Real estate appraisers have submitted a petition that claims a regulation on reasonable and customary fees was improperly implemented and doesn’t follow the mandate of the law it was implemented through.
Appraisers are requesting reconsideration of some elements of an interim final rule from the Federal Reserve and the Consumer Financial Protection Bureau.
The regulators implemented the rule as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
But appraisers claim that that rule has not properly followed the Dodd-Frank legislative mandate when it comes to the establishment of reasonable and customary fees. They also say that the Fed didn’t provide notice and the opportunity for comment as required by the Administrative Procedure Act.
So the American Guild of Appraisers/OPEIU Guild 44 met with Sen. Ben Cardin (D-Md.) to discuss a petition it filed requesting reconsideration.
AGA is a national organization of real estate appraisers affiliated with the AFL-CIO’s Office and Professional Employees International Union.
Congress wrote the law to address, among a multitude of other financial services issues, appraisal management companies that have been dominating the market and allegedly pressuring appraisers to accept assignments with unreasonable requirements and unreasonably low fees. Dodd-Frank specifically prohibits charging appraisal fees based on the current practices of appraisal management companies.
“Last year the Fed adopted a rule that allows appraisal management companies that control up to 80 percent of residential appraisals to pay appraisers a fraction of what a customary and reasonable fee would be as defined in the law, sometimes as much as 50 percent or more below the prevailing rates,” the Office and Professional Employees International Union stated. “As a result, industry experts report, the problems that Congress sought to address have been exacerbated. And the reliability of residential real estate appraisals is once again subject to question.”
The petition outlines areas where the Dodd-Frank legislative mandate wasn’t properly followed.
The guild says that the regulation “threatens the viability of professional appraisal practice and undermines the legitimacy of real estate appraisals relied on by lenders in making residential mortgage loans.”
“For the appraisal management companies and their owners there is well over $100 million annually at stake,” AGA President Peter Vidi stated. “For the taxpayer who is left holding the bag when bad lending leads to defaults and for the borrower who often overpays for a home, this is a serious matter. For real estate appraisers, this one of several related issues that will determine the future of the appraisal profession.”
