value nation
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no way to know, as of this writing, Appraisers will be paid what these costs will be, suffice it to more say that they will easily pale those Fees to appraisers have not increased costs of registration outlined above. much, if at all, over the past 20 years. They deserve higher fees, particularly in some Each appraiser performing appraisals areas where the competition is stiff. The in federally-related transactions will language in the bill speaks to this issue. be required to personally pay a fee in While there will be concerns about subthe amount of $40 each year. If the scribing to a free market, there will also be roughly 92,000 appraisers in the pressure to pay appraisers more. We have United States pay this fee, it would fewer appraisers than we had in the past. amount to a tax of $3.68 million. The The Appraisal Institute reports that the appraisers will pass this along the number of appraisers has decreased in chain to the consumer. recent years due to the recession and to
Management companies will spend much more on compliance and fees. They will have no choice other than to pass this extra cost along to the consumer.
ARE
The effect of current state appraisal certification, educational and experience requirements mandates a program that tends to take appraisal trainees between three and five years to become licensed. Therefore, there is likely to be pressure on the market to increase appraisal fees for some time to come.
REMN
There are those who would say that management companies have been responsible for holding the fees down due to increased efficiency. Many appraisers will say that this is due in part to AMCs not paying them a fair fee. Whatever the reasons, fees to the customer are likely to increase.
Regulation of AMCs will not cause banks to use AMCs less It is likely that more banks will use AMCs to service their appraisals in continued on page 40
WHOLESALE
35
At REMN, we understand that there’s nothing ordinary about focusing on what’s important: our customers. We recognize that continued
We’re not afraid to be different.
business from our satisfied customers is the lifeblood of our business. We believe that every application is precious and treat each file with the respect – and urgency – it deserves. Even better, at REMN, same-day approvals are guaranteed. We promise extraordinary service in an ordinary world.
The new law will require transparency, forcing banks to separate AMC costs from the actual cost to the appraiser Learn more at www.remnwholesale.com * Same-day decisions guaranteed if file is received by 11 a.m. EST. Real Estate Mortgage Network, Inc. is located at 499 Thornall Street, Second Floor, Edison, NJ 08837. NMLS #6521. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or third parties. Information is accurate as of date of printing and is subject to change without notice.
MARCH 2011
It stands to reason that banks will use this aspect of the law to recoup costs of overhead forgone in the past. This will result in many banks charging a higher fee to the customer, which covers both appraisal services and appraisal management services.
MICHIGAN MORTGAGE PROFESSIONAL MAGAZINE
Regulatory cost will make a huge difference
WE
Education and certification
Fees for appraisals to the consumer have not gone up substantially over the past few years
NationalMortgageProfessional.com
It is unclear why such high fees are necessary. Neither is it clear why it is necessary to have two layers of registration, federal and state, when one at the federal level would seem to be adequate. Also, one may ask why some states charge initiation fees of less than $500 when others charge $3,000, $4,000 and $5,000. What is clear is that those new costs, like the costs of other regulations imposed upon business and society by government, will be borne by the consumer. It is possible that many AMCs will be forced out of business by the additional costs of complying with these new regulations. As this occurs, AMCs will not disappear; the larger ones will become larger. This will create a less competitive market, placing upward pressure on appraisal fees. Some even question whether, after the advent of the new regulations, if AMC services will be any better and whether there will be less corruption, fraud or any of the other unsavory activities that the legislation was intended to prevent. Other unintended consequences of the new law will take their toll on small AMCs in many other ways. These will be broad-ranging and will manifest themselves in the form of AMCs forgoing business in states where they cannot afford to register with budgetary constraints preventing their acquisition of technology and human resources, designed to offer national coverage. In summary, be prepared for appraisal fees to the consumer to increase substantially when the new law is in full effect, two or three years down the road. This will happen for a number of reasons listed below.
what many have viewed as low fees, which some blame on management companies. The Appraisal Institute also reports that the number of certified appraisers in the United States decreased 6.6 percent from 2007 to roughly 92,000 in 2010. It also reports that nearly half of all appraisers are between the ages of 51 and 65.