A regulation that was adopted in Louisiana restrained price competition among appraisers, according to a legal action that was filed against the state’s appraisal board.
The
Louisiana Real Estate Appraisers Board, a state agency controlled by licensed real estate appraisers, adopted a regulation that became effective in November 2013.
The regulation
implemented a requirement that appraisal management companies pay appraisers
“customary and reasonable” fees — allegedly an unlawful restriction of price competition.
In a complaint being filed with
an administrative law judge, the Federal Trade Commission claims the state agency unlawfully restrained price competition.
While Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 rules enabled states to regulate and license AMCs, they didn’t require states or appraiser licensing agencies to impose standards for customary and reasonable fee requirements beyond what is required by federal law.
The Dodd-Frank rules also don’t set customary and reasonable fees at any particular level.
The state board’s regulations exceeded the scope of the federal mandate by requiring that appraisal fees are at least the median fees identified in survey reports commissioned and published by the board.
Louisiana’s appraisal board then investigated and sanctioned companies that paid fees less than specified levels.
“The Louisiana appraisers board limits the freedom of individual appraisers and their customers to engage in bona fide negotiations to set appraisal fees for real estate appraisals in Louisiana,” the FTC stated in a news release.
FTC
Acting Director of the Bureau of Competition Abbott Lipsky cited a Supreme Court decision in North Carolina State Board of Dental Examiners.
The judge will
review the complaint and render an initial decision.
