Customary and Reasonable Fees
The Final Interim Rules of the Mortgage Reform and Anti-Predatory Lending Act states that Lenders and their agent 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. It further states that evidence for such fees may be established using objective third party information, including surveys. The main differentiator from the original version from July 2010 and the FIR is the original stated that fee studies SHALL exclude assignments ordered by known appraisal management companies. The FIR has taken all feedback and issued guidance that now includes the two presumptions, outlined below.
Summary of Two Presumptions
First presumption of compliance: A creditor and its agent are presumed to compensate a fee appraiser at a customary and reasonable rate
Second presumption of compliance: A creditor and its agent are also presumed to comply if the creditor or its agent establishes a fee by relying on rates in the geographic market of the property being appraised established by objective third-party information, including fee schedules, studies, and surveys prepared by independent third parties such as government agencies, academic institutions, and private research firms.
ISGN Solution
Today, ISGN is supporting both presumptions. Under presumption one, ISGN continues to validate Customary and Reasonable fees based on product, complexity, and market, based on actual experience and feedback from our vendor panel.
Under presumption two, we have clients who dictate the fee that we pay the appraiser, based on product, complexity, and market.
To get ISGN white paper on Dodd-Frank guidelines or to talk to our Subject Matter Expert, please write to sales@isgn.com, with Dodd-Frank in the subject matter line.
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