12th April 2011

Customary & Reasonable : enforcement 3 to 4 years away?

posted in Appraiser News |

It sounds like we are in another waiting game regarding customary & reasonable fees as noted in Dodd-Frank.

Key Notes:
* The minimal timeline set forth in the Dodd-Frank Act indicates that those rules may be promulgated within 18 months of July 21, 2011.

* After the rules are in final form, States have 36 months to implement the minimum requirements established by the rules for registration and supervision of AMCs. (The ASC may grant States up to a 12-month extension, subject to specific limited conditions set forth in the Dodd-Frank Act.)

Please read the entire article below:

Reprinted with permission from www.appraisernews.com

Reader’s Comments on Appraiser Fools Day, Customary & Reasonable Fees, AMCs and the Appraisal Profession

There is a lot of anger in the appraiser community as we move into mid April and it is “business as usual” in many (most?) parts of the country with no noticeable improvement in mortgage appraisal fees or basic working conditions with the Federal Reserve’s Final Rule Amending Regulation Z: Section 226.42 now in effect. Appraisers are angry at what appear to be blatant violations of the spirit, intent and letter of the Dodd-Frank Act and the manner in which AMCs can circumvent it as we discussed in the last newsletter. In many cases, appraisers are flatly rejecting assignments that they feel do not provide “customary and reasonable” fees and indicating to the AMC that they might report the AMC; in doing so, many are concerned about possibly being “blacklisted” and denied future work.

We spoke with the Appraiser Subcommittee’s Claire Brooks yesterday about the matter and here are excerpts of what she had to say:

“The appropriate agency to receive your concern about a creditor’s compliance with the Truth in Lending Act (TILA), including the creditor or the creditor’s agent paying an appraiser a customary and responsible fee, is the agency that enforces TILA for the creditor. If the agent or appraisal management company (AMC) is affiliated with a federally-regulated creditor, the appropriate agency to receive complaints against the AMC is the affiliated creditor’s federal regulator. If the agent (or AMC) is not affiliated with a federally-regulated creditor, the appropriate agency to receive the complaint is the Federal Trade Commission. There are two websites that you can use to find the federal regulator for a creditor.

Federal Reserve System – National Information Center website: National Information Center (NIC); and
FDIC website at the “Bank Find” webpage: FDIC: Bank Find.

Questions regarding the appropriate interpretation of the Truth in Lending Act, including those on customary and reasonable fees, should be directed to the Federal Reserve Board at Federal Reserve Board: Contact Us.

The following provides general information on the Dodd-Frank Act provisions regarding appraisal management companies (AMCs) and the implementation process for those AMC provisions:

First, the Federal financial institution regulators and the Bureau of Consumer Financial Protection will jointly promulgate rules setting forth the minimum requirements to be applied by the States in registering and supervising AMCs. The minimal timeline set forth in the Dodd-Frank Act indicates that those rules may be promulgated within 18 months of July 21, 2011.

After the rules are in final form, States have 36 months to implement the minimum requirements established by the rules for registration and supervision of AMCs. (The ASC may grant States up to a 12-month extension, subject to specific limited conditions set forth in the Dodd-Frank Act.)

Once the States have implemented the minimum requirements, AMC’s must be registered with the State agency in order to perform appraisal services for federally related transactions. AMCs that are subsidiaries, owned and controlled by a financial institution regulated by a Federal financial institution regulatory agency, shall not be required to register with a State. (Note: the exemption from State registration for these AMCs does not apply to registration of AMCs on the Registry to be established by the ASC.)

ASC staff anticipates that the AMC Registry and annual AMC registry fees will be implemented along with the State’s establishment of AMC registration in accordance with federal law as set forth above. As details and information become available, they will be posted on the ASC website at www.asc.gov”

Yesterday, the U.S. Treasury Department released a statement on a joint set of principles for the Consumer Financial Protection Bureau (CFPB) and the Presidential Initiative Working Group of the National Association of Attorneys General (NAAG). Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB is quoted in the statement as saying that: “I anticipate that our cooperation will have a profound effect on the consumer financial markets…Together…we can ensure that more institutions follow the rules”. While the CFPB does not appear as though it will be directly involved in matters such as C & R appraiser fees, it would not surprise us if Ms. Warren took an interest in these matters.

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