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| Four appraiser trade groups are calling for the U.S. Department of Housing and Urban Development to lighten up on its fee restrictions for appraisal management companies. The groups claim that AMCs are sacrificing quality on FHAÂ loans for price.
The coalition of trade groups issued a letter to HUD Secretary Shaun Donovan, according to a news release today. The groups are the Appraisal Institute, American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers and the National Association of Independent Fee Appraisers. They claim that HUD’s Mortgagee Letter 97-46 — which governs appraisal fees and the use of third-party entities providing appraisal and management services — has the unintended consequence of misinforming borrowers about appraisal costs in mortgage transactions. The problem is that HUD has placed restrictions on fees even as reliance on AMCs has been growing with the implementation of the Home Valuation Code of Conduct. HUD’s new restrictions require that appraisal fees charged be limited to the actual amount paid to an appraiser by the AMC. As local appraisers forego FHA business, appraisal management firms are relying on less expensive appraisers from distant locations with less experience and training. “The restriction on total management fees to ‘no more than’ the customary fee for an appraisal has driven many competent and experienced appraisers away from FHA and other mortgage programs,” the letter stated. “The loss of these seasoned professionals is adding ‘unnecessary and substantial risk’ to the FHA program.” The trade groups are also asking HUD to ban inappropriate practices by AMCs such as hiring appraisers based on price instead of experience and turnaround time. |
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