The trouble with "lender-ordered" appraisals

[Doug in NC]

I've heard a lot recently about outrageously low fees, but today I was shocked to learn what a lender is charging for a PMI-related appraisal - $550!

Hey, I'm not complaining about generous appraisal fees, but I guarantee the appraiser isn't getting that cut. This lender is a big one. Wow.

To me, this is a restraint of trade. The homeowner is forced to use the lender's select appraisers only (probably from their own AMC). Competition has been eliminated. Posters here like to point out the unethical actions of some appraisers, but imagine the ramifications of what lenders do on a daily basis (especially the big boys). I guess this is just one of the increasing fees that banks will be reportedly raising to make up for faltering profits in the mortgage sector.

 

[Mountain Man]

$550? Well, I see they've had a fee increase of $50 since the last time I got an accidental fax in 2003.

 

[Charles Knutson]

I dunno -- it sounds okay to me.

You have to remember -- this fee has to cover both an appraisal and a review, and possibly a field review or second appraisal. In this market, no lender is going to give up their PMI without making sure the value in a random appraisal is really supported.

Plus, you can't expect a lender to take a loss on something that is of no benefit to them -- it takes work and costs money to even process the PMI removal request, and lender shouldn't have to eat the cost of increasing their risk.

 

[Eli Weiss]

http://appraisersforum.com/showthread.php?t=139952

 

[Doug in NC]

I dunno -- it sounds okay to me.

You have to remember -- this fee has to cover both an appraisal and a review, and possibly a field review or second appraisal. In this market, no lender is going to give up their PMI without making sure the value in a random appraisal is really supported.

Plus, you can't expect a lender to take a loss on something that is of no benefit to them -- it takes work and costs money to even process the PMI removal request, and lender shouldn't have to eat the cost of increasing their risk.

Then again if they hired good quality appraisers in the first place, there wouldn't be much need for the other services.