AGA Seeks to Overturn Fed Ruling

The American Guild of Appraisers (AGA) petitioned the Fed and the Consumer Financial Protection Bureau to overturn a regulation that allows appraisers to be paid a fraction of what can be defined as a “customary and reasonable fee,” a release from the AGA stated.

In 2010, Dodd-Frank rules were enacted to establish certain requirements for appraisals, including one to “ensure that creditors and their agents pay customary and reasonable fees to appraisers,” according to the Dodd-Frank website.
But last year, the Fed introduced a new law that the AGA views as undermining the original Dodd-Frank requirement.
“The Fed adopted a rule that allows appraisal management companies that control up to 80 percent of residential appraisals to pay appraisers a fraction of what a customary and
reasonable fee would be as defined in the law, sometimes as much as 50 percent or more below the prevailing rate,” the AGA stated in a release.
The Dodd-Frank rules were passed by Congress in response to evidence that appraisal management companies (AMCs) were pressuring appraisers in ways that led to inaccurate appraisals, according to the release.
“In addition to paying low fees, appraisal management firms are pressuring appraisers to meet unreasonable deadlines and often condition work on an appraiser’s willingness to cooperate in ways that compromise the integrity of the appraisal process,” said Peter Vidi, president of AGA.
Vidi also explained that the borrower is not actually saving money under the regulation the organization is looking to overturn, and less than half of what the borrower is paying for the appraisal may actually go the appraiser, and the rest goes to the AMC.
The petition to reverse the Fed’s ruling was filed by lawyers Matt Schneider and Ben Lambiotte, who represent Garvey Schubert Barer.
“We believe that the Guild has a strong legal case that the Fed has violated the Dodd Frank law,” said Schneider. “We are hopeful that the Fed and the new Consumer Financial Protection Bureau, which is specifically charged with protecting the interests of consumers in financial transactions will reexamine this rule and make the changes necessary to carry out the intent of the law.”