TAVMA Questions Accuracy of Appraisal Fee Report
The trade group that represents many of the country’s biggest appraisal management companies is questioning the validity of a recently released database of appraiser fees. Privately-owned appraisal technology firm a la mode released in February its Appraisal Fee Reference dataset. The data is drilled down on the county level, providing fee reports for appraisers. But the Title/Appraisal Vendor Management Association (TAVMA) called the dataset misleading because it doesn’t include the fees AMCs pay to appraisers, excluding two-thirds of all the appraisals conducted in the United States. The launch of the Appraisal Fee Reference came as the Federal Housing Administration (FHA) released new appraisal guidelines to bring its mortgage program requirements in line with the Home Valuation Code of Conduct (HVCC) used for Fannie Mae (FNM) and Freddie Mac (FRE) originations. The so-called FHA HVCC requires lenders to ensure appraisers are paid “reasonable and customary” fees. “The a la mode analysis attempts to redefine what is reasonable and customary using this analysis that cherry picks results and implies that a small sub-group of the industry should dictate industry-wide prices,” said TAVMA executive director Jeff Schurman. “The FHA says 'reasonable and customary' should be defined by the entire marketplace.” TAVMA accused a la mode of causing confusion in the valuation industry and compared the dataset to hardware prices determined only by mom-and-pop hardware stores and ignoring giant retailers Home Depot (HD) and Lowe's (LOW). Representatives from a la mode did not immediately respond to HousingWire’s request for comment. “There is a strong argument to be made that AMCs, as the major provider of appraisal services in the country and the leading source of business for more than two-thirds of all independent appraisers, are in effect the standard for what is reasonable and customary,” said Schurman. While always a player in the valuation market, AMCs have grown in prominence over the past year after the government-sponsored enterprises implemented the HVCC. Many lenders use AMCs as a compliance stopgap to ensure appraiser independence. TAVMA said two-thirds of appraisals conducted in the U.S. are done with AMCs. There are 45 AMCs that are TAVMA members and the group said those companies generate 85% of the country’s AMC business. “The a la mode analysis may be of some use to the decreasing number of non-AMC aligned appraisers who do boutique 'retail' business or non-mortgage work for attorneys handling estate and divorce cases, but it distorts what is happening in the market and what fees should prevail for FHA work,” Schurman said. Write to Austin Kilgore. The author held no relevant investments. Note: included in the April edition of HousingWire magazine is HW Focus, a new supplemental publication that, in the first edition, explores the valuation industry with expert analysis by staff and insight and perspective from some of the industry’s top professionals, including representatives from TAVMA and a la mode. Keep on top and get it here.