Click to return to BOL home page
Banker Store Read A Reg BOL Insiders Career Connect Learning Connect Bankers Information Network



October 22
Advanced Visa Error Resolution;
Biran Crow

October 23
Advanced MasterCard Error Resolution;
Brian Crow

October 24
How to Audit Advertising - Compliance Issues Here, There, Everywhere!;
Patricia Cashman

October 29
Documenting an Applicant's Intent to be a Joint Applicant;
David Dickinson

November 4
Issues with Deceased Customers;
Mary Beth Guard and John Burnett

November 5
Vault Burglaries, Floods, Fires & Other Disasters;
Dave McGuinn



Topic Options
#1523429 - 03/17/11 02:52 PM New Appraisal Rules vs. AMCs and TIL Discl
Dutch Offline
100 Club

Registered: 11/28/05
Posts: 208
Since the new appraisal rules effective 4/1 have been planted in Regulation Z, I was wondering...are TILA disclosures themselves being impacted?

For example, for those banks that use AMCs, are there any issues that need to be considered in the way appraisal related fees are disclosed on TILA disclosures starting 4/1?

Top
Lending Compliance
#1523455 - 03/17/11 03:15 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Dutch]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 50412
Loc: Galveston, TX
"appraisal related fees are disclosed on TILA disclosures starting 4/1?"

Where are appraisal fees disclosed on a TILA disclosure?
_________________________
The opinions expressed are my own, take them or leave them.

Top
#1523575 - 03/17/11 05:17 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: rlcarey]
Dutch Offline
100 Club

Registered: 11/28/05
Posts: 208
RClarey: No they are not. I should have worded it better.

To clarify....We had heard some talk that for an AMC, that portion of the fee that is retained by the AMC (i.e. the portion that is not paid to the appraiser)might be considered a prepaid finance charge because it is not an appraisal fee per se (but rather the AMC's management fee), and is a fee that would not be paid in a comparable cash transaction.

I was wondering if anyone else had heard anything like this or not. Certainly we are hoping that the concensus is that the new appraisal rules have no impact on the TIL disclosure (whether intentional or not).

Any thoughts?

Top
#1523609 - 03/17/11 06:45 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Dutch]
Need Assistance Offline
100 Club

Registered: 10/06/09
Posts: 164
I had the same question a while back and I believe Dan Persful answered it "yes" we need to dislcose the portion paid to the AMC as a fiannce charge and the appraisal fee as not a finance charge. YOu can look back a few weeks under appraisers to double check that info.

I have discussed this with the AMC that we use and they will not disclosure the fee they pay the appraiser (they believe that is proprietary). I therefore cannot determine that the fee we are paying for the appraisal is customary and reasonable (because I have no idea what it is). I just don't see how I can continue to use the AMC.

Does anyone have solutions they are using for this? Tons of banks use and AMC, does anyone have an AMC that will disclose the fees? Or some other method? I'm lost and APril 1 is just around the corner.

Top
#1523682 - 03/18/11 08:49 AM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Need Assistance]
Dani York, CRCM Offline
Power Poster

Registered: 04/13/05
Posts: 3279
Loc: TN
A couple of things you might try:

1: Tell the AMC that the bank is required to segregate the fees on the HUD for RESPA compliance. It's not their job to tell your bank how to comply. Your bank is the one that will get cited and bear the brunt of any repercussions of their refusal to give you the segregated fees.

2: Maybe check your contract to see if their fee is spelled out there or just ask them what their fee is. We just signed up with an AMC and they charge a flat fee per appraisal. Our contract tells us what that fee is so we can back into the appraisal price by subtracting their fee from the total amount they tell us we need to collect from the borrower.


If that doesn't work, I'd start looking for another company. Be glad to give the name of the one we are using.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Top
#1525228 - 03/22/11 01:54 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Dani York, CRCM]
Dutch Offline
100 Club

Registered: 11/28/05
Posts: 208
Thanks for everyone's responses thus far. Is anyone out there concerning themselves with the notion of having to disclose the AMC "management fee" portion of the appraisal fee as a pre-paid finance charge?

I keep hearing differing opinions about whether this fee is considered a pre-paid finance charge or not. Keep in mind that we are billed one fee and pay just one fee to the AMC. It is the AMC that splits out the proceeds from there. Does anyone else have an opinion they would be willing to share?

We don't want to underdisclosure, but certainly do not want to make something out of this that it is not.

Top
#1525261 - 03/22/11 02:26 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Dutch]
Dani York, CRCM Offline
Power Poster

Registered: 04/13/05
Posts: 3279
Loc: TN
I'm in the camp that says the AMC fee is a finance charge. To the best of my knowledge, the borrower would not pay that fee in a cash comparable transaction. Though if someone can point me to where it is exempt in the reg, I would be very happy to remove it from my APR calculation. smile
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Top
#1525262 - 03/22/11 02:27 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Dani York, CRCM]
RR Joker Offline
10K Club

Registered: 11/15/02
Posts: 16386
Loc: The Swamp
It would seem logical, at least to me, that if you are paying a 3rd party to manage your appraisal process...their fee would be a ppfc.

As to it being in the regulation? I believe that section of the reg predates these new concepts and therefore, had not been considered.


Edited by RR joker (03/22/11 02:28 PM)
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Top
#1525338 - 03/22/11 03:10 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: RR Joker]
Dan Persfull Offline
10K Club

Registered: 08/28/02
Posts: 40949
Loc: Bloomington, IN
Quote:
Though if someone can point me to where it is exempt in the reg, I would be very happy to remove it from my APR calculation.


/Paragraph 4(c)(7).

1. Real estate or residential mortgage transaction charges. The list of charges in § 226.4(c)(7) applies both to residential mortgage transactions (which may include, for example, the purchase of a mobile home) and to other transactions secured by real estate. The fees are excluded from the finance charge even if the services for which the fees are imposed are performed by the creditor’s employees rather than by a third party. In addition, the cost of verifying or confirming information connected to the item is also excluded. For example, credit-report fees cover not only the cost of the report but also the cost of verifying information in the report. In all cases, charges excluded under § 226.4(c)(7) must be bona fide and reasonable.


The AMCs I have talked to perform quality checks and review the appraisal for accuracy and content. IMO this would fall under the above exemption.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Top
#1525490 - 03/22/11 05:05 PM Re: New Appraisal Rules vs. AMCs and TIL Discl [Re: Dan Persfull]
Dani York, CRCM Offline
Power Poster

Registered: 04/13/05
Posts: 3279
Loc: TN
Thanks Dan! You are a Reg Z encyclopedia! Is this from the commentary?
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Top


Moderator:  Andy Z