On December 27, the American Society of Appraisers, together with the National Association of Independent Fee Appraisers (NAIFA), the Appraisal Institute (AI) and the American Society of Farm Managers and Rural Appraisers (ASFMRA), filed reply comments with the Federal Reserve regarding its proposed Appraiser Independence Interim Final Regulations. Of utmost importance to ASA and our partners was concern over the potential for “the consideration of fees paid by AMCs when adhering to the first presumption of compliance with the customary and reasonable fee regulations,” which uses a series of factors in determining whether the fee paid to an appraiser is appropriate under the law and regulations. This concern arose from commentary provided by the Fed in its Interim Rule which stated that determining whether an appraisal fee is customary and reasonable, “does not require that a creditor use third-party information that excludes appraisals ordered by AMCs.”
Also addressed in the letter was the appropriateness of safe harbors for reliance upon third-party fee studies and surveys which rely on generally accepted survey methodologies, and a recommendation that the Fed, using its RESPA authority, require separate disclosure of appraisal fees and AMC fees in this or a subsequent rulemaking as a matter of consumer protection and to further ensure that appraisers receive customary and reasonable fees. The letter also directly addresses over a dozen questions raised by the Fed as part of the rulemaking process on a variety of issues, from the extension of conflicts of interest prohibitions to AVMs, to outcome-based appraiser compensation, to the consideration of professional designations as part of a determination of the reasonableness of fees.