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TAVMA Asks for Delay in Fee Provision of Frank-Dodd

On August 25, 2010, The Title/Appraisal Vendor Management Association (TAVMA) sent a letter to the Federal Reserve Board (FRB) requesting that implementation of the customary and reasonable fee provision in Title XIV of the Frank-Dodd act be delayed.  The fine folks at Appraisal Scoop have a copy of the letter here.

In their letter, TAVMA states that “it is unclear whether the ‘customary and reasonable’ provision should be adopted in the 90 day interim final regulations.”  TAVMA believes this portion of the legislation should not be implemented in the 90 days because it is not an appraisal independence requirement.  Further, “customary and reasonable” is a vague standard lacking any coherent definition.

In their letter, TAVMA seems to support the reasonable and customary fee language used by the US Department of Housing and Urban Development (HUD) noting that the agency permits fee flexibility depending on several variables.  TAVMA otherwise believes there are “no readily available authoritative surveys to gauge what constitutes a customary and reasonable fee from one jurisdiction to the next.”  While one might consider the US Department of Veterans Affairs (VA) an authority, TAVMA argues that this appraisal fee schedule produces fees higher than many consumers expect to pay in a mortgage transaction.

Comments
  1. Chuck Robertson

    TAVMA – Totally Asinine Vampires Massacreing Appraisers!

    Of course they are nitpicking about anything that will pay appraisers what they are really worth and expose their greedy practices which provide them with all of the profit and their clients with inferior reports. Not that good appraisers still don’t do a good job no matter how bad they are ripped off, but the inexperienced practitioners that are taking the dregs offered by these scalawags are creating valuation problems that will come back to haunt the market in a few years.

    All because that power grabbing New York State Attorney General who is always seeking the spotlight for his political advancement, and who almost ruined FHA during his tenure there, thought he was smart enough to change the whole valuation industry without any input from those who actually work in it. The HVCC despite its efforts to take away appraiser intimidation, has done nothing of the kind.

    I was discussing this with a lender just this past week and complained that the AMCs have taken the place of the lenders in putting pressure on the appraisers. He laughed and said that was because the lenders are putting pressure on the AMCs. If they don’t perform, the lenders will go somewhere else.

    How’s that different from what we had before?

  2. Tim Gilbert

    Sad but not unexpected that AMC’s fear being treated as appraisers have over the past year+ under the present system where an entity believes it is entitled to a healthy portion of a fee for doing none of the work

  3. Tom Glenn

    HUD 1 statement (” Appraisal FEE Line” data (for the last 10 years) can be used as proof of Appraisal Fee. And of course for the last few years that fee “managed” by the AMC’s have been north of $600. Far higher than VA could ever be.

    Thanks TAVMA for helping out with the large “Appraisal Fee” in the data research.

  4. Jack

    Regarding the millions of HUD-1 statements from real estate settlements – that’s where the Fed can get all the info on customary appraisal fees:

    Here is the contact information for the person at the Fed that is handling the Interim rule-making on appraiser independence (including customary & reasonable fees):

    Ms. Sandra Braunstein

    Director

    Division of Consumer and Community Affairs

    Federal Reserve Board

    1709 New York Avenue, NW

    Washington, DC 20006

    Please, everyone, write !! Make TAVMA completely irrelevant !!

  5. Craig Bryan

    Hey, TAVMA…it’s law. Nothing for you to prepare for, except pay the appraiser the rightful fee (reasonable and customary), not the penny-pinch fees we’ve been getting, while you and the industry try to drive us out of business. The appraisal fee schedule doesn’t cause consumers to pay too much…it’s your fee added on top of it. Appraisal fees were accepted universally as being reasonable, until you got into the picture. No problem if the appraisers can stick together (for once). Just stop accepting the AMC fee schedule, either now to show we mean business, or on the original stated inception date of the new law.

  6. Tim in Fla

    I was kinda expecting this. With an election at hand TAVMA is hoping that a change in the composition of the governing bodies will result in a repeal the Financial Regulations Bill. This would take a great degree of effort but when you only have one card to play; which is stall for time and hope for policy change, what else can you do. It never ceases to amaze me at what lengths these greedy paper shufflers will go to protect their interests over the consumer and their own clients.

  7. JEFF W

    Funny how AMC’s pay one flat fee for 1004′s in my area irregardless of complexity or location. For years every single 1004 order comes over at the same exact fee.

    Now the AMC’s are trying to say it is too complex a situation to have a single fee for 1004′s in a given area. This is amazing – as they never had this problem before as they paid the same low, flat, below market fee on every single order in the past – and I never received a higher fee due to “complexity”

  8. SEBASTIAN

    THIS IS NOT EVEN FUNNY. I SPOKE WITH TAVMA FEW TIMES ON THE PHONE AND THEY ARE COMPLETE SCUM, ALSO THEY CALL THEM SELF “NON PROFIT ORGANIZATION ” IS THIS A JOKE ??? THEY ARE SUCKING BLOOD OUT OF ME AND COSTUMERS FOR THE PAST YEAR. HVCC IS A SCAM AND I DON’T UNDERSTAND HOW TAVMA IS EVEN ALLOWED TO HAVE ANY INPUT OR ANYTHING TO SAY. THESE GUYS DON’T EVEN KNOW WHAT APPRAISING IS ALL ABOUT. WHAT WE HAVE HERE IS BUNCH OF FREE LOADERS LIKE FLEAS SUCKING THE BLOOD OUT OF NOT ONLY APPRAISERS BUT COSTUMERS AS WELL. HOW IS THAT LEGAL AND HOW CAN ONE CALL THEM SELVES NON PROFIT WHERE CLEARLY THIS SOUNDS LIKE AN EXTORTION. THESE PEOPLE ARE SCUM . WHERE IS THE GOVERNMENT ON THIS? THEY JUST LET US HANG AND ALLOW TO BE TAKEN ADVANTAGE OF ALL THANKS TO CUMO AND HIS OWN GOALS FOR WHICH WE WOULD SACRIFICE HONESTLY WORKING PEOPLE. THIS IS NOT AMERICA, THIS SOUNDS MORE LIKE CORRUPTED MEXICAN GOV. AND IS HAPPENING HERE RIGHT ON FRONT OF US THE QUESTION IS AGAIN: WHERE IS WASHINGTON ON THIS ?

  9. Scott

    Yes, AMC’s are a microcosm of the new American way…take a cut of a cut of someone else’s cut for producing absolutely nothing. Don’t produce anything, just ‘manage’ someone else’s work. But what is most sad is that government forced the decline in fees with regulation, and regulation is what we must now rely on for an increase in fees. Quite frankly, it is no longer a business when you have to rely on government regulation for your income. That is not capitalism. Be prepared to be a government employee if you expect to remain an appraiser for too long.

  10. I think it is very simple……AMC’s “MUST” quote fees changed as: (1) to AMC $ and (2) paid to appraiser $….. (underwriter) all loan papers must have a paid invoice from appraiser…..before loan can close…. and given to the borrower…..this would be a stright up front fee to the consumer…truth in lending laws…..no hiding behind “all those fees” and indicating that it is the appraiser charging the fees….not the lender,bank,morgage broker…….”TRUTH IN LENDING”…WHO IS BEING PAID WHAT…..NO HIDING THE FEES…..

  11. Andy

    Every industry changes over time, and appraising is no exception. Many appraisers did not notice the consolidation of banks over the last 20 years, or what that might mean for their profession.

    Lenders are free to spend their money any way they like. Ask yourself this: why is it that banks no longer deal directly with appraisers? If you can’t answer this question, you do not understand your customer and are sure to lose their (direct) business.

    Appraisers have always been, and will always be free to refuse work.

    I think you appraisers aren’t mad at TAVMA, you’re mad at the younger and leaner appraisers who apparently are more competitive.

  12. Andy

    Perhaps the government can set ‘customary and reasonable’ prices for houses too; then we wouldn’t even need appraisers!

    Oh, that’s a bad idea?

    We don’t want government to set housing prices.
    We don’t want government to set appraisal prices.
    We don’t want them to set prices for gasoline, software, hardware, E&O insurance, tires, cars, GPS devices, how much you pay your assistant, or what you spend for a digital camera.
    Any government price control is loss of freedom of choice between two otherwise willing parties.

    Every appraiser has always been free to refuse every assignment that had a ‘low’ fee. Do not hate appraisers who elect to do business with AMCs. If you do, you have most likely taken your client’s business for granted and are unstandably inclined to lose that business.

    Appraising is a valued institution and of the greatest importance. It is shameful how many AMC made it worse on appraisers by passing on the heat to pump values. It is a shame how some AMCs would order reports with predetemined values (” Do not complete if it won’t come in at least $100k” for example). It is shameful how AMCs would go back after the order was completed and ask for another $10,000, or consider changing the subject condition from fair to average so a loan would go through. AMCs have been guilty of these types of practices and I think they should be brought to justice for those practices which sure seem criminal to me.

    Those are good reasons to dislike AMCs, but the matter of fees is very different. Appraisers understand markets as well as any other profession.

    ECON 101 – When you have decreased demand (fewer banks/ potential customers), price goes down. THAT SIMPLE.

  13. Tin in Fla

    Whats even more simple;

    Inapproriate compensation structures always lead to manipulation and fraudulent behavior.

    Business Managment 101

    It was actually the deregulation in the finance industry that brought us to this point. Manipulation of the system with big banking and First American Corp conspiring to corner the valuation services market led to the artifically deflated actual fees paid to the appraiser. The consumer was fleeced in more ways than one.

    Its no wonder that when third party managment is involved some crisis or tradgedy happens soon enough. The flight that crashed in Buffalo that killed all those people comes to mind. Pilots were managed by a third party which was outsorced by the big airlines to cover the regional routes. They used inexperienced pilots, low pay structure and long hours….which led to that sorrowfull incident. Note this outsourced managed struture was not regulated.

    TAVMA and their members, as well as the banks and First American should be investigated under RICCO.

    Supply and demand only works when there is no artificial influence and market forces are left to their natural actions. We don’t have that in the valuation services industry. Again, AMC’s for years were unregulated.

    I am all for regulation of the highest degree of these criminals. But what I wish more for mostly is a return to the 1989 regulations established under TITLE XI. Technology has reached the point that banks and lenders can easily manage valuations through portal systems and in house QC. The AMC model is not sustainable if the consumer (borrower) becomes more informed.
    TAVMA is just the lobbying arm and I recognize that. However, I am also agains’t lobbying groups that do not represent the consumer only the profiteer’s.

  14. Andrew in Virginia

    Amc’s have essentually taken over the functions of lenders i.e. the ordering, management, and review of appraisals. Why are appraisers now ( and have been since the birth of the AMC ) asked to pay for this function ? Our insurance cost have increased, our data source cost have increased, the price of gas has increased, software companies such as ACI have started charging “credits” on top of anual “tech support” ( what a joke ), we are charged upload fees, its simply getting ridiculous.

    And yes, Andy sometimes were are our worst enemies when it comes to accepting lower fees but most of us have families to feed and weve had to “take it” up until now. If we didnt, we would esentually be blacklisted. Thank God somebody is listing to us. I beleive in capitalizim too but its not perfect. I would like to see a government clearing house take over and end the AMC model, much like the VA’s system.

  15. I think it is very simple……AMC’s “MUST” quote fees changed as: (1) to AMC $ and (2) paid to appraiser $….. (underwriter) all loan papers must have a paid invoice from appraiser…..before loan can close…. and given to the borrower…..this would be a stright up front fee to the consumer…truth in lending laws…..no hiding behind “all those fees” and indicating that it is the appraiser charging the fees….not the lender,bank,morgage broker…….”TRUTH IN LENDING”…WHO IS BEING PAID WHAT…..NO HIDING THE FEES…..

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