Customary & Reasonable fees were all the buzz back in 2010. Then the conversations subsided. Appraisers had a whirlwind of refinance activity to distract them for a while. When interest rates ticked up, volume plummeted. Now every dollar counts more than ever. The sting is especially painful when volume has dropped precipitously and fees were cut simultaneously. That spells double trouble.
With the signing of the Financial Regulatory Reform Bill on July 21, 2010, also known as Dodd Frank, there were significant changes that affected the appraisal community.
Title XIV addresses appraisal fees:
CUSTOMARY AND REASONABLE FEES
Lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised. Evidence for such fees may be established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies shall exclude assignments ordered by known appraisal management companies.
Essentially Dodd Frank states that C&R may be determined by three methods:
- Government Fee Schedule
- Academic Study
- Independent private sector surveys
The great news is that every stakeholder has expressed renewed interest on the topic of C&R. Regulators, lenders and AMCs all want to know what is both customary and reasonable. Clearbox LLC recently updated their fee survey tools allowing appraisers to enter their fee schedules for free. And even better, once registered the appraiser can view the average fees for their coverage areas.
Clearbox has overlaid the VA fee schedule and has also engaged Roger Staiger III, adjunct professor at Georgetown University to perform an academic study. But first Clearbox is inviting you to input your data. That is why it is free, of course. Without your help it will be difficult to enforce C&R.
On the client side, they get a pretty nifty tool where they see an array of every county in the US with every GSE form. The general population is shown for each county along with the appraiser population for the county. The ratio of appraisers per population is pretty interesting all by itself. Then the mean, median, and mode is displayed. If you are a lender or AMC and wish to see a demo contact email@example.com.
Clearbox needs your help in making this issue viral. If you belong to a state coalition please spread the word. If you belong to a local chapter of a trade association please engage your peers. Without access to data, enforcement has less of a chance of occurring.
To enter your fees just go to www.clearbox.com and select "Sign Up". The next step is to choose the Basic Option and begin entering your fees. Thank you in advance for your participation in the fee survey. Your input matters!
Have any comments or would you like to submit content of your own? Email firstname.lastname@example.org.