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42314Richmond, VA 23242804741-4968 All Rights Reserved.
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From the Appraisal Subcomittee Website: Appraisal independence requirements for consumer credit transactions secured by the consumer's principal dwelling are set forth in 129E of the Truth in Lending Act (TILA). Other appraisal independence (or appraisal independence) requirements are established by various Federal and State statutes, regulations or guidance. Examples of violations of appraisal independence laws could include:
For immediate Release:
beginning, Federal Regulation of the industry was initiated to “protect the
public. “ FIRREA, USPAP, HVCC, Dodd Frank and state licensing of appraisers and
appraisal management companies were initiated with consumer protection as the
goal. Customary and reasonable fees, mandated by Dodd Frank, are also to
protect the consumer.
Coalition of Appraiser Professionals supports customary and reasonable fees and
believes in order to determine a customary and reasonable fee all things
associated must be considered and incorporated into the determination. The
below practices by AMC’s are not in the interest of protecting public trust and
go against the purpose of the Dodd Frank Act and the Commonwealth of Virginia AMC
Regulations to protect the public.
1. Email Blast of
orders with a “first to respond gets the order” approach. Often these email blasts are sent after
normal business hours and on weekends with unrealistic fees and turn
Many AMC’s have developed their own mobile apps and/ or utilize
text messaging for the sole purpose of facilitating a” first to respond gets
the order.” Limited information is relayed to the appraiser and only a partial
address and a fee is displayed. Relevant information, such as the due date and
scope or work are omitted.
Both the email blasts and the text messaging systems do not allow
an appraiser ample time to research the property to determine if they are qualified
to perform the assignment. The assignments advertised through these systems are
usually below customary and reasonable fees and often are sent outside of
normal business hours. Often there is no opportunity to counter the offer, a
fee or turn time. These systems are not in compliance with the Dodd Frank
Legislation and are harmful, not only to the public, but to communities,
neighborhoods and the appraisal profession.
The consumer is protected when the most competent and qualified
appraiser completes the appraisal. Language should be included in the C& R
Fee determination on how to choose the most competent and qualified appraiser.
The practice of email blast / text messaging should be strictly prohibited. This business model seeks the lowest fee, the
quickest turn time and does nothing to ensure the public is protected.
Documentation of the vetting of the appraiser should be kept with
each assignment by the AMC and provided to the VREAB upon request and/ or audit.
2. Appraisers should be given the opportunity to
negotiate a C& R Fee without consequences. Many AMC’s penalize the appraiser if they ask
for a higher fee or reassign the appraisal assignment.
Language should be
included with the C& R Fee determination that strictly prohibits this
practice and documentation of a higher fee request and documentation as to why
it was accepted / not accepted by the AMC should be kept for each assignment.
This information should be provided to the VREAB upon request or audit. Without
proper vetting of the appraiser, the AMC is supporting a low fee / quick turn
time model, which is not in compliance with the Dodd Frank Legislation or
Virginia statue. Paying an appraiser
less than what is needed to provide a quality report does not protect the
public in any way.
engagement letters should be presented to the appraiser before an order can be
accepted. How does the appraiser
know if the fee is C&R if they don’t know what the engagement letter
requires? Generic engagement letters that incorporate numerous lender
guidelines should be eliminated. The appraiser should be provided this
information without the need to access 3rd party sites, or click
links within an email.
AMC’s state on the engagement letter, you cannot accept the assignment if you
are on an exclusionary list. Isn’t this the role of the AMC to manage the
appraisal process? How does this
practice protect the public?
4. Ample time
for an appraiser to research a property must be given prior to acceptance of an
assignment. Some AMC’s allow as little as 2 hours to respond when directly
assigned to an appraiser. This is not
realistic as often times, the appraiser is not in areas where they can access
MLS and other data sources to research the property prior to acceptance.
Language should be included with the C& R Fees determination
that strictly prohibits this practice. Accepting an assignment without the
proper research is not in the interest of the protecting the public.
and / or Technology Fees should not be an appraiser
charges range from anywhere from $5 to $35 and are
Additionally, fees associated with the same 3rd party are
For example, the technology / pload fee for ABC Portal
varies depending on
the AMC the report is being sent to. How
can this be a legitament fee? How is
this fee in the best interest of the
Each appraiser has the ability to deliver an appraisal report in a
safe, secure and compliant manor without the use of 3rd.party. The
upload of an appraisal report is time consuming, and requires the record
keeping and maintenance of user names and passwords. The use of 3rd
party sites provides no benefit to the consumer or the appraiser. It only
increases the cost to the public.
Any AMC or lender who requires an appraisal to be delivered
through a 3rd party should do so at the expense of the AMC or lender,
not the appraiser or borrower. This fee should be prohibited from being passed
on to the borrower and appraiser as it does not provide any benefit to anyone
other than the AMC or lender. Where are the protections and benefits to the
6. Staff appraisers employed directly by an AMC are completing appraisals
locally in direct competition with local fee appraisers. The role of an AMC
is different than the role of an appraisal company / fee appraiser. The role of a fee appraiser is to provide an
unbiased opinion of value to protect the public. The role of an AMC is to
manage the appraisal process, not to perform the appraisal. Allowing an
employee of the AMC to perform an appraisal is not in the interest of
protecting the public. An AMC is hired by the lender and is not an
unbiased participant, thus resulting in a conflict of interest.
In addition to the above
AMC practices, VaCAP recommends the VREAB implement the following to protect
the public interest:
re-evaluation of C& R fees should be done at a minimum of every two years. Appraisal fees were stagnant for
many years. Periodic reviews to ensure appraisal fees remain customary and
reasonable is necessary to protect the public.
The definition of an AMC should
be expanded to specifically
include portals used by lenders directly. Many of these portals
same function as an AMC, only in electronic form. The
the Dodd Frank Legislation must be consistent to protect
Per Dodd Frank, an AMC is defined as:
MANAGEMENT COMPANY.—The term
‘appraisal management company’ means, in connection with valuing
collateralizing mortgage loans or mortgages incorporated into a
securitization, any external third party authorized either
by a creditor of a
credit transaction secured by a consumer’s principal dwelling or
other principal in the secondary mortgage markets,
that oversees a network or
panel of more
than 15 certified or licensed
appraisers in a State or 25 or more nationally
within a given Year.”
should be consistent with the Federal Statue which includes 3rd
The VREAB should have a system in place
to process complaints
of non- customary
and reasonable fees of unlicensed entities.
conducting business in Virginia in accordance
Virginia Statue that are not licensed directly through DPOR must
with all state statures. The VREAB should have a system in
place to process
complaints against those entities that are not required
to be licensed by DPOR.
The intent of all legislation is to protect the
public interest and everyone must
obey Virginia Statue to protect public
VaCAP encourages all industry
professionals that support the above initiatives to attend the special meeting
of the Virginia Real Estate Appraisal Board on January 12, 2016, at 10:00 AM, 9960
Mayland Dr. Richmond, VA 23233. If you
are unable to attend, VaCAP encourages the submission of commentary and
documentation to the Virginia Real Estate Appraisal Board at the above address.
This press release is a summary of a
letter sent to the VREAB on 01/07/2016 in request for commentary on customary
and reasonable fees.