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There are a lot of issues affecting the appraisal industry today, but one of the biggest is Customary and Reasonable fees. The payment of unreasonably low fees by predatory clients has the potential of hurting not just appraisers, but the financial industry as a whole. Everywhere we look – HUD, the States, Interagency Guidelines, Fannie Mae, Dodd-Frank – there have been moves to set it right, so that fee is not the determining factor in engaging appraisers. I’ve thought about this for years and am vocal about appraisers charging what we are worth, but now that the CFPB adopted the Federal Reserve C & R Rules virtually word-for-word, I think it is time appraisers set the record straight from a regulatory perspective.
Enforce C&R Fees
I originally wrote a lengthy letter to be sent to the Agencies, but it was just too complicated and not focused enough. I sought out feedback from a variety of folks and solicited the help of some industry veterans to help me craft a C & R Petition. The petition is hosted at Appraisal Buzz.
I hope appraisers will discuss this issue with one another, send it to peers, and post the link to appraiser sites, so we can reach a large audience.
Let me be clear: I know there is no one simple solution, and a petition alone is not the only move appraisers can be making. But revisiting, correcting, or repealing the C & R Rules is one important step on the regulatory side of this issue.
There several fronts that need to be addressed such as knowing how much our time is worth and looking at the time spent on each appraisal, the scope of work, quality, and other factors. And my favorite, which I use every day:
Fee too low? Just say ‘no’. (I don’t accept mini-fees in my business.)
With the current lack of enforcement of the C & R provision in Dodd-Frank, the entire intent of the law is being thrown out the window. But beyond that, low fees are driving good appraisers out of the business and out of the lending appraisal arena altogether.
I encourage every appraiser to take a few minutes to read the petition and pass it along to peers. With a strong response I believe the appraisal community can and will have a voice.
In 2010 when I first looked into the C & R Rules issued by the Federal Reserve, one of the first justifications shared with me regarding the loophole was that there were no fee surveys available to lenders and AMCs to enable them to “measure” C & R fees, which even at that time was not correct. Appraisers can also complete a fee survey at the site (separate from the petition) and together with other fee studies out there in the industry, will eliminate the claims that there is insufficient data or that there are no comments from the appraisal community.
Thanks for reading!
Take a look at, discuss, sign, and share the petition to the CFPB.