Customary and reasonable fees - 90 days

[DonRico]

What does PFA mean in this context? Dare I ask ?

Joan....tell us about Dave Biggers and alamode please.



BTW...I'm using my new built-in Ignore Feature on all of Karl's Posts....did he say something stunning again?

 

[Mr Rex]

Pulled From Arifice or something like that. I didn't use spellcheck.

 

[Flygirl 152]

I just opened up membership to appraisers a few months ago. Appraisers may join. All in all there are 260 members. More than half are chief appraisers of banks. Vendors may join as well. Those you see listed on the site are dues paying members. Some of the speakers are not members just invited guest speakers.

Attendees have a strong voice. As a group we have had amazing access to policy makers.It is my firm belief that we won't find solutions without putting all stakeholders in a room together.

As someone suggested this part of Title 14 seems to be fairly straightforward. The surveys can be done as often as the market demands.

It would seem some appraisers are looking for a conspiracy where there is none.

No doubt there will be some AMC, some lender who will fail to comply. The regulator is the new CFPD and your State Atty General.

I would think that as a lender/AMC they will look for you to indemnify them on reasonable and customary. It wouldn't be prudent to accept an assignment and then dial up your AG and ask them to go after the client. The penalties are onerous and I doubt many are looking for the headline risk.

No doubt the fees will get passed on to the consumer. I am quite comfortable with that. The price being paid for faulty appraisals has been a hefty one. Competent appraisers deserve to be paid and work independently without pressure. We could use a little enforcement to rid ourselves of the bad actors. None of this will happen overnight but it would seem progress is being made.

Joan Trice

Joan, you are the voice of reason.

Thank you for your posts.

 

[Frederick]

No doubt there will be some unintended consequences in FIN REG. I do believe the onerous registration fees will be passed through to appraisers. That will likely favor the large AMCs and be harmful to smaller ones.

Joan Trice
jtrice@allterragroup.com

AMCs will be paying a registration fee per appraiser on their panel to the governmental regulatory authority. So it sounds like the AMCs are planning to have the appraisers pay a registration fee which the AMC will use to pay their obligation to that regulating authority.

I would think that as a lender/AMC they will look for you to indemnify them on reasonable and customary. It wouldn't be prudent to accept an assignment and then dial up your AG and ask them to go after the client. The penalties are onerous and I doubt many are looking for the headline risk.
Joan Trice

It appears AMCs will then upon acceptance of an assignment by an appraiser likely require the appraiser to sign a statement that the fee they have accepted is customary and reasonable.

If the appraisal fees become “customary and reasonable” and AMCs no longer compete on “fast and cheap” they will need to distinguish themselves in other ways.

Of course management fees will need to be competitive and some edge may be found by offering premium quality assurance services but the edge will likely be in coverage and appraiser credentials and experience.

In this time of over supply of appraisers I would imagine credentials, experience, quality and timely performance will become paramount. That is likely to leave Licensees and the less experienced on the sidelines.

If an AMC can say their panel is 90% Certified with 10 yrs. min. experience it might be meaningful in the marketplace. If the fee is standard and appraisers plentiful they can be discriminating.

It may be the beginning of new era in appraising for financial institutions.


.

 

[residentialguy]

I don't know about you guys, but appraising today is much more difficult and time consuming then it used to be and we haven't raised prices. Cookie cutters? What are those? If we are about to set fees that will most likely be set in stone for quite a while and probably heading into a major inflation time, why aren't we pushing for fair fees to what they should be for 2010?

 

[moh malekpour]

October 21, 2010 is going to be the deadline for the following changes:

1-lenders, their agents and AMCs have to pay reasonable and customary appraisal fee to their appraisers. I don't think they are going to start paying sooner than the expiration of 90 days. The fee is going to be established within 90 days deadline. The consumers maybe charged extra for the AMCs administrative cost or lenders might take the tab.

2-The first violation for not paying reasonable appraisal fee shall be a civil penalty prosecutable by state attorney general. The penalty would be up to but not more than $10,000 per day and if that violation was repeated, a harsher penalty shall be applied by substituting $20,000 for $10,000 per day to all subsequent violations. That is very very stiff penalty.

3-AMCs have to disclose the appraisal fees and their administrative fees separately. a clear disclosure of— ‘‘(1) the fee paid directly to the appraiser by such company;and ‘‘(2) the administration fee charged by such company.’’.

4-HVCC will be sunset.

5-Appraisal reports will be portable from lenders to lenders.

6-Lenders have to send a copy of appraisal report to borrower 3 days prior to closing the loan without any cost to borrower.

7- Appraisals have to have interior inspections. No driveby or desktop

8- Lenders who willfully failed to obtain appraisals will be liable to borrowers sum of $2000

9-It is unlawful to engage in any act or practice that violates the appraisal independence in the loan transaction that is secured by the principal dwelling of the consumer.

10-Requirement from a mortgage lender, mortgage broker, mortgage banker, real estate broker, AMC, employee of AMC, borrower or any other person involved in a real estate transaction with interest in the real estate transaction from appraiser for considering additional comps, further details or explanation for appraiser’s value conclusion, or correct errors in the report are not violation of appraisal independence.

11- Any mortgage lender, mortgage broker, mortgage banker, real estate broker, AMC, employee of AMC, borrower or any other person involved in real estate transaction involving an appraisal in connection with loan transaction secured by the principal dwelling of the borrower who has a reasonable basis to believe an appraiser is failing to comply with USPAP or violating the state laws or is engaging in unethical or unprofessional conduct, shall refer the matter to the applicable state appraisal board or agency.

12-The lender should not issue the loan if knows at or before loan consummation of the violation of appraisal independence unless lender documents that the lender has acted with reasonable diligence to determine that the appraiser doesn’t materially misrepresent the value of subject property


13-The loan application should state that the appraisal is for the sole use of the lender and the applicant may choose to
have a separate appraisal conducted at the expense of the applicant

14-If the property value has been increased within 180 days of effective date of appraisal, the lender should order a second appraisal from another appraiser who should analyze and explain the reason for the change in value due to change in the market condition or new improvements to subject property. The cost of second appraisal should not be paid by the borrower.

15-Mortgage originators must be qualified and, when required, registered and licensed as a mortgage originator under state and federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Mortgage originators also are required to include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry

:
16-‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.—If, 6 months after the date of the enactment of this subsection, the Appraisal Subcommittee determines that no national hotline exists to receive complaints of non-compliance with appraisal independence standards
and Uniform Standards of Professional Appraisal Practice, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, the Appraisal Subcommittee
shall establish and operate such a national hotline,which shall include a toll-free telephone number and an email ad-dress. If the Appraisal Subcommittee operates such a national hotline,the Appraisal Subcommittee shall refer complaints for further action to appropriate governmental bodies, including a State appraiser certifying and licensing agency, a financial institution regulator,or other appropriate legal authorities. For complaints referred to State appraiser certifying and licensing agencies or to Federal regulators, the Appraisal Subcommittee shall have the authority to follow up such complaint referrals in order to determine the status of the resolution of the complaint.’’.


This is my prediction but I might be wrong. what do you say? I am not craving for them to come back but they might come back with their hands tied behind their backs:
If lenders are going to pass on AMCs administrative fees to consumers, there is going to be a competition between lenders for who is going to pass on AMCs administrative fees to consumers and who won't and the one with no AMCs fee get the prize. With the HVCC out of the picture, mortgage brokers and originators being regulated and the portability of appraisal reports, I won’t be surprised to see some lenders let mortgage brokers and originators to order their appraisals as they have to comply with appraisal independence law are going to be equally liable to the law. I don't think they can go back to their old habits. I don't think it is going to work

 

[Evincere]

Moh-

First,

In a bidding system, the client gets what it pays for. If quality is a requirement and the quality cannot be obtained at the low fee, then won't fees go up as clients discriminate in their choice of appraisal-providers, rewarding those who produce quality and skipping those who don't? By mandating a minimum fee, how does a lender use its fee to discriminate in favor of better quality. Do you think everything shifts-right on the quality scale because the fees go up (I don't think you do and I certainly don't). The same poor quality appraisers will be competing for the same jobs as they do now. The only difference is that they will be paid more.

Absolutely correct. Your logic throughout is consistant and concise. The course that has come full circle and we are back to square one pre HVCC with fees being the dominant preponderance. Accomplished is that the cheese..aka the fees are being moved around and now, quite possibly, regulated.

 

[KenAZ]

October 21, 2010 is going to be the deadline for the following changes:

1-lenders, their agents and AMCs have to pay reasonable and customary appraisal fee to their appraisers. I don't think they are going to start paying sooner than the expiration of 90 days. The fee is going to be established within 90 days deadline. The consumers maybe charged extra for the AMCs administrative cost or lenders might take the tab.

2-The first violation for not paying reasonable appraisal fee shall be a civil penalty that would be enforced by state attorney general and it would be not more than $10,000 per day and if that violation, a harsher penalty shall be applied by substituting $20,000 for $10,000 per day to all subsequent violations. That is very very stiff penalty.

3-AMCs have to disclose the appraisal fees and their administrative fees separatley.

4-HVCC will be sunset.

5-Appraisal reports will be portable from lenders to lenders.

6-Lenders have to send a copy of appraisal report to borrower 3 days prior to closing the loan without any cost to borrower.

7- Appraisals have to have interior inspections. No driveby or desktop

8- Lenders who willfully failed to obtain appraisals will be liable to borrowers sum of $2000

9-It is unlawful to engage in any act or practice that violates the appraisal independence in the loan transaction that is secured by the principal dwelling of the consumer.

10-Requirement from a mortgage lender, mortgage broker, mortgage banker, real estate broker, AMC, employee of AMC, borrower or any other person involved in a real estate transaction with interest in the real estate transaction from appraiser for considering additional comps, further details or explanation for appraiser’s value conclusion, or correct errors in the report are not violation of appraisal independence.

11- Any mortgage lender, mortgage broker, mortgage banker, real estate broker, AMC, employee of AMC, borrower or any other person involved in real estate transaction involving an appraisal in connection with loan transaction secured by the principal dwelling of the borrower who has a reasonable basis to believe an appraiser is failing to comply with USPAP or violating the state laws or is engaging in unethical or unprofessional conduct, shall refer the matter to the applicable state appraisal board or agency.

12-The lender should not issue the loan if knows at or before loan consummation of the violation of appraisal independence unless lender documents that the lender has acted with reasonable diligence to determine that the appraiser doesn’t materially misrepresent the value of subject property


13-The loan application should state that the appraisal is for the sole use of the lender

14-If the property value has been increased within 180 days of effective date of appraisal, the lender should order a second appraisal from another appraiser who should analyze and explain the reason for the change in value due to change in the market condition or new improvements to subject property. The cost of second appraisal should not be paid by the borrower.

13-Mortgage originators must be qualified and, when required, registered and licensed as a mortgage originator under state and federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Mortgage originators also are required to include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry

:
15-‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.—If, 6 months after the date of the enactment of this subsection, the Appraisal Subcommittee determines that no national hotline exists to receive complaints of non-compliance with appraisal independence standards
and Uniform Standards of Professional Appraisal Practice, including complaints from appraisers, individuals, or other entities concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, the Appraisal Subcommittee
shall establish and operate such a national hotline,which shall include a toll-free telephone number and an email ad-dress. If the Appraisal Subcommittee operates such a national hotline,the Appraisal Subcommittee shall refer complaints for further action to appropriate governmental bodies, including a State appraiser certifying and licensing agency, a financial institution regulator,or other appropriate legal authorities. For complaints referred to State appraiser certifying and licensing agencies or to Federal regulators, the Appraisal Subcommittee shall have the authority to follow up such complaint referrals in order to determine the status of the resolution of the complaint.’’.


This is my prediction but I might be wrong. what do you say? I am not craving for them to come back but they might come back with their hands tied behind their backs:
If lenders are going to pass on AMCs administrative fees to consumers, there is going to be a competition between lenders for who is going to pass on AMCs administrative fees to consumers and who won't and the one with no AMCs fee get the prize. With the HVCC out of the picture, mortgage brokers and originators being regulated and the portability of appraisal reports, I won’t be surprised to see some lenders let mortgage brokers and originators to order their appraisals as they have to comply with appraisal independence law are going to be equally liable to the law. I don't think they can go back to their old habits. I don't think it is going to work

thank you for that post. Could you repost that every few days under any thread titled "Customary and Reasonable" or "Financial Reform Act"

The only question I have is

13-The loan application should state that the appraisal is for the sole use of the lender

Does this mean that the owner cannot rely on the appraisal for GLA?

That is the way it used to be until the "Blagg" lawsuit.

Maybe there will be a new business for appraisers. Potential owners or realtors will hire appraisers to measure the homes.

 

[moh malekpour]

thank you for that post. Could you repost that every few days under any thread titled "Customary and Reasonable" or "Financial Reform Act"

The only question I have is
Does this mean that the owner cannot rely on the appraisal for GLA?

That is the way it used to be until the "Blagg" lawsuit.

Maybe there will be a new business for appraisers. Potential owners or realtors will hire appraisers to measure the homes.

This is the exact verbiage of the law:

‘‘(d) CONSUMER NOTIFICATION.—At the time of the initial mortgage
application, the applicant shall be provided with a statement
by the creditor that any appraisal prepared for the mortgage is for
the sole use of the creditor, and that the applicant may choose to
have a separate appraisal conducted at the expense of the applicant.

 

[Moe Larry]

I don't know about you guys, but appraising today is much more difficult and time consuming then it used to be and we haven't raised prices. Cookie cutters? What are those? If we are about to set fees that will most likely be set in stone for quite a while and probably heading into a major inflation time, why aren't we pushing for fair fees to what they should be for 2010?

If they do end up setting fees, the fees should be called minimum fees which would allow for higher fees if market forces dictate.