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Better Days For Appraisers, Higher Fees Ahead

July 5th, 2010 by Bill Collins Leave a reply »


Dodd-Frank Wall Street Reform and Consumer Protection Act Passed in House, Moves On to Senate

As we reported in our Special Edition last week, after several years of reporting about difficult times for appraisers, many provisions in the Dodd-Frank bill promise to help bring positive changes to the appraisal profession. 

Here is a link to the Dodd-Frank bill, all 2,319 pages worth.  Dodd-Frank Wall Street Reform and Consumer Protection Act

For those of you who don’t wish to read the entire document, we will summarize some of these provisions as we did last week with our Special Edition as many appraisers may have missed it during the holiday week.


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Higher Appraisal Fees!

The congressional bill appears to take some of the language from the FHA (see FHA Mortgagee Letter 2009-28) regarding appraiser compensation and expands upon the mandates of that letter. It includes the following language on page 2215:


“Customary and Reasonable Fee:

IN GENERAL—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.”

The bill, however, goes further than the FHA mandate in describing manners in which customary and reasonable fees are to be determined:

“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.”  Please note that we have added italics to this last sentence to emphasize its importance.


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HVCC to End!

Page 2216 in the bill has this to say about the HVCC:

“SUNSET. Effective on the date the interim final regulations are promulgated pursuant to subsection (g), the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.”

What does this mean exactly? It doesn’t mean very much as many of the provisions of the HVCC are included in this bill.  But, there are many pro-appraiser provisions in this bill which is something we haven’t had many opportunities to say during recent years.  We have been most interested in the bill’s impact on appraisers and have not analyzed it carefully as to its impact on other industry groups such as mortgage brokers and AMCs but it does not appear as though these two groups will find much to like about it from their vantage point.


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New Regulations for AMCs!

Page 2223 of the congressional bill contains the following language regarding Appraisal Management Companies:


(a) IN GENERAL.—The Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, the Federal Housing Finance Agency, and the Bureau of Consumer Financial Protection shall jointly, by rule, establish minimum requirements to be applied by a State in the registration of appraisal management companies. Such requirements shall include a requirement that such companies—

(1) register with and be subject to supervision by a State appraiser certifying and licensing agency in each State in which such company operates;
(2) verify that only licensed or certified appraisers are used for federally related transactions;
(3) require that appraisals coordinated by an appraisal management company comply with the Uniform Standards of Professional Appraisal Practice; and
(4) require that appraisals are conducted independently and free from inappropriate influence and coercion pursuant to the appraisal independence
standards established under section 129E of theTruth in Lending Act.”


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Limitations on BPOs!

While this does not go far enough and excludes many current uses of BPOs, the congressional bill contains the following provision regarding Broker Price Opinions on page 2241:

(a) GENERAL PROHIBITION.—In conjunction with the purchase of a consumer’s principal dwelling, broker price opinions may not be used as the primary basis to
determine the value of a piece of property for the purpose of a loan origination of a residential mortgage loan secured by such piece of property.

(b) BROKER PRICE OPINION DEFINED.—For purposes of this section, the term ‘broker price opinion’ means an estimate prepared by a real estate broker, agent, or sales person that details the probable selling price of a particular piece of real estate property and provides a varying level of detail about the property’s condition, market, and neighborhood, and information on comparable sales, but does not include an automated valuation model, as defined in section 1125(c).’’

Once again, we at Appraiser Help want to note our support for the positions taken by the four appraisal organizations which authored the March 8th and April 20th letters that we have previously discussed opposing the use of both BPOs and BOVs (Broker Opinions of Value of Commercial Real Estate).  Links to these two letters are here:
Letter Regarding BPOs.

We also again request that Andrew Cuomo take one final action as Attorney General, before his coronation as Governor of New York, to read our letter dating back to August 4, 2009 (go to to see) and use the powers at his disposal to help bring an end to these unseemly financial practices.


The Bottom Line

First, the Senate needs to pass the measure and send it to the President for his signature.

Assuming that this takes place within the next couple of weeks, it appears likely that many of the appraiser friendly provisions will begin to take effect before the end of the year.  Other parts of the bill, such as the AMC registration, will not be fully implemented for an extended time.


A Positive Report Regarding Commercial Real Estate Loans?

On June 30th, the New York Times discussed some signs of life in the dormant market for commercial real estate backed securities and a link to this article is found here: Commercial Mortgage-Backed Bonds Make a Comeback


Other News

Amidst talk of a double dip recession, and Zillow recently posted two reports regarding 1) areas where the real estate market has declined significantly after a period of improvement and 2) those U.S. cities with the most underwater mortgages. Links to these articles are found here:
America’s Double-Dip Real Estate Markets
US Cities With The Most Underwater Mortgages              

The negative impact of high property taxes on home sales was discussed in the New York Times on June 27th and a link to this article is found here:
Property Taxes Inhibit Sales in West Orange

On July 2nd, approximately two weeks after the delisting of Fannie Mae and Freddie Mac, discussed some of the possible consequences if the two mortgage giants were disbanded.  A link to this is found here: Who Would Finance Mortgages If Fannie, Freddie Disbanded? also put out a special report titled “The Housing Fix”, a link to which follows: The Housing Fix


Rates & Dates

Freddie Mac reported that rates for 30-year fixed-rate mortgages had dropped to 4.58% for the week ending July 1st from 4.69% during the previous week.

The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending June 25th also reported a decline in the average rate for 30-year fixed-rate mortgages to 4.67% from the previous week’s rate of 4.75%.

On July 1st, discussed the lack of mortgage loan activity even with mortgage rates at 50 year lows: Mortgage Rates Drop to Lowest Rate in 50 Years

Additional information from Freddie Mac can be found by going to: Freddie Mac – Primary Mortgage Market Survey PMMS

Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association


Ask Angie

First, we want to congratulate our most recent winner: Scott D. Hammond, a Certified Residential Appraiser with Hammond Appraisal Services, LLC, in Grand Junction, Colorado. 

Today’s questions:

Question 1) Who said:
“I don’t see much of (my husband) anymore since he got so interested in sex.”  

1. Mrs. Sigmund Freud
2. Mrs. Alfred Kinsey
3. Mrs. Albert Gore
4. Mrs. Tiger Woods
5. None of the above

Question 2) Who said:
“I think the free enterprise system is absolutely too important to be left to the voluntary action of the marketplace.”  

1. Congressman Richard Kelly
2. John Maynard Keynes, economic thinker
3. Congressman Barney Frank
4. Paul Krugman, New York Times columnist
5. None of the above

The first person to respond with both correct answers wins a choice of either:

One Free Trade Show Pass or $199 off a Full Conference Pass to Valuation 2010 or

A Free Copy of the Directory of Appraisal Management Companies for FHA Appraisers

Angie’s Hall of Fame: Those who have been crowned winners more than once during the past two years and who have been retired from competition for the rest of 2010:
Suzanne Fahien
Pat Reass



Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: with your thoughts!


We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at


Bill Collins, Appraiser Help Inc.

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