Federal Reserve Board to Clarify Customary and Reasonable Appraisal Fees
-
Author:
n/a -
Send To:
Federal Reserve Board, U.S. Congress, Federal Financial Institutions Examination Council, Federal Trade Commission
-
Sponsored By:
Appraisers and Concerned Citizens -
More Info at:
Federal Reserve Board - [email protected]; [email protected] ; [email protected] ; [email protected] ; [email protected]
Subject: Potential violations of the prohibitions in TILA against the use of AMC fees as the basis for determining reasonable and customary appraisal fees.
On October 18, 2010, the Federal Reserve Board announced an interim final rule to Regulation Z of Title 12, also known as the Truth in Lending Act (TILA). One of the elements to Regulation Z is a binding requirement upon creditors and appraisal management companies to ensure that appraisers who are not employees of creditors or of the appraisal management companies receive customary and reasonable payments for their services.
In preparing this interim final rule, the Federal Reserve Board did not specifically identify which appraisal fee schedules, surveys or studies that would be appropriate to designate as a safe harbor for creditors and their agents to comply with the reasonable and customary fee requirements of TILA. In lieu of identifying these schedules, surveys or studies, the Board basically offered two alternatives to creditors and appraisal management companies; either conduct their own surveys of fees for a locale and operate off the presumption that those surveys are reasonably accurate (Presumption 1), or rely on other fee surveys or studies conducted by objective third parties such as government agencies, academic institutions, and private research firms and rely on the presumption that they are accurate (Presumption 2).
The specific language of both (TILA) and the FRBs interim final rule specifically exclude the use of AMC fees as the basis for identifying the thresholds for reasonable and customary appraisal fees. In fact, the final interim rule specifically refers to this prohibition several times.
It is our assertion that there is no language in the "Presumption 1" paragraphs that indicate that either Congress or the Board intended to allow the AMCs to include their own fees or those of other AMCs as the basis for reasonable or customary appraisal fees. We believe it is obvious that the term:
"...recent rates paid for comparable appraisal services..."
as stated in Presumption 1 *is not* synonymous with, nor should it be interpreted as:
"...recent rates paid by AMCs for comparable appraisal services..."
We also assert that ample evidence exists in the market in virtually all locales as to what local appraisers charge their non-AMC clients for such appraisal work. No AMC is compelled to actually wonder what fees the appraisers charge their non-AMC clients - all they have to do is pick up the phone and start asking.
As of the implementation date of the final interim rule, many appraisal management companies have made a good faith effort to comply with the requirements in TILA to ensure that the appraisers they engage are paid fees that are reasonable and customary for those markets. Some of these AMCs have accomplished this by employing Presumption 1 (conducting their own market surveys), while others have accomplished this by employing Presumption 2 (relying on other published fee schedules and surveys developed by objective third parties). Some AMCs have gone so far as to employ both methods as a means of ensuring their compliance. As appraisers, we applaud and support the good faith efforts of those AMCs that have chosen to adhere to the law as written.
Sadly, as of the implementation date of 04/2011, some AMCs have chosen to flaunt both the letter and specific intent of the law (TILA) as well as that of the interim final rule. Despite the specific prohibition against including AMC fees as part of those surveys, a few of the high profile AMCs have even gone so far as to erroneously assert that the final interim rule specifically allows them to reference their own fees and/or those of other AMCs in their surveys. This, despite the repeated references in TILA and the interim final rule to the contrary.
To the extent such violations are occurring in the market the results serve to undermine both the letter and intent of the law (TILA) as written. The violator AMCs have undermined the level playing field on which they compete in the market with other AMCs that are in compliance, not to mention seriously degrading the economic viability of the appraisers who actually perform the appraisals being used in these transactions. The damages to the professional appraiser community extend across all levels of experience and competency, and serve to induce some appraisers who work for the AMCs to attempt to compensate for these grossly substandard fees by sacrificing quality and due diligence for increased assignment volume. Obviously this has also had a negative impact on the utility of those appraisals as used by the creditors, not to mention the negative impacts on consumer interests and the federal banking regulatory interests.
Simply put, if a violator AMC is billing a consumer $500 or more for a comprehensive residential appraisal, that consumers interests cannot be well served on a consistent basis when that AMC makes their primary choice of appraiser based on a unilaterally imposed fee structure that is, in some cases, less than half of the prevailing rate being charged in the market to any other type of user. That some of the biggest AMCs are wholly-owned subsidiaries of the lending institutions they represent essentially amounts to an additional hidden fee being paid - by the consumers - to those lenders in those loan transactions.
We, the undersigned, represent a large number of licensed and certified real estate appraisers in the United States. We respectfully request that the Board take action to publicly reiterate the prohibitions contained in both TILA and the Boards interim final rule against the reliance on any survey, conducted by any party, that 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 as referenced. In addition to public guidance, we also request that the Board act promptly and effectively to investigate complaints involving allegations of the blatant violations of these prohibitions as stated.
We thank you for your cooperation and assistance.
Subject: Potential violations of the prohibitions in TILA against the use of AMC fees as the basis for determining reasonable and customary appraisal fees.
On October 18, 2010, the Federal Reserve Board announced an interim final rule to Regulation Z of Title 12, also known as the Truth in Lending Act (TILA). One of the elements to Regulation Z is a binding requirement upon creditors and appraisal management companies to ensure that appraisers who are not employees of creditors or of the appraisal management companies receive customary and reasonable payments for their services.
In preparing this interim final rule, the Federal Reserve Board did not specifically identify which appraisal fee schedules, surveys or studies that would be appropriate to designate as a safe harbor for creditors and their agents to comply with the reasonable and customary fee requirements of TILA. In lieu of identifying these schedules, surveys or studies, the Board basically offered two alternatives to creditors and appraisal management companies; either conduct their own surveys of fees for a locale and operate off the presumption that those surveys are reasonably accurate (Presumption 1), or rely on other fee surveys or studies conducted by objective third parties such as government agencies, academic institutions, and private research firms and rely on the presumption that they are accurate (Presumption 2).
The specific language of both (TILA) and the FRBs interim final rule specifically exclude the use of AMC fees as the basis for identifying the thresholds for reasonable and customary appraisal fees. In fact, the final interim rule specifically refers to this prohibition several times.
It is our assertion that there is no language in the "Presumption 1" paragraphs that indicate that either Congress or the Board intended to allow the AMCs to include their own fees or those of other AMCs as the basis for reasonable or customary appraisal fees. We believe it is obvious that the term:
"...recent rates paid for comparable appraisal services..."
as stated in Presumption 1 *is not* synonymous with, nor should it be interpreted as:
"...recent rates paid by AMCs for comparable appraisal services..."
We also assert that ample evidence exists in the market in virtually all locales as to what local appraisers charge their non-AMC clients for such appraisal work. No AMC is compelled to actually wonder what fees the appraisers charge their non-AMC clients - all they have to do is pick up the phone and start asking.
As of the implementation date of the final interim rule, many appraisal management companies have made a good faith effort to comply with the requirements in TILA to ensure that the appraisers they engage are paid fees that are reasonable and customary for those markets. Some of these AMCs have accomplished this by employing Presumption 1 (conducting their own market surveys), while others have accomplished this by employing Presumption 2 (relying on other published fee schedules and surveys developed by objective third parties). Some AMCs have gone so far as to employ both methods as a means of ensuring their compliance. As appraisers, we applaud and support the good faith efforts of those AMCs that have chosen to adhere to the law as written.
Sadly, as of the implementation date of 04/2011, some AMCs have chosen to flaunt both the letter and specific intent of the law (TILA) as well as that of the interim final rule. Despite the specific prohibition against including AMC fees as part of those surveys, a few of the high profile AMCs have even gone so far as to erroneously assert that the final interim rule specifically allows them to reference their own fees and/or those of other AMCs in their surveys. This, despite the repeated references in TILA and the interim final rule to the contrary.
To the extent such violations are occurring in the market the results serve to undermine both the letter and intent of the law (TILA) as written. The violator AMCs have undermined the level playing field on which they compete in the market with other AMCs that are in compliance, not to mention seriously degrading the economic viability of the appraisers who actually perform the appraisals being used in these transactions. The damages to the professional appraiser community extend across all levels of experience and competency, and serve to induce some appraisers who work for the AMCs to attempt to compensate for these grossly substandard fees by sacrificing quality and due diligence for increased assignment volume. Obviously this has also had a negative impact on the utility of those appraisals as used by the creditors, not to mention the negative impacts on consumer interests and the federal banking regulatory interests.
Simply put, if a violator AMC is billing a consumer $500 or more for a comprehensive residential appraisal, that consumers interests cannot be well served on a consistent basis when that AMC makes their primary choice of appraiser based on a unilaterally imposed fee structure that is, in some cases, less than half of the prevailing rate being charged in the market to any other type of user. That some of the biggest AMCs are wholly-owned subsidiaries of the lending institutions they represent essentially amounts to an additional hidden fee being paid - by the consumers - to those lenders in those loan transactions.
We, the undersigned, represent a large number of licensed and certified real estate appraisers in the United States. We respectfully request that the Board take action to publicly reiterate the prohibitions contained in both TILA and the Boards interim final rule against the reliance on any survey, conducted by any party, that 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 as referenced. In addition to public guidance, we also request that the Board act promptly and effectively to investigate complaints involving allegations of the blatant violations of these prohibitions as stated.
We thank you for your cooperation and assistance.
11100 Signatures
-
Anonymous C
- Status: (Appraiser, Appraisal Mgt Company, other)
- citizen
- Comments:
- Disregard Posts 10032 and 10035! I was just kidding too I am alsol lovin those FULL FEE APPRAISERS!
-
Robert W
- Status: (Appraiser, Appraisal Mgt Company, other)
- very concerned citizen
- Comments:
- I LOVE FULL FEE APPRAISERS AND I KNOW YOU DO TOO!!!
-
Mike M
- Comments:
- My mom keeps wanting me to move out of her basement and find a real job but I love to play on the internet all day and I don't even have a car so I can't really go anywhere anyway. Sometimes I wish I had some friends but I think that all I really need is my computer and the internet.
-
Anonymous C
- Status: (Appraiser, Appraisal Mgt Company, other)
- citizen
- Comments:
- HAVE YOU HUGGED YOUR AMC TODAY?
-
Anonymous C
- Status: (Appraiser, Appraisal Mgt Company, other)
- concerned citizen
- Comments:
- More blah blah blah from the DISGRUNTLED appraisers who cannot compete in today's market.
-
Guy B
- State:
- MI
- Status: (Appraiser, Appraisal Mgt Company, other)
- State Licensed Appraiser
- Comments:
- The AMCs are making more than us on some assignments.
-
Anonymous C
- Comments:
- WHOOPS Ignore 10848! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
Anonymous C
- Comments:
- WHOOPS Ignore 10844! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
MIKE M
- Comments:
- I LOVE FULL FEE APPRAISERS AND I KNOW YOU DO TOO
-
Anonymous A
- Comments:
- Disregard Post 10848. There is no market today
-
Anonymous Government O
- Status: (Appraiser, Appraisal Mgt Company, other)
- Anonymous
- Comments:
- More blah blah blah from the DISGRUNTLED appraisers who cannot compete in today's market.
-
Leading E
- Status: (Appraiser, Appraisal Mgt Company, other)
- Leading Economist
- Comments:
- Disregard Post 10854. There is no market today
-
oqy2938646y
- Comments:
- For getful of all save his vassals plain fealty to the ethnarch Humphrey or Harold stayed not to yoke or saddle but stumbled out hotface as he was (his sweatful bandanna loose from his pocketcoat) hasting to the forecourts of his public in topee, surcingle, solascarf and plaid, plus fours, puttees and bulldog boots ruddled cinnabar with flagrant marl, jingling his turnpike keys and bearing aloft amid the fixed pikes of the hunting party a high perch atop of which a flowerpot was fixed earthside hoist with care. On his majesty, who was, or often feigned to be, noticeably longsighted from green youth and had been meaning to inquire what, in effect, had caused yon causeway to be thus potholed, asking substitutionally to be put wise as to whether paternoster and silver doctors were not now more fancied bait for lobstertrapping honest blunt Haromphreyld answered in no uncertain tones very similarly with a fear less forehead: Naw, yer maggers, aw war jist a cotchin on thon bluggy earwuggers. Our sailor king,
-
Mike M
- Status: (Appraiser, Appraisal Mgt Company, other)
- AMC Appraiser
- Comments:
- For getful of all save his vassals plain fealty to the ethnarch Humphrey or Harold stayed not to yoke or saddle but stumbled out hotface as he was (his sweatful bandanna loose from his pocketcoat) hasting to the forecourts of his public in topee, surcingle, solascarf and plaid, plus fours, puttees and bulldog boots ruddled cinnabar with flagrant marl, jingling his turnpike keys and bearing aloft amid the fixed pikes of the hunting party a high perch atop of which a flowerpot was fixed earthside hoist with care. On his majesty, who was, or often feigned to be, noticeably longsighted from green youth and had been meaning to inquire what, in effect, had caused yon causeway to be thus potholed, asking substitutionally to be put wise as to whether paternoster and silver doctors were not now more fancied bait for lobstertrapping honest blunt Haromphreyld answered in no uncertain tones very similarly with a fear less forehead: Naw, yer maggers, aw war jist a cotchin on thon bluggy earwuggers. Our sailor king,
-
jack
- Status: (Appraiser, Appraisal Mgt Company, other)
- other
- Comments:
- ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY. ALL WORK AND NO PLAY MAKES JACK A DULL BOY.
-
Anonymous Government O
- Comments:
- Disregard Post 10860. More blah blah blah from the DISGRUNTLED AMC appraiser.
-
Anonymous C
- Status: (Appraiser, Appraisal Mgt Company, other)
- concerned citizen
- Comments:
- More blah blah blah from the DISGRUNTLED appraisers who cannot compete in today's market.
-
Michael M
- Status: (Appraiser, Appraisal Mgt Company, other)
- concerned citizen
- Comments:
- After reading through many comments on this petition, it seems clear to me than there are just too many appraisers compared to the amount of business and that many appraisers should go out and find a real job where they can put in an honest day's work for once.
-
Leading E
- Status: (Appraiser, Appraisal Mgt Company, other)
- Leading Economist
- Comments:
- Disregard Post 10863. There is no market today
-
Michael M
- Status: (Appraiser, Appraisal Mgt Company, other)
- very concerned citizen
- Comments:
- WHOOPS Ignore 10864! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
Leading E
- Status: (Appraiser, Appraisal Mgt Company, other)
- Leading Economist
- Comments:
- Disregard Post 10864. There is no market today
-
American A
- Status: (Appraiser, Appraisal Mgt Company, other)
- Appraiser
- Comments:
- Regarding the over supply of appraisers: Natural forces always tend to thin the herd when the herd is too large to be supported by it's surroundings.
-
Fake Name P
- Status: (Appraiser, Appraisal Mgt Company, other)
- silly person who posts anti-AMC comments under dozens of fake names
- Comments:
- WHOOPS WHOOPS WHOOPS WHOOPS WHOOPS WHOOPS WHOOPSWHOOPS WHOOPS WHOOPS WHOOPS WHOOPS WHOOPS
-
American A
- Comments:
- WHOOPS Ignore 10868! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
Anonymous
- Comments:
- Ignore 10869! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
Leading E
- Status: (Appraiser, Appraisal Mgt Company, other)
- Leading Economist
- Comments:
- Disregard Post 10868. Herds apply to the Wild Kingdom Channel.
-
Moderator
- Comments:
- Disregard Post 10869. This appears to be a fake post.
-
Hans Van S
- State:
- LA area, CA
- Status: (Appraiser, Appraisal Mgt Company, other)
- Mortgage Banker
- Comments:
- We use full fee appraisers. They are better looking and drive expensive cars. This keeps up our image as opposed to using the AMC appraisers who drive Ford escorts and have no teeth.
-
Forrest O
- State:
- TN
- Status: (Appraiser, Appraisal Mgt Company, other)
- Appraiser
-
MIKE MCMIKE (THE AMC C
- Status: (Appraiser, Appraisal Mgt Company, other)
- AMC Appraiser
- Comments:
- HEY AMCs, HIRE ME AS YOUR APPRAISER AND GET A GOOD LAUGH WHEN YOU SEE MY $125.00 REPORT! ALSO, FOR YOUR ADDED ENTERTAINMENT, I COME TO YOUR HOUSE IN MY FULL CLOWN ATTIRE, RED NOSE AND ALL! I MAKE SURE ALL OF MY REPORTS ARE COMPLETED VERY FAST SO THAT I CAN GET MY $125.00 PER DAY. BWAHAHAHAHAHAHA
-
Robert W
- Status: (Appraiser, Appraisal Mgt Company, other)
- very concerned citizen
- Comments:
- Hahahahaha. I bet Mike McMike is looking at his AMC properties as we speak. He has not posted a silly comment in 2 hours. He is trying to get his $125.00 fee for the day. I bet it will be another 2 hours or so since he has to change out of his AMC clown outfit when he gets back plus take off his red nose.
-
Leading E
- Status: (Appraiser, Appraisal Mgt Company, other)
- Leading Economist
- Comments:
- Regarding the oversupply of AMC Appraisers: Supply and demand tend to thin the number of clowns when the supply is too large to be supported by it's circus.
-
American A
- Status: (Appraiser, Appraisal Mgt Company, other)
- Appraiser
- Comments:
- Doing business with AMCs is fun and exciting and AMC people are very good looking too!
-
The Real Fake Name P
- Comments:
- This is the Real Fake Name Poster. I did not write Post 10869 so disregard it. It is a fake post
-
American A
- Comments:
- WHOOPS Ignore 10879! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
American A
- Comments:
- WHOOPS Ignore 10879! I was just kidding. Actually I am lovin those FULL FEE APPRAISERS!
-
Michael M
- Status: (Appraiser, Appraisal Mgt Company, other)
- very concerned citizen
- Comments:
- I LOVE FULL FEE APPRAISERS AND I KNOW YOU DO TOO!!!
-
G. H
- Status: (Appraiser, Appraisal Mgt Company, other)
- Appraiser
- Comments:
- AMCs have worked out great for me. I do about two per day at 250 per appraisal. Most are in my local area. It just appears we have some disgruntled appraisers whose businesses are failing. Just an oversupply of appraisers at this point but the market forces of supply and demand will weed them out.
-
Anonymous
- Comments:
- Ignore 10884. There is no G. Hatch on the national registry of appraisers
-
Robert W
- Status: (Appraiser, Appraisal Mgt Company, other)
- very concerned citizen
- Comments:
- You are right. There is no G. Hatch on the National Registry of Appraisers.
-
American A
- State:
- America
- Comments:
- G. Hatch may be an appraiser who simply disagrees with us, (in which case I do not understand why he would sign a petition that is designed to urge regulators to enforce C&R fees for appraisers) - or may just be another AMC employee paid to circumvent the petition - I'm going to give him the benefit of the doubt if he can answer a few simple questions - are you ready? Why would you want to fight a movement that would result in you being paid the majority of the appraisal fee instead of about half, which is what you are getting now? How long does it take you to complete one appraisal? According to your comments, it takes about half a day. If you are doing 2 a day, how can you possibly be doing everything correctly, including keeping a complete workfile with support for your adjustments, including the cost approach, including the 1004MC? If you are doing everything like you are supposed to, you must be working 10-12 hour days. How long do you think you will be able to keep that up without burning out?
-
DONALD P
- State:
- RHODE ISLAND
- Status: (Appraiser, Appraisal Mgt Company, other)
- APPRAISER
-
G H
- Status: (Appraiser, Appraisal Mgt Company, other)
- Fake Appraiser
- Comments:
- I was just kidding. I cant do two AMC appraisals per day. You know that is not possible. I am lucky if I get out one every two days.
-
MIKE M
- Status: (Appraiser, Appraisal Mgt Company, other)
- AMC Appraiser
- Comments:
- AMCs have worked out great for me. I do a zillion appraisals per dayl. Most are over 150 mikes away. Bwaaaaaaaaaaa Whaaaaaaaaaaaa.
-
Jake H
- Status: (Appraiser, Appraisal Mgt Company, other)
- AMC President
- Comments:
- LOL. AMCs do not allow appraisers to do two per day at 250 each. If we had an appraiser who did that we would cut his fee in half and keep the rest. I have a lake front condo I want to purchase. AMC Appraisers are worth 250 per day max.
-
Anonymous C
- Status: (Appraiser, Appraisal Mgt Company, other)
- concerned citizen
- Comments:
- Appraisers need to be much more regulated. A suggestion would be to require all appaisers to submit reports through AMCs so as to have each report checked for quality prior to going to the lending institution. This would be a great help in cleaning up the appraisal industry.
-
Anonymous C
- Status: (Appraiser, Appraisal Mgt Company, other)
- concerned citizen
- Comments:
- Markets are similar to nature in how they tend to thin out the herd when the herd is too large to be supported.
-
Leading E
- Status: (Appraiser, Appraisal Mgt Company, other)
- Leading Economist
- Comments:
- Disregard Post 10896. Herds apply to the Wild Kingdom Channel.
-
Jake H
- Status: (Appraiser, Appraisal Mgt Company, other)
- AMC President
- Comments:
- LOL. Disregard Post 10894. It is that silly person again. We do not perform real quality checks. We just make sure all the right boxes are checked for our client.
-
Reginald W
- Status: (Appraiser, Appraisal Mgt Company, other)
- Chief Appraiser, US Appraiser Association
- Comments:
- If you can't make money doing reports for AMCs, then you should get out of the business. AMCs are here to stay so either get with the program or get a new job and get on with your life's work. I am so tired of all of you complainers, you are always blaming someone else for your problems. The appraisers begging for this C&R should be ashamed of themselves.
-
11100
Signatures! - View Signatures
- Sign Petition