New Bill Would Ban All Settlement Cost "Markups"

[Bemis Pownall]

From Startribune 12/08/2001




Under HUD's guidelines, builder incentives "must be a true discount below the prices that are otherwise generally available and must not be made up by higher costs elsewhere in the settlement process."

Another common practice drawing attention concerns appraisals. Many appraisers complain that in order to obtain assignments from lenders, they must work with "appraisal management" organizations, some of which are wholly owned by the lenders. One appraiser, who asked not to be identified, said he gets paid $200 on average per valuation by a lender-owned management firm, but the home buyer is charged $400 or more at settlement, with no disclosure about the markup.

HUD officials said markups on appraisals may -- or may not -- be legal. Large markups with little or no additional services are illegal. Where extra services are rendered, the charges must be "reasonable."

What can consumers do to ensure

 

[bradellis]

Joe,

You wondered if anyone was actually "mining" the data in appraisal reports.

It is being done by both Fannie and Freddie and is used in their streamlined underwriting programs. I personally questiond Mark Simpson (Director of QC for Fannie) on this a few years back and he confirmed it to me. They may also be using assessor data, but they are definitely using data from the reprots they have as well- in the data base.

Brad Ellis, IFA,RAA