This question was asked in a recent New York Times article. The article goes on:
SHOULD you care about how much money your appraiser makes?
That question is at the heart of a dispute in the mortgage industry, pitting independent appraisers against established banks, which in recent years have built vast networks of affiliated appraisers, through appraisal management companies.
Appraisers who work on behalf of these companies typically receive less pay than those who do not. Some appraisers say the lower fees mean consumers are less likely to get a high-quality appraisal, which could jeopardize their loans.
It is a claim with which banks strenuously disagree. “Obviously, it’s in a lender’s best interest to have the most accurate appraisal possible,” said Terry Francisco, a spokesman for Bank of America, “and it’s in the homeowner’s best interest, too.”
Borrowers, though, pay the same amount no matter who orders or conducts an appraisal. In the New York region, for example, an appraisal of a single-family home will cost around $300 to $500. But independent appraisers say that when a big bank orders an appraisal, it typically pays the appraiser about $200 of that fee and pockets the rest.
Lenders are essentially arguing that a home-owner will receive the same quality of appraisal, no matter how much the appraiser is paid. Color me skeptical. Somehow I think an appraiser getting paid $500 an appraisal is going to create a higher quality appraisal, than an appraiser gettting $200.
Update: In addition, a blogger at WalletPop had this to say about the article:
Here’s what Congress should do: Require that lenders disclose to home buyers how much of the money they pay for the appraisal is actually used for the appraisal — and how much is just skimmed off for an undisclosed profit for the bank.
Given all the cash that United States taxpayer has poured into Bank of America, I think we deserve better than to be charged $600 for a $200 service and not told about the difference. There’s is no way in hell that lenders should be allowed to profit by paying a third party to conduct the appraisal without that being disclosed to the consumer. That just seems obvious. There’s nothing wrong with a lender paying $200 for a third-party appraisal and charging the consumer $600 for it: But the consumer should be told that that’s what’s happening.
The article also included this cool graph: