A section of the Dodd-Frank Wall Street Reform and Consumer Protection Act created registration requirements for appraisal management companies (AMCs) that will lead to increased fees for both borrowers and mortgage companies.

In an article in National Mortgage Professional magazine, Charlie Elliott, Jr. of Elliott & Company Appraisers writes that the implementation of this section of the Dodd-Frank Act is creating significant costs for AMCs that will drive some out of business and force others to pass on those expenses to clients.

Elliott states that there four cost issues that have been created by the new rules.  First is the requirement to register in every state in which an AMC does business.  Current fees for this registration range from $500 to $5,000, with some annual renewals as high as $2,000.  There appears to be little justification for the range of these registration fees.

Second, AMCs must register each appraiser on their roster at the federal level at an annual fee of $25 to $50 per appraiser.  While some AMCs indicate they will have to charge appraisers for those fees, many plan to absorb the fees, but pass them on to their clients.

Third, there will be on-going and yet undetermined costs of compliance for AMCs to stay on top of the regulatory compliance

Lastly, each appraiser providing appraisals in federally-related transactions will be required to personally pay a fee in the amount of $40 per year.

According to Elliott, the number and amount of these various fees are not clearly justified and will lead to further contraction and consolidation in the appraisal and AMC market place.  Some smaller entities will be either forced out of business or forced to limit the number of states they operate in as a way to mitigate the amount of fees they are required to pay.