Appraisers…….
I spent time Wednesday 8/04/10 discussing the Dodd-Frank law, and the “Usual and Customary Fee” mandate within it, with an experienced appraiser on the east coast. Also Wednesday, two e-mails arrived which ask appraisers to fill out a ‘fee survey.’
The basic question is ‘when are Usual and Customary Fees’ applicable to our assignments? The actual answer is July 22, the day after the President signed the bill. That fee implementation language is contained in the bill and is separate from Appraisal Independence issues that regulators will define up to 90 days later.
Some people are under the impression that there is a 90 day waiting period before fee implementation. In my opinion, that is incorrect, because the ‘up to 90 days’ as mentioned in the bill applies to the Appraisal Independence aspects of appraisal ordering only, not to fees. It is designed to allow the new “Bureau” time to write and distribute their new Interim Final Regulations (which is an oxymoron!) concerning independence issues. Those probably will be very similar to FIRREA, HVCC, FHA, and other regulators’ policies.
So what are “Usual and Customary Fees?” The answer: It Depends. There is NO one mandated fee that must be charged by the appraiser. “U&C” fees vary by region, and frankly, between appraisers in the same region.
The bill does say that “U&C” fees “may” be based on ‘evidence…established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies SHALL EXCLUDE assignments ordered by known appraisal management companies.’ The bill says ‘lenders and agents SHALL compensate fee appraisers at a rate that is customary and reasonable….in the market area…’ Complex assignments can have a higher fee than a typical basic assignment based on difficulty and additional scope of work requirements.
So, in my opinion, appraisers are free to consult various fee schedules, and decide for themselves what they will charge any client for a particular service. But I will tell you (from personal experience since July 22) that AMC’s are still ‘shopping’ appraisers to find the lowest fee.
For 20+ years, the agent business model for assignment fees has been ‘mandated’ by lender agents – for those assignments in which an agent is involved. In effect, it’s been price fixing, which is illegal. But nobody had the gonads (or desire) to seriously challenge this, and individual appraisers were powerless to reject it if they wanted to continue working for particular lenders who were using agents. Now, with the Dodd-Frank law, that model has been overturned. And with it, if the agent or lender refuses to pay a “U&C” fee to the appraiser, they can be heavily fined.
As a result of this legislation, agents and lenders are renegotiating their contracts now, anticipating that appraisers will begin asking for fees more in line with what they would normally charge local clients that don’t use agents for order placement.
There are currently two ways to research “U&C” fees in your area…VA fee tables and the alamode anonymous survey for the entire country, broken out by county.
Two other established companies are also attempting to collect fee info. One is entirely anonymous, but based on an entire state only.
The other is designed to collect contact info of the survey participant and you cannot fill out the fee survey until you provide contact info….but the survey drills down to the county level in each state and includes several different report types. I don’t appreciate this data collection aspect used to promote the sponsoring company. You can decide for yourself how accurate of required contact info you want to provide, but it may be interesting to see what kind of fee data they obtain. The other aspect of this survey is a ‘subscription’ feature which will allow lenders and agents to gain access to the data……..and possibly the contact info of the survey participants who provide the fee data. That makes me very uncomfortable.
AUTHOR: Dave Towne Towne Appraisals dtowne@fidalgo.net Washington State 360-708-1196 & Appraiser Education Service
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