Request for Information Regarding Promoting Access to Mortgage Credit

[Bobby Bucks]

I’ve never had another agent comment or ask questions about appraisal fees where AMC splits are concerned, they have too many other concerns, same with the borrowers. The only ones outside of appraising that have ever asked me about AMCs are mortgage brokers. IMO the only thing that would get the borrower’s attention and the general public would be separate lines on the closing statement for the appraisal fee and the AMC fee. If closing statements read like the following : Appraiser fee $290 Clear Capital “transaction fee” $700 the borrowers and some agents would begin asking "Who the hell Clear Capital is and why do I owe them $700?" Words have meaning, “transaction fee” would be one way to cause them to ask what exactly is being transacted.

 

[Bob Ipock]

Exactly.

 

[djd09]

i emailed them...they emailed back...saying they are from the governement and they are here to help

 

[chad hampton]

I love when some on here tell us what we care about and what we don't. Not a lot of refi's these last 4 years, but I often had borrowers ask me why an appraisal costs 800+ when they were 350 15 years ago. I tell them the truth (that's just how I do things) - they are dealing with big banks and the big bank and middle men now takes their cut. They all seem to be pissed, but understand that's how we do things in this country these days.

Some of you didn't care when you go into a single mother's home or a family with a handicap person who are clearly struggling and you know if they only had to pay the appraisal fee, it would save them 100's that they desperately need? Are you really that heartless?

I agree that I could care less what the surgeon that lives in a $3M home is charged. But even then I believe they should know the truth.

 

[djd09]

TAF could end all of this...don't know why he is sending the appraiser to a different agent

 

[J Grant]

I have said this 100 times at least. The BORROWER does not care. They know up front what the appraisal fee will be. They agree to it. They do not give a crap about appraisers or AMCs. They want to buy a house. Anyone who believes that borrowers will stand up and come to the rescue of appraisers.

When you buy nearly any product the price will be split many ways. You buy furniture, the manufacturer gets part, the store gets some, the trucking company gets some, the lumber company gets some. When someone buys a car do they want to know how the price is split up. Salesman, dealer, shop personnel, delivery, prep crew, rent, overhead. Who cares? I want the car. When I buy a house and I have bought dozens, I could not care less how much the appraiser gets, the home inspector, the painters, the carpet layers.....I do not care. I have agreed on a price and paid it.

This idea that anyone other than appraisers care about how any of the fees are split simply is ignoring reality. Do get the AMCs get too much....any do. This argument has been going on for 30 years and nothing has changed.

The borrowers do care; that is why there are national lawsuits about the undisclosed and usurious AMC fees now in the courts, lawsuits filed by borrowers.

Of course, our appraiser fee interest is specific and not directly aligned with the borrowers. But if borrowers knew HOW the AMC shops their appraisal, like a flea market to the lowest bidder, the borrowers would care a heck of a lot more.

Comparing this to mass market consumer products and goods, broken down by cost, is ridiculous.

Disclosing the fee split is better than nothing, but the better thing would be no fee split between the appraiser fee and the total apprasial fee with an AMC. Let the lender pay the AMC a hard cost if the LEnder wants to use one. If there is a fee disclosure split as a result of the lawsuits, it might rein in the most egregious splits and at least bring the topic out in the open. How can the borrowers object when, for all these years, they had no idea it was going on? If these lawsuits are successful, lenders and AMCs will be hit with a Tsunami of additional suits from borrowers.

To be effective, the disclosure of fee splits needs to be upfront, the day the borrower applies for the loan, rather than later on in the appraisal report when it is too late to change anything.. Having the fee split disclosure upfront the day the borrower applies for a loan would, in large part, eliminate the bidding and lead to more cost plus. That is because lenders like to charge a same amount to all borrowers, and that can only be done upfront if it is mandatory fee split disclosure.

 

[J Grant]

You don't care about the consumers paying "more" for an appraisal. You care about the AMC not paying you what you want or think is fair. If consumers shopped around for the lowest appraisal fee the AMC would pay even less. Consumers do not care how the fee is split. $200.00, $600.00, $900.00. Whatever the consumer pays...they do not care how much of it the appraiser gets.

I am not against appraisers being paid more at all.....but consumers simply don't care. If they did then lenders making sure the appraiser got more money would corner the market. This issue is for dreamers; I am a realist.

Where do you get the authority to speak for all consumers and make this grand sweeping assumption??? I have had numerous borrowers ask about the fee. Especially back in the days when I accepted work from AM"S. I have been AMC-free for roughly the last 8 years, so I am well aware of the fees when a lender uses an AMC vs when they do not.

Comparing appraisal fee splits to health care is ridiculous.

 

[J Grant]

I have said this 100 times at least. The BORROWER does not care. They know up front what the appraisal fee will be. They agree to it. They do not give a crap about appraisers or AMCs. They want to buy a house. Anyone who believes that borrowers will stand up and come to the rescue of appraisers.

When you buy nearly any product the price will be split many ways. You buy furniture, the manufacturer gets part, the store gets some, the trucking company gets some, the lumber company gets some. When someone buys a car do they want to know how the price is split up. Salesman, dealer, shop personnel, delivery, prep crew, rent, overhead. Who cares? I want the car. When I buy a house and I have bought dozens, I could not care less how much the appraiser gets, the home inspector, the painters, the carpet layers.....I do not care. I have agreed on a price and paid it.

This idea that anyone other than appraisers care about how any of the fees are split simply is ignoring reality. Do get the AMCs get too much....any do. This argument has been going on for 30 years and nothing has changed.

If the BORROWER does not care, then why do AMCs instruct the appraiser NOT to discuss or disclose the appraiser's fee with the borrower? Since the borrower, according to you, does not care, it should be no problem if they find out. But the AMCs are real scared of the borrower finding out

Borrowers did not object many times becaue they had no idea an AMC was being used or that their appraisal fee was in large part going to a middleman. Which was the whole point of the secrecy.

 

[J Grant]

I’ve never had another agent comment or ask questions about appraisal fees where AMC splits are concerned, they have too many other concerns, same with the borrowers. The only ones outside of appraising that have ever asked me about AMCs are mortgage brokers. IMO the only thing that would get the borrower’s attention and the general public would be separate lines on the closing statement for the appraisal fee and the AMC fee. If closing statements read like the following : Appraiser fee $290 Clear Capital “transaction fee” $700 the borrowers and some agents would begin asking "Who the hell Clear Capital is and why do I owe them $700?" Words have meaning, “transaction fee” would be one way to cause them to ask what exactly is being transacted.

It should be disclosed upfront, the day the borrower applied for the loan, the way every other fee is disclosed up front in a good faith estimate.

Leaving the fee split breakdown until closing is too late for many borrowers to object or even notice it.
The disclosure in the few states that require it on the appraisal reads along the lines of : "Appraisal fee, $600. Appraiser's fee $350. AMC fee $250 (if that was the breakout )

Disclosing the fee split upfront would force uniformity because mortgage lenders do not want to have borrowers objecting to their money going to different splits than other borrowers paid, and it would prevent fee bidding/the usorous splits.

Of course, the better solution would be to cap the % an AMC could receive from the apprasial fee, such as 20%. That might be a suggestion to the Consumer agency in the comment period. If the AMC is worth more than 20% of the appraisal fee to a lender, they are free to pay additional ( fat chance of that happening )

If the lender had to pay a hard cost charge for the AMC service, I bet they would not pay more than $75 per order.

 

[J Grant]

Borrowers are actively filing class action lawsuits against Appraisal Management Companies (AMCs). These cases challenge deceptive fee bundling and unconstitutional appraisal bias, seeking financial damages and better transparency for consumers. [1, 2, 3, 4]
The main borrower lawsuits against AMCs currently include:

• Hidden Fee and Unjust Enrichment Claims: Multiple class action lawsuits—such as Arnold v. Appraisal Nation in Florida and Timmens v. Clear Capital in California—allege that AMCs and mortgage lenders deceptively conceal. Plaintiffs argue that while borrowers pay large appraisal fees (often $450 to over $1,000), the AMCs pay the actual appraiser only a fraction and keep the rest as unearned fees. [1, 2, 3, 4]

Gee, it looks like the borrowers did care after all.