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Customary and Reasonable Fees Survey Results Now
Available.
Click to Download.
“I save your magazines and reference them when
issues arise within the industry or my residential
appraisal business. I find your publication to be very
informative and worthy of archiving for future
referencing.”
-Edward Rossi, State Certified Appraiser
Working RE
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great service and is sincerely appreciated."
- Paul J. Caristi, SRPA, SRA
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really love these magazines." -
Tina Lee-Swafford
New:
Customary and Reasonable Fee Survey:
The OREP/Working RE survey now has over 13,600 responses. You can
add your fee data here: www.surveymonkey.com/s/YZWHYT3.
Find a link to initial results
in sidebar. (Closed)
Challenging Low Fees Blog:
Post experiences and "how to" on filing a complaint regarding low
fees from AMCs.
Take our other surveys:
HVCC - One Year On(Closed)
HVCC Appraiser Talkback Survey (Closed)
You can always tell when you’re getting under the skin of AMCs:
TAVMA writes a letter.
This time the letter fired off by the AMC trade group TAVMA
(Title/Appraisal Vendor Management Association) is to the Secretary
of the Board of Governors of the Federal Reserve System, Jennifer J.
Johnson, complaining of misrepresentations in reporting, by an
industry publication, of remarks made by a Fed Board staffer at a
recent industry gathering. Specifically, the story quotes the Fed
official as saying that appraisal management companies (AMCs) may
be “misinterpreting” the customary and reasonable fee provision of
the Interim Final Rule.
The
TAVMA
letter says that “such misstatements are causing confusion in
the marketplace and are adding unnecessarily to the regulatory
burden of those working to comply with the new requirements.” In
the letter, TAVMA requests the Federal Reserve Board and staff take
the steps necessary to “correct this distortion of its Interim Final
Rule.”
In February 2010, as legislation sun-setting HVCC gained traction,
TAVMA wrote a letter defending HVCC’s role as a “firewall”
protecting appraisal independence (see HVCC: Appraiser Last
Laugh? at WorkingRE.com, Library, Volume 24). That proposed
legislation eventually became Dodd-Frank. One month later TAVMA
disputed the results of a la mode’s pre-HVCC fee survey arguing that
it did not reflect customary and reasonable fees because it excluded
AMC appraisals, which by then were dominating the marketplace.
Dodd-Frank disagreed, saying specifically that AMC fees should not
be considered when surveying for customary and reasonable. Now TAVMA
is disputing the notion that Presumption 1 may not be a “safe
harbor” for AMCs in this customary and reasonable fee storm.
“Safe
harbor,” in this context, can be defined as “a
legal provision to reduce or eliminate liability as long as good
faith is demonstrated.”
(story continues below)
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In the
letter, TAVMA does not say whether it was represented at the meeting
in question of the Association of Appraiser Regulatory Officials (AARO).
WRE was not at the meeting but the reporting in the
Appraisal Institute publication that the TAVMA
letter references comports with what Board officials
told WRE earlier this year on two separate
occasions: that Presumption 1, or "current market
fees," may not be a safe harbor given the following language
from the Interim Final Rule: “[T]he Board
understands that some AMCs have begun requiring fee appraisers to
agree that the fee is ‘customary and reasonable’ as a condition of
obtaining the appraisal assignment. In these situations, the Board
believes that an appraiser’s agreement that a fee is 'customary and
reasonable' is an unreliable measure of whether the fee in fact
meets the statutory standard."
The TAVMA letter also disputes the substance of an online petition
saying, “The petitioners show contempt for others in their
profession by declaring that the work of those appraisers who will
work for less than the petitioners is substandard.” Click to
view/sign the petition.
The subtext of this TAVMA letter may be this: the
multitude of challenges made by appraisers to federal regulators
regarding customary and reasonable fees, as well as increased
coverage in the mainstream media and the gathering voices of
appraisers raising these issues with their elected representatives,
are gaining traction and quite possibly getting under the skin of
some AMCs.
David
Brauner Insurance Services/ OREP/Working RE Magazine
David
Brauner Calif. Insurance License: 0C89873
(story
continues)
Restraint of Trade The term restraint of trade can be defined
as: “Contracts or combinations that tend, or are
designed, to eliminate or stifle competition, create a
Monopoly, artificially maintain prices, or otherwise
hamper or obstruct the course of trade as it would be
carried on if it were left to the control of natural
economic forces.” And “As used in the
Sherman Anti-Trust Act (15 U.S.C.A. § 1 et seq.),
unreasonable restraints of trade are illegal per se and
interfere with free competition in business and
commercial transactions. Such restraint tends to
restrict production, affect prices, or otherwise control
the market to the detriment of purchasers or consumers
of goods and services. A restraint of trade that is
ordinarily reasonable can be rendered unreasonable if it
is accompanied by a
Specific Intent to achieve the equivalent of a
forbidden restraint.”
Here it is in plain English, from a veteran appraiser
who, like most these days, wishes to remain anonymous
for fear of reprisal. “This AMC is complaining about a
fee for a rural appraisal in Creek County outside the
Tulsa (OK) Metro area. Before AMCs dominated the Tulsa
market, lenders were widely accepting $350 to $425 for
this type of appraisal in this area. I know because I
did many such appraisals in this market since 1989,
before AMCs monopolized the market. AMCs scoff at a $275
fee for an appraisal in this area. Where fees of $350 to
$400 were widely accepted, I have been told by AMCs that
my greatly discounted fee of $275 is not ‘competitive.’
The fees I am being forced to accept are 25-35 percent
of what they were before the AMCs controlled this
market, without exception. I have been forced to either
lower my fees (that were customary and accepted as
reasonable by lenders before the AMCs dominated this
market) or face the prospect of being forced out of the
appraisal business. HVCC was so concerned about the
lender interfering with the appraiser’s objective
process of the appraisal, but the AMC ‘bidding war’
practice is becoming just as dangerous to the appraisal
industry, in my opinion. I have never seen anything as
threatening in the 34 years of my appraisal profession.”
Three Options Appraisers who are fighting back are doing one or
more of the following: refusing to work for less than
customary and reasonable fees; challenging the low fees
(click to read
More "How to" Challenging Low Fees) and
bending the ear of their elected representatives. Some
or all of these responses are gaining traction.
Unfortunately, some appraisers report being
“blacklisted” for speaking out publically against AMCs
and in a few cases, for challenging low fees. One tells
WRE that while the complaint process is anonymous, it
requires the property address which leads back to the
appraiser.
Transfer of Power, Fresh Ideas Enforcement authority for
Dodd-Frank transfers from the Federal Reserve Board back
to the Inter Agencies (OCC, FDIC, etc.) July 21, 2011.
This means we may not hear anything new until the
transition is complete. It is becoming clear to
all parties involved that the current state of affairs
is not working and that the status quo will not hold.
Regulators will either have to send a message to AMCs by
enforcing the stiff fines in Dodd-Frank for not paying
customary and reasonable fees or they’ll have to clarify
the Interim Final Rule to permit the status quo: Dodd
Frank either intends that appraisers be paid customary
and reasonable fees or it does not. And there are more
ways to skin the cat.
Here are a couple ideas submitted by an appraiser this
week. This appraiser, like so many others, speaks
anonymously for fear of losing work as a consequence of
speaking out against his AMC clients. He writes, “I
believe that there are only two things that can be done
that will actually realize substantial change in the
current scenario: 1) Help Fannie/Freddie realize that
they need to allow loan officers to place the appraisal
orders with any federally licensed AMC of their
choosing. This will break up the monopoly that is
currently being held by a small handful of AMCs, to the
detriment of the industry. 2) Require that AMC fees be
itemized and billed separately from the appraisal
company’s fees on the HUD1 closing documents. This will
completely remove the downward fee pressure from
appraisers because AMCs won’t be increasing their
profits by lowering the appraisal fees. In my opinion,
one or both of the above items are absolutely necessary
to see any type of change. If we just tell AMCs to pay
more, that won’t fix the root of the problem. That’s
like ordering a handicapped person to walk without first
healing their illness. Fees can't be regulated
successfully for the long run in the open market. The
only way to bring fees up is to remove the downward
pressure from companies that now enjoy the advantage of
massive appraisal ordering consolidation as a result of
the HVCC mandate.”
Good Reads Find a recent statement from the National
Association of Realtors (click
to view) on appraiser independence and how current
market conditions threaten the housing recovery, and a
story published in Mortgage Banking, written by
an a la mode executive,
The Mystery of the Missing Appraiser, which
debunks the notion that lenders face longer turn times,
lower quality and higher costs due to a shortage of
appraisers.
The Working RE/OREP.org Customary and Reasonable Fee
Survey is approaching 14,000. AMCs and others have
used the data to study compliance issues under
Dodd-Frank; appraisers also are viewing the results (for
free) in large numbers.
Click here to view results.
About the Author
David Brauner is Editor of Working RE magazine
and Senior Broker at OREP.org, a leading provider of E&O
Insurance for appraisers, inspectors and other real
estate professionals in 49 states (OREP.org). He has
covered the appraisal profession for over 16 years. He
can be contacted at
dbrauner@orep.org
or (888) 347-5273. Calif. Insurance Lic. #0C89873.