30th March 2011

April 1st is right around the corner

posted in Dodd-Frank C&R Topics |

Do you think you will see much change regarding Customary and Reasonable fees come April 1st? It sounds like we are going to have to take up law school to straighten out this question.

Below is an article I received from WorkingRE.com on the subject of Customary & Reasonable Fees.

Challenging Low Fees

By David Brauner, Editor

As the April 1 implementation date of Dodd-Frank looms, attorneys at the Federal Reserve direct appraisers to a method for challenging low fees (see last issue: Customary Fees: Good, Bad and Uncertain). Here’s where to find the information.

According to Federal Reserve Board attorneys, Section 312(c) of Dodd-Frank (reprinted below), lays out which agencies regulate which types of transactions- this is the “where” to properly file complaints. It revises section 3 of the Federal Deposit Insurance Act.

Section 1100 (A)(8) of Dodd-Frank (below) sheds light on the authority under which provisions of the Act are enforced. This Section revises the enforcement provisions of the Truth in Lending Act (with cross references the FDI Act), according to a Board spokesperson.

With implementation of Dodd-Frank only a few days away a new chapter begins. A Federal Reserve Board attorney told WRE in a recent interview that according to the Interim Final Rule (IFR) recent market fees do not necessarily meet the first presumption of compliance (customary). The Board attorney said, “Someone can rebut the presumption(s) of compliance with evidence that a fee is not reasonable or customary for a reason other than a condition addressed in a presumption of compliance. What evidence supports an allegation depends on the facts and circumstances of a particular case. The rule addresses compensation paid in a particular geographic market.’” (Read the article here: Fed Board Update: Customary and Reasonable Fees.)

The language addressing how and where to rebut low fees is reprinted below. In an interview at the release of the IFR, a Board attorney also pointed to the following language from the IFR, which she seemed to interpret as also reinforcing the notion that recent fees do not necessarily meet the “customary” test under the first presumption: “[T]he Board understands that some AMCs have begun requiring fee appraisers to agree that the fee is ‘customary and reasonable’ as a condition of obtaining the appraisal assignment. In these situations, the Board believes that an appraiser’s agreement that a fee is ‘customary and reasonable’ is an unreliable measure of whether the fee in fact meets the statutory standard.”

Appraisers are reporting, with greater regularity now as we move nearer to the Dodd-Frank implementation date, receiving inquiries from AMCs as to what their “customary and reasonable fees” will be come April 1. Many appraisers are tapping into the Working RE/OREP.org survey results for data. The penalties for noncompliance are stiff: $10,000 for each day any such violation continues and $20,000 civil penalties for subsequent violations. For many appraisers, of course, a return to customary and reasonable fees means staying in business.

WorkingRE.com is published by OREP.org, providing low-cost E&O insurance for appraisers, agents/brokers and other real estate professionals.

There are currently 4 responses to “April 1st is right around the corner”

Why not let us know what you think by adding your own comment! Your opinion is as valid as anyone elses, so come on... let us know what you think.

  1. 1 /*On March 30th, 2011*/, Payback Is Hell said:

    Only one thing will change after April 1st. Appraisers will FINALLY see that banks will continue to rape them via the AMCs that they own. Challenging the low fees that AMCs will continue to pay will be pointless however because banks once again stacked the deck in their favor.

    Banks will continue to rape both appraisers and homeowners until the following two things take place:

    DOCUMENTARY
    The documentary, “HVCC: Rape Of The American Homeowner” will be available through Netflix. The banking lobby and Andrew Cuomo will receive special signed editions of the movie.

    SEVERE APPRAISER SHORTAGE
    Appraisers will be offered far more lucrative work through a national company that is currently looking to hire tens of thousands of individuals with appraisal skills. One can only assume that AMCs will force their employees to train as appraisers to do their own appraisal work once this takes place.

    Hopefully the banks enjoyed their run on the appraisal profession. Unless their AVM business plan is completed soon they will be up the creek without an appraiser.

    Don’t think that you’ve lost yet appraisers and homeowners. Banks stabbed theirselves in the back and the real fun is just beginning.

  2. 2 /*On March 31st, 2011*/, sandiegohelp said:

    I have to agree. The outlook is not good for April Fools Day! But I will at least find out all the details and let everyone know. Most likely we can’t do anything until we unite and refuse low fees.

  3. 3 /*On March 31st, 2011*/, outtahere said:

    this is a low job and a no-win situation for appraisers. A reasonable profit margin has been removed by AMC and banks. It is a joke these crooks make commentson how fees will increase to the borrower…there are thouSands of fees and commsissions on the table during a simple refi..the $500 underwriter fee…it is a raceto the bottom..I am sick of it..after 12 years I am done with this POS career…time to move on

  4. 4 /*On April 4th, 2011*/, sandiegohelp said:

    Outtahere,
    I know what you are saying. The opportunities just seem to be getting worse all the time. I got my broker license a few months back, I might just have to start looking in to selling homes at this point.

    Bryan

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