From a practical matter, I think it is a tough sell (whether one thinks it is a good idea or not) to get regulators to raise fees that are ultimately paid by the consumer when every focus is ensuring that the consumers are not "over charged".
So tough a sell that I don't think it will ever happen.
It is a tough sell because the lenders can point to what is really occurring and say,
"In markets where there are not a lot of appraisers, we pay more. In markets where there are a lot of appraisers, we pay less. We put jobs out for bid and we get those jobs accepted. If you tell us you want to raise the rate for appraisal services above what we are paying now, fine... we'll do that. However, for those of us who pass on that cost directly to the consumer, they will be paying for it directly. And, for those of us who use our own in-house staff, we will have a competitive advantage because those rates are not subject to C&R. We still are going to use a centralized appraisal management process (AMC) and there is nothing in the law that prohibits them from being profitable; so, any increase in price for their services will be passed on to the consumer as well.
Go ahead, tell us we are required to pay a rate across the board that will affect more than half of the appraisals we order. You set the price for us. That way, when will bill the consumer, we can tell them this wasn't our decision, it was yours. We can work with a system like that... especially those of us who use staff appraisers rather than contract appraisers."
What regulator is going to say, "Well, we think it is more important for the small group of appraisers to be paid a higher rate than it is for the large group of consumers to not pay more than what they have up to now because there has been a sufficient number of appraisers willing to provide their services at a lower fee."
I don't think any regulator is going to go along with that. And, as a consumer, I'd be outraged.
So not on a political, not on a fundamental economic, not on a theoretical, but on a practical level, how realistic is it that the government is going to increase the fee paid by a consumer when there is no reason to do so other than appraisers demanding a higher fees?
The retort to the sentence above, naturally, is, "Well, C&R mandates it!"
Again, as Terrel and others have pointed out, there is no schedule for what is customary or reasonable that anyone can enforce. C&R is de facto what the market will bear.
I'd rather see the focus be on aggressive auditing of the lender process and aggressive auditing of the quality of the appraisal reports they are relying on. If quality is so bad because of low fees (a position I don't subscribe to) or due to quick turn-times (a position I do subscribe to), then those lenders who rely on low fees/quick turn-times should get the regulatory penalties (You want to see a bank's stock drop? Watch what happens when you see a regulatory investigation announced or disclosed in their 10K. You want to see a bank's stock go up? Watch what happens when the regulatory issue has been settled and the bank makes changes so it will sin no more).
If, after aggressive auditing and enforcement, it turns out that low fees and quick turn-times were the culprit, fees and turn-times will naturally go up to a level that is consistent to what that service is worth to meet the requirements. This isn't an artificial price level, this is a market price level.
If, after aggressive auditing and enforcement, it turns out that there is no significant difference in the fee or the turn-time, but quality has improved, then there is absolutely no reason for an artificial fee increase because it will be proven that higher fees are not necessary to ensure quality reports.
No regulator or regulation is going to increase consumer fees by $200 to $350 because appraisers think they should be paid more.
Current C&R has so many holes in it, there is no practical way to determine what that fee should be and what, if any, variance should be allowed.
An increase in fees is not going to change the turn-time dilemma; indeed, it will put more pressure on appraisers who to provide a quicker turn-time ("we're paying you more, what's your problem?"). And those who have constructed a system to produce quick turn-times without having to worry about quality levels will be rewarded for their pseudo "efficiency".
Mike, best of luck on your endeavor. No doubt you are putting your heart and soul into this.
To all others who think this is the answer, good luck as well. I don't think it is, and if I've learned anything over the last 10-years with appraisal changes, it is every new change seems to have created a bigger problem. What I have noticed is when things don't turn out like some were hoping they would, then that just increases the level of bitterness, resentment, and negativity. Some become depressed over it because (in my view) what they were hoping for was a significant overreach.
But I might be wrong and you might be right.
