29th February 2012

AGA Petitions Federal Reserve, CFPB

posted in Dodd-Frank C&R Topics |

On Capitol Hill, the American Guild of Appraisers (AGA) is petitioning the Federal Reserve Board and the Consumer Financial Protection Bureau to overturn a recently adopted rule that stands in opposition to regulations contained in the Dodd-Frank Act.

The AGA wrote the organization’s plea based on the assertion that the Fed’s new rule poses a threat to “the viability of professional appraisal practice and undermines the legitimacy of real estate appraisals.”

The legislation in question was put in place last year by the Fed, and the regulation allows appraisal management companies (AMCs) to cut fees for appraisers. In its petition, the AGA stated that AMCs control up to 80 percent of the appraisal market and that, by allowing such companies to pay appraisers only a fraction of customary and reasonable fees, the law makes it possible for AMCs to offer fees that are nearly 50 percent below prevailing appraisal rates.

Additionally, the AGA asserts that the issues the Dodd-Frank Act sought to resolve have worsened, affecting the overall reliability of residential real estate appraisals. Within Dodd-Frank, the appraisal regulation was vague, calling for rates that were “reasonable and customary.”

However, the AGA says that AMCs have been put in a position to abuse the rule. According to the AGA, the original law “specifically prohibits basing fees on the current practices of appraisal management companies,” but the Fed’s regulation provided a loophole for AMCs.

Peter Vidi, president of the AGA, noted of the group’s petition, “Under the regulation we are seeking to overturn, the borrower doesn’t save a penny but the appraiser gets a fee that is as much as 50 percent less than prevailing rates. What the borrower doesn’t know is that perhaps less than half of the fee that they are required to pay is actually going to the appraiser who performs the appraisal. The rest goes to the appraisal management company.”

Vidi went on to add, “AMC’s are often owned or controlled by lenders that make big profits without the borrower’s knowledge that his fee is an additional profit center for the lender or the subsidiary management company at the expense of the borrower.”

The AGA petition, which was filed by lawyers Matt Schneider and Ben Lamboitte of Garvey Schubert Barer, also accuses the Fed of failing to comply with the public commentary period that is typically mandated with any proposed rule. Schneider and the AGA allege that the Fed received over 1,400 comments in response to the rule after its adoption, and the organization’s legal team stated that “the Fed was obligated under the Administrative Procedure Act, to provide notice and opportunity for comment prior to adoption of the rule and that the Fed was further required to consider and address comments submitted as part of the rulemaking process.”

While the AGA, hopes that its petition will find an audience in Washington, D.C., Vidi was clear that the group will pursue legal action if it becomes the only alternative. “Suing the Federal Reserve is not something that the appraisal industry would do lightly, but there may be no other option. This is far too important an issue to appraisers and consumers to simply walk away. We are fighting for our livelihood and for the integrity of the work that we do. We ask all appraisers to join with us in this effort,” said Vidi.

As an affiliate of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and the Office of Professional Employees International Union (OPEIU), the AGA represents the interests of appraisers throughout the country. Michael Goodwin, international president for the OPEIU, spoke out in support of the AGA’s petition, stating, “We support concerted action by the American Guild of Appraisers to protect the integrity of professional appraisal practice and the profession.”

Comments are closed.



FREE REPORT INCLUDED:
3 Steps to get
More AMC Orders

SECURE & CONFIDENTIAL
Your email will NEVER be rented, traded or sold.
WE GUARANTEE YOUR CONFIDENTIALITY.
We hate spam just as much as you do.


E&O Insurance
Appraisers Club Appraisal Management Companies





Get More Orders - Private Appraisers Club
Get More Estate Work!
Divorce, Bankruptcy,
Date of Death and
Estate orders are
needed in your area!