The Appraisal Institute continues to represent the interests of its members in ongoing rulemakings resulting from the Dodd-Frank Act, including the separation of appraisal and appraisal management fees in order to provide transparency to consumers.
Last November, AI and the American Society of Farm Mangers and Rural Appraisers urged the Consumer Financial Protection Bureau to separate appraisal fees and appraisal management fees. Last month, Appraisal Institute representatives met with CFPB officials about a new Consumer Disclosure Form slated to replace the current HUD-1. The Dodd-Frank Act authorizes, but does not require, separation of appraisal and appraisal management fees on these loan documents. The CFPB is expected to issue a Notice of Proposed Rulemaking this summer and will seek public comment.
The Appraisal Institute believes that appraisal management is different than appraisal services and will continue to advocate for clear separation of fees on the new form. Appraisal Institute members should voice their opinions during the public comment periods.
At the CFPB meeting, officials indicated that an upcoming version of the form will show a new line for appraisal management fees, separate from appraisal fees; the form is scheduled to be tested nationally in consumer focus groups.
The Appraisal Institute believes that the CFPB is weighing three options: 1) Do nothing and continue to allow bundling of appraisal fees and appraisal management fees; 2) Provide a new line on the Consumer Disclosure Form, but not require the fees be separated; or 3) Provide a new line and require separation of the fees.
A key issue will be consumer confusion over seeing two lines on the new form, although consumers may pay for both as a lump sum at application. Additionally, some “captive” AMCs may be adversely impacted by fee separation because of a provision found in the Dodd-Frank Act capping lender points and fees at 3 percent. Currently, if the appraisal management fee is bundled with the appraisal fee, it is considered outside of this cap.
Information on these, and many other issues affecting both commercial and residential members, is available to Appraisal Institute members-only in a free, recorded presentation.
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