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Comment on Financial Reform Implementation


August 17, 2010

To Whom It May Concern:

Hello,

I am so happy to see some formal language in support of the appraiser and of AMC regulation. Here are some of my comments on the effects of HVCC, and hopes for the new financial reform. Please feel free to contact me with any questions.

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The HVCC brought the issue of 'pressuring appraiser's for a value', to the forefront, which I can appreciate. As an appraiser, I will say however that pre-HVCC, I would not say that pressure for loan values was a huge issue with my clients, but more often an infrequent occurrence.

Since HVCC, it has become very difficult to sustain a business as I am forced to do business with AMC's and AMC's are impersonal and unregulated. In my opinion, due to this, the harm of AMC's has outweiged the good.

This does not pertain to all AMC's as I do have several who I have worked with long before HVCC and I enjoy working with still. These AMC's pay FULL FEE's ($300-$400 on average for a 1004/FHA), allow for increased turn time when requested and do not penalize me for declining an assignment for valid reasons, etc. This business model for the AMC appears to be becoming more rare as the "new HVCC type of AMC takes over. These AMC's pay unreasonably low fees, (due to their collecting unreasoanble fees and paying out a percentage fo this already lowered fee andf/or collecting a full fee but taking a high percontage of it), have regualted 48 hour turn times (regardless of USPAP, complexity of assignment, etc), and penalize appraiser's for issues such as requesting additional time and/or fees and for issues out of the appraiser's control.

1. I strongly urge for stronger and more clear language as to the source for "customary and reasoanble fees" (ie. the VA fee list or Mercury network survey). Also, a clear place to report refusal to comply with "customary and reasonable fees" and a clear penalty. FHA passed this language and did nothing to enforce it. I know of AMC's which have been reported on numerous occassions for not following this ruling and NOTHING has changed.

I have offered fees decreased by over 50% by some AMC's from the fees I regularly collected pre-HVCC. It is common practice fro AMC's to force appraiser's to accept lowered fees to get on their list and to get work and with so many appraiser's struggling post-HVCC to find enough work to survive, the AMC's now have an easy, government approved way to to FORCE appraiser's to work for ridiculously cut-down fees. Many AMC's are stealing from our pockets with government approval.

My fees have been the same since 2005, $350-$400 for an average job. I have never had a complaint about them being high until HVCC and AMC's. They did not increase with gas prices, with the housing boom, nothing. They are fair. I work approximately 8 hours on any given appraisal. When that AMC tries to pay out $150 or $200 or $225, how much time are they putting into that job. What an insult to my profession. I am insulted by my legislators for allowing and in many ways pushing this into being. So, please help me now.

2. I strongly urge that AMC's not be allowed to force turn times and/or to penalize appraiser's for requesting additional time to verify sales or properly research a more complex property. This is often impossible to do with a 48 hour max turn time. I have also recently been told by one of my AMC's that asking for an increased turn time (to complete an assignment well), turning down assignments due to fees or turn time or lack of geographic competency LOWERS my "SCORE" and thus gets me less future assignments. I am unsure how this is even legal.

There are AMC's that I work with who behave in line with lender, borrower and appraiser interests, and pay a full fee. Since they do exist, there is no excuse for all AMC's to not do the same.

3. This being said, as an appraiser, I do not see any need to dis-allow 'lender to appraiser ordering'. As I said, I have had few experiences with lender pressure and I firmly believe that the non-AMC/direct process is often quicker & cheaper (no middlemen), more concise (as it is easier to clarify issues directly) and allows for the one-on-one relationship which allows for an appraiser to grow his/her business. As professionals, we appraiser's should not be hindered from growing our business as we are with forced use of AMC's. IE. if you do a good job for a person, are reputable, etc, you often get more work, referrals, etc. If you do a good job for a nameless AMC (typically computerized) system, you often get no benefit. In addition to not allowing us to grow our business, what is the benefit of doing the best possible appraisal. There is none. (I have heard appraiser's state that when they are paid less, they do less work and save their time and best work for the companies who pay best. This is no way to lead financial reform). In my experience most lender want a good appraisal, not a to the numbers appraisal. In my experience, I have also had AMC's request a higher value. How is this not pressure. If the regulations are in place for pressure to be reported, and the penalty is serious, why would an appraiser be any less likely to report a loan officer or an AMC, why would an lender risk his/her license over one appraisal. I, and no appriaser that I know wants to deal with being pressured over values, turn times, fees.

SO IN MY OPINION, the government via HVCC has now allowed a mass of AMC's to lower fees, increase work (higher # of pointless corrections and explanations to their less trained staffs or corrections being sent one at a time of a several day period), over regulate turn times, & punish me for being USPAP compliant (by lowering my score).

AMC's are not in my opinion inherently evil, however regulation of AMC's is a necessity. The average or customary fee for most appraiser's I know (that is many) is $350 for a 1004 and $400 for a FHA, on average. This is supported by Mercury Networks Survey, the VA fee schedule. Even appraiser's who work for less (out of necessity), will tell you what "full fee" is and it will be similar. AMC's collect this amount (and at times more) on their end, for the appraisal, so for them to say that this amount is not a average fee is RIDICULOUS. I was recently told by a borrower that they paid $500 for my $300 appraisal in addition to other application fees, etc.

Also, again, I support clear fees and enforcement. I see NO FHA ENFORCEMENT of customary fees. RELS, a large company, is still paying $225 on average for FHA, slightly over 50% of a full fee, and they have been reported per appraiser forums, repeatedly...yet nothing has changed. I hope that this regulation will differ in that effect.

I really hope that this gets someone to listen. This would not be difficult to fix. A mandatory average fee of $350 for a 1004 and $400 for an FHA (which is enforced), an additional charge to the borrower of 10% or so for the AMC (which would be less than what borrower's are being charged now), caps on the % AMC's can take of 10% or less OR requiring the lender to pay it out if they choose to use an AMC (regulations could allow lenders to be reported as necessary or lender's could go through a system like the Mercury Network to avoid AMC's altogether ), and an end to forced turn times and penalties/refusals to allow extra time to complete a USPAP compliant report.

I am also curious as to how and to whom appraiser's can report AMC's who are not paying 'customary and reasonable fees', and what is the penalty? This wording is like saying that we should all drive at a reasonable speed. I am not sure how far that would get us. Please let me know this.

This is my livelihood and that of many others. How would any person, a Senator, a CEO, you feel if all of a sudden a law was passed that forced them/you to work through a middle man who was allowed to claimed 30-60% of their salary on average. I doubt that would go unheard and un-repaired.

I will be looking forward to your actions and your response.

-Laura




Last Updated 9/14/2010 FinReformComments@fdic.gov