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#2112054 - 12/23/16 05:05 PM Appraisal Management Company
CSB98 Offline
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Wisconsin
We are looking to use an appraisal management company for the ordering and review of our appraisals. They have a system worked out with the appraisers so that we are paying a flat fee for each order that we request. This fee includes the ordering and reviewing of the appraisal. The fee is not broken out so that it states $XX for the appraisal and $XX for the review.

How do we disclose this on the LE and CD? Do we simply put "Appraisal/Appraisal Review" as the description (or something to that effect)? I'm concerned that auditors/examiners may come back and say that theses fees should be split and show separately on the disclosures.

Any direction would be appreciated. Thanks!

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TRID - TILA/RESPA Integrated Disclosures Rule
#2112059 - 12/23/16 05:25 PM Re: Appraisal Management Company CSB98
rlcarey Online
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rlcarey
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Galveston, TX
While such a fee may be itemized, there is no requirement to do so.

From the preamble to TRID:

Several national trade association commenters representing real property appraisers, as well as a number of individual appraiser commenters, stated that any charge for an appraisal management company (AMC) should be required to be separately itemized in § 1026.37(f)(2). As noted in the Bureau’s proposal, section 1475 of the Dodd-Frank Act permits the optional disclosure of the charges made by an AMC, but does not require separate itemization. See 77 FR 51116, 51134 (August 23, 2012).

Of course, investors have their own requirements.
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#2112984 - 01/04/17 04:45 PM Re: Appraisal Management Company CSB98
ConfusedByCompliance Offline
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Joined: Dec 2013
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Virginia
To add on to this, we are in a similar situation in looking to use an appraisal management company. Very early in the process but one company we looked at states that their turn around time for getting a quote for a residential appraisal is 2-4 days. With the Loan Estimate timing how would you ever be able to make this work? Anyone have experience on this?

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#2113017 - 01/04/17 05:53 PM Re: Appraisal Management Company CSB98
Truffle Royale Offline

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Don't use that company? Honestly, this isn't new so if they cannot get you a quote in a timely fashion, move on to another company that can.

Flipping the coin over, why do you need an estimate for a specific property appraisal? When your bank orders appraisals don't you just use a single estimate to cover all properties? Ex: Appraisal $400 is what I see on the vast majority of LEs. The appraisals run from $350 to $400 so we're covered. You should be able to do the same thing with an appraisal management company too.

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#2113023 - 01/04/17 06:16 PM Re: Appraisal Management Company CSB98
burke116 Offline
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RVA
Quote:
Flipping the coin over, why do you need an estimate for a specific property appraisal? When your bank orders appraisals don't you just use a single estimate to cover all properties? Ex: Appraisal $400 is what I see on the vast majority of LEs. The appraisals run from $350 to $400 so we're covered.

We've been under the assumption that this practice is not in good faith (to disclose a one-size-fits-all without taking the property or other charge-related variables into consideration when estimating the fee).

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#2113026 - 01/04/17 06:21 PM Re: Appraisal Management Company CSB98
ConfusedByCompliance Offline
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Virginia
I didn't think you could estimate an appraisal? We also do a lot of 'odd' requests where the one size fits all approach wouldn't work. We may have a home on 100 acres in the middle of nowhere and the next loan be a brich ranch on a half acre. The prices we have in our markets are so different.

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#2113045 - 01/04/17 07:49 PM Re: Appraisal Management Company CSB98
Truffle Royale Offline

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No you couldn't generalize a 100 acre middle of nowhere property with an average sized city lot home.
But how is it not in good faith to quote an average appraisal price for an average property?
The loan estimate is just that...an estimate of costs.
Waiting for the a quote on a specific property is something that you need for a closing disclosure, not a loan estimate.

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#2113075 - 01/04/17 09:39 PM Re: Appraisal Management Company CSB98
John Burnett Offline
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John Burnett
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Cape Cod
The risk is that your average price will be low half the time and high half the time. If it's high on the LE, no harm, no foul as long as your estimate was in good faith. But that and a dollar will buy you no more than a cheap cup of coffee if your estimate is low, since it's a 0% tolerance service. Lenders who want to reduce the downside risk try to get a commitment on cost from local appraisers.
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#2113091 - 01/05/17 12:01 AM Re: Appraisal Management Company CSB98
Truffle Royale Offline

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I really don't know of many banks that are getting a commitment prior to issuing an LE, John. I know that the banks have a list of appraisers who state that they will do a 'normal' appraisal within a certain geographical area for $x. Competition dictates that all appraisers in that area stay in that $x range. That's the amount that I'm saying is 'average' and the one that is used on the LEs.

Now, if the property is not 'average' then it definitely behooves the lending institution to contact an appraiser for a truly good faith estimate of what it will cost to appraise that property.

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#2113112 - 01/05/17 02:36 PM Re: Appraisal Management Company CSB98
MonicaMc Offline
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Land of Oz
This year we switched from an AMC who had set us a list of fees that we had to pay the appraisers to a self-managing software. We took into account many, many, many appraiser fee schedules in our areas and set our own fee schedule. We pay each appraiser the same fee for the same types of appraisals. Every now and then we have an appraiser request a higher fee for a complex or rural property so we do a re-disclosure for the higher fee.

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#2113118 - 01/05/17 03:02 PM Re: Appraisal Management Company CSB98
Truffle Royale Offline

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ah...you can't redisclose for a higher fee like that MonicaMc. You don't have a valid changed circumstance.

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#2113126 - 01/05/17 03:21 PM Re: Appraisal Management Company Truffle Royale
MonicaMc Offline
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Land of Oz
We do have a changed circumstance. We have a set fee we pay every appraiser and if we re-disclose its due to complexity or something similar. We have had a full exam as well as our QC before and after closing every week/month and we have had no problems. We also had the same procedures when we were with the AMC for years.

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#2113132 - 01/05/17 03:37 PM Re: Appraisal Management Company CSB98
Truffle Royale Offline

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So you're saying that the valid cc is information not known at time of application? What if you know from the get-go that the property is more complex? Do you go with a higher fee from the beginning then?

As for passing exams, I hear you. I just caution you that what flew once may not do so the next time. Been there...done that...got the t-shirt, unfortunately. frown

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#2113154 - 01/05/17 04:18 PM Re: Appraisal Management Company Truffle Royale
MonicaMc Offline
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MonicaMc
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Land of Oz
Quote:
So you're saying that the valid cc is information not known at time of application?

Yes.
Quote:
What if you know from the get-go that the property is more complex? Do you go with a higher fee from the beginning then?

We do not. We do not pick our appraisers and most appraisers will not charge the extra amount. So it is truly info we do not know upfront. We do not know a whole lot about the property itself and we do not know who the appraiser will be.
Its not something that happens regularly. We work a lot in rural KS and NE and 98% of the time our fee is it.

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#2113172 - 01/05/17 05:43 PM Re: Appraisal Management Company CSB98
Truffle Royale Offline

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I'm confused by your answer, MonicaMc, specifically when you state: "So it is truly info we do not know upfront." Are you referring to the additional charge being the 'info' in that statement? Because the fact that the appraiser will charge more is NOT a valid cc.

The fact that the property calls for an additional charge due to information you didn't know at the time of application would be something like roof repair or water in the basement that would call for a recert, etc.

We work in a lot of rural areas too. So at the time of preparing the original LE we have to take into account if the property might require a more expensive appraisal or not. This is the issue John was pointing to in his post above.

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#2113657 - 01/10/17 05:06 PM Re: Appraisal Management Company CSB98
Onehotidea Offline
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Joined: Jul 2015
Posts: 36
Minnesota
Quick question.. The loan estimate stated that a $550 appraisal fee would be charged, but the closing disclosure is stating that instead of an appraisal being ordered, an in-house evaluation was done and charged $75. The field that the $75 is charged is a no-tolerance category, thus resulting in the cure. would this be correct even know it was in the interest of the consumer??
Thank you!

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