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Robin
Sentinel


Joined: 30 Aug 2007
Posts: 3416
Location: Loveland, OH

Appraisers to Fed: Define Reasonable and Customary
PostPosted: Thu Apr 14, 2011 8:13 pm Reply with quoteBack to top

View original article in html format here: http://hosted.verticalresponse.....180690ade/

Thursday, April 14, 2011


Real Estate Appraisers nationwide are asking the Federal Reserve Board to clarify Customary and Reasonable Fees. The petition represents thousands of licensed and certified appraisers in the United States.

The petition requests the Board take action to publicly reiterate the prohibitions contained in the Dodd Frank Act against the reliance on any survey, conducted by any party, which unlawfully includes AMC fees and purports to use them as the basis, in part or in whole, for establishing the thresholds for reasonable and customary appraisal fees. In addition to public guidance, the petitioners’ request that the Board act promptly and effectively investigate complaints involving allegations of the blatant violations of these prohibitions as stated.

Please join OCAP in support of this document and sign the petition at the link below:

http://www.petitiononline.com/.....ition.html
About the Ohio Coalition of Appraisal Professional (OCAP)



OCAP is a professional organization of Appraisers practicing in the state of Ohio. The mission of OCAP is to act as an independent, nonprofit, unbiased advocate for accurate and effective appraisal practice and service which leads to confidence by real estate participants, supports sound lending practices, and ultimately the best in consumer protection.




OCAP | Ohio Coalition of Appraisal Professionals
P.O. Box 2149
Fairborn, OH 45324

www.ocapweb.org
E. info@ocapweb.org
P. 877-622-7797 or 877-OCAPPWR
F. 866-211-0779


Last edited by Robin on Fri Apr 15, 2011 12:58 pm; edited 1 time in total
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Robin
Sentinel


Joined: 30 Aug 2007
Posts: 3416
Location: Loveland, OH

Re: Appraisers to Fed: Define Reasonable and Customary
PostPosted: Fri Apr 15, 2011 12:57 pm Reply with quoteBack to top

*We received the following via email and obtained the author's permission to post it here on their behalf:

This is regarding the Dodd-Frank Law and the Interim Final Rule (IFR) that pertains to the way independent fee appraisers are compensated when they are engaged by lenders.

In short, since HVCC, Appraisal Management Companies (AMCs) have become the default choice by many residential mortgage lenders for their appraisal management process. HVCC (Home Valuation Code of Conduct) was an agreement between the GSEs and the Attorney General of New York. The intent of the HVCC was to strengthen appraiser independence. The practical outcome was to eliminate the ability of private mortgage brokers to select appraisers for their assignments. Some lenders referred their mortgage broker partners to the lender’s in-house appraisal ordering process. Some lenders decided to outsource that responsibility to a 3rd-party management firm (the AMC). The introduction of a middle-level of management into the lender-appraiser relationship has resulted in a significant decrease in compensation paid to appraisers. Pre-HVC, a typical scenario would be for the borrower to be charged $350 for an appraisal, for the appraiser to collect that fee at the time of the inspection or from the client, and the appraisal was completed and delivered to the client. Now, a borrower may be charged $400 to $500+ for the appraisal and the appraiser may receive $200 to $275 his/her compensation. In practice, fees to the consumer have increased and compensation to the appraiser has decreased.

A provision in Dodd-Frank was crafted to address this imbalance by requiring independent fee appraisers to be paid “customary and reasonable” (C&R) fees. The Federal Reserve Board was charged with constructing the specific regulations to carry out the intent of the law. The FRB has created its regulation (called the Interim Final Rule) which provides for a two-track vehicle for compliance (referred to as presumptions of compliance). The Dodd-Frank Law states the following process for determining R&C fees:

Image

The law is written so that if surveys are used, AMC compensation to the appraiser shall not be part of the survey.

The FRB, in its rule, provides that an AMC’s past appraiser-compensation history can be used as a basis for calculating C&R fees (this is presumption #1 of compliance with the C&R requirement). Presumption #2 for C&R compliance would be to use an independent fee study (as the law states) or to adopt a fee schedule such as the Veteran’s Administration’s appraisal fee schedule.

Many appraisers and stakeholders believe that the interpretation by the FRB is inconsistent with the intent of the law. Appraisers and other stakeholders are in the process of signing a petition (http://www.petitiononline.com/CnR2011/petition.html) to request that the appropriate regulators and legislators revisit this interpretation and clarify it further. As written, the Interim Final Rule does not provides clarity and creates uncertainty.

As of this email (4/15/11, 5:00am PST), there are more than 6,100 signatures on the petition. The petition was created on 4/12/11.

Please consider reviewing this petition and commenting on it in your website. The issues here affect all stakeholders in the mortgage lending industry.



Thank you,


Denis DeSaix, SRA
Principal- Metrocal Appraisal
7567 Amador Valley Blvd. #306
Dublin, CA 94568
Tel: 925-875-0525
Fax: 925-875-0528
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