP, the Responsibility for the SOW Decision rests squarely on the appraiser's shoulders.

Ok, I wasn’t going to rehash the history behind the current issues, but I got carried away. If we don not stay aware of the events that led to this point, they will be repeated.

Oh and by the way, do you know that there is only ONE animal that a Grizzly Bear will share his KILL and meal with?......................................................................a skunk.
 
Spot on, Old Guy! That is why the only emphasis should be that the lenders should have to pay appraisers what appraisers charge the lenders and, if the lender wants to seek reimbursement from a borrower for that service, it should be honest and inform the borrower that the fee charged is what a professional appraiser charges in order to provide a competent appraisal.

I think the only thing you left out in your recitation is the MAJOR role that ONE very dominant national title insurance company has grabbed for itself in these circumstances by being partners in some of the major bank-owned AMCs + owning their own AMC business(es) + owning many of the alternative valuation products that it promotes to lenders to replace appraisers entirely.
 
This worth repeating.

"‘‘(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.
Click to expand...


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."
Click to expand...


READ IT REALLY SLOW AND STOP AT THE PERIODS AND COMMAS.

You will be paid Customary & Reasonable Fees from Lenders and their agents.

The way they prove they are paying you a Customary & Resonable Fee, is evidenced by a survey.


Not that some one is going to say, "The survey says.....$325 is a C&R for a 1004 in shobokin Michigan and $300 is the C&R in Rotterdam Wisconsin" .

Nope it does not say that.

It says that what they pay you must be in line with surveys. So if surveys have a varience of actual fee prices, they cannot pay you more or less than the range of fees.

The survey is for their defense that they have not paid you more or less than what is customary and reasonable.

You want a C&R fee for your area? Set it. Get a local college professor to perform a fee survey.

It does not matter what the survey says until someone, usually a borrower claims they have been charged more than the customary and reasonable appraisal fee.

Then they'll come up with surveys that say the fees range from $x-$Y and the borrower was not charged more than $Y therefore the borrower was not over charged.

What you need is to DEMAND NOT NEGOTIATE BUT DEMAND your fee.

Surveys do not help appraisers and if you don't know what a real fee is ASK ANOTHER LOCAL APPRAISER.



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a la Mode isn't an AMC - it facilitates jobs with AMC's and recommends you don't accept fees that are below your norm. Mercury and A la Mode have been instrumental in helping their appraisers and all appraisers in general.
 
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