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Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Jul 2 2015, 5:54 PM
Bill--so I'll throw you a bone. It's not a free market right now in the context of your definitions above. The government is to a large degree dictating what we can and can't charge/make in the name of protecting consumers who arguably were badly damaged by years and years of abuse at the hands of all the housing players including appraisers and lenders. The comp plan is what it is. Is it unfair? As Matt said, absolutely. Do we have an organized lobby with a unified voice and a message capable of changing it? I'd say unequivocally no. If you are trying to educate consumers, great. The question is, will they care about spending $400 to $800 on an appraisal, when they watched thousands of dollars of equity evaporate when the housing meltdown happened? Not likely. Maybe you should take your argument straight to a consumer protection group. There are a ton of them out there, and they might be able to help you craft a platform for change with all of your facts and figures supporting the harm the current system is doing to customers. You've educated us all about the injustices of appraiser compensation and the flaws in the AMC system. Now what are you going to do fight the injustice besides rant and attack anyone who tries to provide you with some perspective other than your own? Provide the details of a new system for appraisal compensation and valuation and then covince a grassroots movement why it will work better. If you can't do that, then you will just be written off as a guy who is angry about his place in the housing industry food chain, and just wants to complain, but doesn't have the will or creativity to come up with something different than anyone will care about.
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Thu Jul 2 2015, 10:38 AM
I'm a fan of healthy dialog, but the "Bill Johnson Show" in the comments section of most every MND article is getting a bit tedious. I'd wager you're not doing yourself any favors with the verbose rants. You come off like a guy who has been deeply personally injured by the after-effects of the financial crisis (Hi, welcome! You're among friends) and who is looking for a place to make his voice heard. This is a website about "mortgage news." Try to keep the comments more directly connected to the topic of the article. If an article is about the gross injustices of the appraisal system, lucky you! Otherwise, ranting about the gross injustices of the appraisal system isn't really helping your cause. I'm sorry to say that gross injustices are always a risk for any group of people who don't have a big enough lobby. It ticks me off that life's not fair too, for what it's worth. When we explicate those injustices with too much zeal, we risk alienating people that might otherwise listen.
on Wed Jul 1 2015, 8:27 PM
I feel your pain Lauren, but people just don't want to listen or simply think they know best.. I have routinely brought forth the ongoing issues at it relates to the 70% of all appraisal transactions that go through AMC's, but have routinely been met with strong resistance to the truth. I'm told I'm angry, abusive, and my honest truthful comments to questions get edited to remove facts. Keep up the fight.
on Wed Jul 1 2015, 7:04 PM
Jason, do you really think that the 70% of all residential transactions (appraisals) that now go through appraisal management companies (AMC’s) operate in a true free market? Here’s a definition of Free Market; “A free market is a market system in which the prices for goods and services are set free without consent between vendors and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority. A free market contrasts with a controlled market or regulated market, in which government intervenes in supply and demand through non-market methods such as laws creating barriers to market entry or directly setting prices.” Let’s take a few of these on one by one. The appraisers do not set their fees with the majority of big box AMC’s as they are solely controlled by the lender. How can you have a free market when the business owning appraiser is not allowed to establish their own independent rate? The definition states, “The forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority”. With the government’s involvement with past and current regulations, the forces of supply and demand are not being met. With the government price-setting of VA appraisal fees on a state level, how can supply and demand be free to work? If within the DODD/Frank bill there is specific verbiage to try and control what is considered a customary and reasonable appraisal fee, then how can this be considered free of government intervention. When most big banks own their own AMC’s (BOA = Landsafe / Wells Fargo = RELS) and set their own appraisal fees, how can this not be considered a price-setting monopoly? When the government sets AMC regulations so stiff and expensive that forces it out the smaller AMC’s, then they are in effect creating monopolies and creating barriers to entry/competition. Ted, although I see that you follow me as it relates to the question and answer section of this site, routinely flag my answers, and ask for administration editing, what you like to call countless hours of complaining, is in fact an education to the public. Ted, continue to operate and sell your services in all 50 states as your profile indicates, while disclosing in prior comments you are licensed in none. I look forward to an educated specific line by line response to still support your claims of a free...
on Wed Jul 1 2015, 5:00 PM
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Ted Rood
Senior Loan Officer , MB Financial Bank
on Wed Jul 1 2015, 4:33 PM
Great point, Jason. We'd all love to make more money. Loan officers can't be paid anymore on loan profitability, but it sure wouldn't do us any good to spend countless hours complaining about it.
on Mon Jun 29 2015, 6:25 PM
I agree with you Andy that an appraisal should be a credible opinion of value, however as I've stated many times, most people who review our work are not licensed appraisers and thus are unable to determine credibility. Unfortunately, a credible report to most just means that the value suites their intended goal (purchase / refinance). I also do not want anyone to set my fees, however if its the law of the land that a customary and reasonable fee be established freely from known work via AMC's, then I think this will establish a floor to fees and should not be considered the ceiling. I to have taken on work that I considered less than a reasonable fee, however the ultimate business decision is mostly based on the clients needed scope of work (Liability). If client A pays $425, has a very stiff and extended scope of work, and often calls for unneeded reconsiderations on the back end (post submittal), then working for client B who pays $350 with an easier scope of work, may result in a higher hourly wage.
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on Fri Jun 26 2015, 4:52 PM
Jason, in a true open and free market your thought holds some validity, but with the well-established use of AMC’s in the appraisal process, the system is not a free market. The appraisal fee that’s reflected on the HUD-1 statement is in most cases, not the actual fee that goes to the appraiser. If the appraiser is paying out of pocket (up to 60 % of the noted appraisal fee) towards the lenders enforcement of regulations (by use of an AMC), than the market is not free. If I have no control in setting my fees for noncomplex assignments by my clients, than again, the system is not free. If the lender forces me to us a delivery system of their choosing that charges me $10 to $30 per transaction, and I have no ability to raise my fees to offset this, the system is not free. As it relates to banks being forced into the current process, some of the issues facing the appraiser today, are not due to new regulatory changes, but are due to each lender independently setting their own set of appraisal standards (Scope of Work). How can appraisal fees be established in a free market when each lender is working off their own individual template / set of guidelines, and have all but abandoned what is supposed to be set federal standards? Lenders don’t care, but they should know what a standard appraisal looks like (meets federal guidelines) set a base fee, and expect to pay more each time they add addition requirements onto the scope of work. The lenders have paid for a $10 car wash, but every week since (2008/2009 - HVCC) they have continually been forcing the appraiser to add freebies. They now receive hand washing, chamois drying, waxing, full interior cleaning with leather detail, wheel polishing, and headlight restoration.
on Fri Jun 26 2015, 3:15 PM
Amen Frank.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Fri Jun 26 2015, 1:38 PM
Bill: The reason I haven't responded any further to your argument is this debate is a waste of time. The Supreme Court's ruling on disparate impact needs the attention of every single industry professional that exists, and will require that we set aside petty differences like the ones that are being debated here and come together as a united whole in the very near future, or simply watch the nationalization of this industry take another giant unobstructed step. The regulatory and political powers that be see arguments like this and it only fuels their justification that we have no cohesive argument to make that will protect consumers any better than they are. In the absence of any focused opposition, they have power to regulate, fine and legislate us into oblivion. Imagine how many voices there would be if title companies, credit vendors, appraisers and AMCs, loan officers, secondary market personnel, builders, financial planners, and every other stakeholder involved in every housing transaction were united towards one focused goal? I fear the very well designed timing of each tsunami of regulatory implementation keeps us in a perpetual state of adaptation where all we can do is the best we can to survive. But is also keeps us in a state of perpetual retreat. I wonder at what point we will reach a precipice where we have no more ground left to retreat to. At that point, we either fall of the cliff, or figure out how to fight back with some teeth. Until then, we run.
on Wed Jun 24 2015, 4:25 PM
Jason, I agree with you about the repurchases and the increased scrutiny of appraisals, however the thought that they are being thoroughly vetted today, is simply not true in most cases. Instead of hiring teams of qualified appraisers on a local level to sure up quality control (at the lenders expense) lenders steal from the original appraiser (split fee) and pay outside AMC’s / software providers to put a seal of approval on each appraisal report. Truth be told, AMC’s and their primarily lower level staff are unqualified to determine the true quality of an appraisal, as what they review is very limited in its scope. Although the individual appraiser must be licensed, have access to all relevant data (MLS, etc.) be competent of the local area, etc. the companies hired to monitor us do not have the necessary tools or knowledge to do so. If I go to a doctor and want his findings reviewed by a 2nd opinion, I would go to someone with equal or a higher degree of knowledge and not have the work reviewed by someone less qualified, but yet that is what happens to the appraisal as it relates to AMC reviews. Also, keep in mind that many of these AMCs primary function is to be a secondary income stream as it relates to the loan process. The BOA’s and the Wells Fargo’s of the world force the borrower to use their company owned AMCs (Landsafe / RELS) and pocket the portion on the fee not paid to the appraiser. As it relates to the 2nd level of scrutiny, the appraiser’s frustration with our clients (the lenders) is absolutely not misplaced. Our clients have chosen to reduce appraisal fees to levels of the late 1990’s; have randomly increased the scope of work without acknowledgement of the increased time and liability put on the appraiser; demand turn time of 24 to 48 hours; have required higher license levels than necessary for the job; can at random times demand 5 to 10 years of experience to complete basic assignments; chose to not allow Trainee appraisers to assist in the completion of an appraisals; often charge the appraiser $10 to $30 in delivery fees for each assignment; require us to pay annual fees for the companies they choose for background checks; charge the appraiser a 3% credit card processing fee when the borrower chooses to pay the appraisal fee with a card; keep internal blacklist (do not use) on those appraisers that do not give into to their illegal attempt to influence us; etc., etc., etc. Follow the...
on Tue Jun 23 2015, 10:41 PM
Bill...the reason there is so much scrutiny on the appraisal is that when loans went bad during the crisis lenders became accountable for repurchase requests from Fannie and Freddie based on the accuracy of the valuation. In order to avoid this, they were forced to put in place processes that insured appraisals are vetted thoroughly. AMC's have similar QC processes in place to ensure the product they provide to the client is of satisfactory quality. Yet banks cannot rely on this alone because they are ultimately responsible for any errors by counterparties such as the AMC. This creates a dual level of scrutiny that won't likely go away soon in our current regulatory environment. It is frustrating for all involved, but it is what it is and directing your frustration at lenders is quite frankly misplaced. My experience is that the other parties you reference (agents, buyers, sellers, etc) may complain but at the end of the day as an industry we defer to the appraiser across the board as it relates to the final value determination.
on Mon Jun 22 2015, 4:16 PM
Ted, as an appraiser I clearly understand who the intended user is (The lender) in a typical purchase and understand the roles involved. If you state that “Listing agents and sellers ONLY have access when the appraised value doesn’t meet the sales price”, then you are proving my point that our work is overseen by a vast majority of individuals and systems. When by law the borrower is given a copy of the appraisal, it’s my experience that they have no filter when it comes to giving out copies. My original comment was in response to Frank who indicated that “the valuing system didn’t/doesn’t work”. My question to Frank still stands, how many more sets of eyes need to review the appraisal to get a final seal of approval?
Ted Rood
Senior Loan Officer , MB Financial Bank
on Mon Jun 22 2015, 2:05 AM
Since when do listing agents and sellers get access to the appraisal paid for by the buyers, Bill? ONLY when the appraised value doesn't meet the sales price. Loan officers may/may not peruse appraisals, but certainly don't underwrite them. Your contention is not accurate, appears you may not understand the roles involved.
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Fri Jun 19 2015, 1:11 PM
Fixed, thank you!
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Fri Jun 19 2015, 1:06 PM
Thank you Chuck
on Fri Jun 19 2015, 8:54 AM
Great site.... Nice level headed analysis. Any mortgage broker should be using this site
on Wed Jun 17 2015, 4:44 PM
Your headline is wrong. From page 5 of the Corelogic report: 94 percent of homes valued at greater than $200,000 have equity compared with 85 percent of homes valued at less than $200,000. Therefore15% of low-end homes are underwater, not 85%.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Tue Jun 16 2015, 3:19 PM
Looks like we're headed towards a downward spiral in homeownership rates. Guess all those housing reforms may not have boosted the market quite the way they were intended.
on Mon Jun 15 2015, 5:17 PM
I'm not sure if appraisals are included within the accounting for how much a borrower pays for a home loan when it closes, but the split appraisal fees offered by the big box AMC's have been the same since HVCC (2008/2009). I'm sure my story is similar to every appraiser out there, but I have never received an e-mail saying "Good news we are raising the appraisal fees". If every body else finds it necessary to raise the costs of doing business 30% from 2012, then why has the appraiser been forgotten. As it relates to residential appraisal fees, its the lender who sets the fee paid by the borrower, so why hasn't the appraisal fee been increases in 10 years? Correct me if I'm wrong, but if property values have increased 30 to 40% over the past same 3 years, have commissioned real estate agents not seen a significant bump in income? If borrowers are seeking higher loan amounts to be able to buy, are the commissioned loan officers not also getting a huge increase in pay? This is not sour grapes, but people forget that with a set fee (established by the banks) I will get the same/similar fee for a $300,000 property or a $1,300,000 property. Appraisers do not have a carrot to chase like an agent (desire/plan) to work the higher end neighborhoods or like a commissioned loan officer (higher dollar loans) so without a modest cost of living increase every year, we are losing ground.
on Sat Jun 13 2015, 10:25 AM
The violations Bill points out are a tiny subset of the market. I have never seen or heard of an industry with its comp structure so painstakingly regulated by Federal Law. i understand as someone outside of the industry the headlines seem jarring....although it is such a small segment of the broader industry it does not even register for me other than to take note of the enforcement action and wonder "what we're those guys thinking?".
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Fri Jun 12 2015, 4:54 PM
I keep speaking about the appraisal industry from the same place you are speaking about the originating industry--from a place of not doing it for a living. So if I am 'falsely speaking' about the appraisal industry, you are simply doing the same about the mortgage industry.
on Fri Jun 12 2015, 11:26 AM
Frank, if recent trends continue and your industry/profession keeps getting dragged through the mud, (illegal activity) then I think you will find this is the bottom floor of change. When you lose the ability to market yourself, set your own fees, pay some middleman company 50% of your pay, become licensed to a higher standard and you start to lose 5% of your membership a year, don't say I didn't warn you. I agree that the market values our professions differently, and based on the extreme variances for entry, its no contest. You ask " Why should we waste time beating a dead horse" as it relates to the ongoing illegal activity? If the allegations are true, and I have $millions of reasons to believe they are, than why does it seem to be a culture of activity and not a simple rouge individual. As it relates to the appraiser profession, and certainly on the residential/lender side, I'm always provided a phone number to call when illegal influence is attempted (LO's/agents, etc.). If I had a boss and he presented a way to illegally collect funds under the table and wanted the entire company to get on board, I would be the first person blowing the whistle. Frank, you keep saying "Why try to speak as to what I do" but yet you keep falsely speaking about the appraisal industry. Sorry, but market value is not standardized and there's no chart for me to refer to when establishing current value. As it relates to current appraiser issues, when this site or any other indicate 3 large companies were busted for illegal activity in a single month, my stance will be just as strong.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Fri Jun 12 2015, 12:33 AM
Bill--you helped make my point beautifully. "Why try to speak as to what I do". Yet that is what you want to lump the value of originators functions in the housing chain in the same manner as how you are paid. The simple truth is, the market values what originators differently from what appraisers do and compensates accordingly. Why do some lawyers charge $400/hour and other charge $100/hour. Why do some hospitals charge $1000 for a CT scan and others charge $500? Why are brand name drugs more than generics? Why should a CEO make 100 times more than the employees that bring in the business to his firm? Because the market values them differently. As far as the lack of comments about all of these 'outrages" why should we waste time beating a dead horse about these violators actions when regulatory agencies have already done that. You also assume that the companies in question were 'guilty for a fact'. The truth is with a regulator that has no oversight, the potential reality of the endless litigation expenses that would be incurred if a lender actually fought a regulator's findings make settling or paying fines a less costly approach. The answer is to educate customers about how to save, budget and purchase homes with higher down payments, less debt, and at prices that are not at the top of the market range. This site teaches customers and loan officers how to actually know what makes the best rates and terms and how to shop accordingly, and gives them as much knowledge as they want to make educated decisions. You especially can educate customers about why that house they want to bid up $10-15-20k to stay in the running in a 'hot market' is basically speculating on real estate. Compensation reform was a mortgage banking industry designed ruse to control competition, period. It was brilliant--the broker industry had strayed so far from it consumer benefit oriented beginnings that it was easy to justify the need for the controlling of compensation after some heavily advertised abuses by the worst of the worst. But all it is has done is help make the costs of originating a loan more predictable. The secondary market is where the profit can be made, so the originating market simply serves to keep the velocity of money flowing in and out at a more controlled page. Appraisal fraud was a massive cause of the meltdown. Where were the alarm bells when values were going up year over year over year with no basis on any historical...
on Thu Jun 11 2015, 5:40 PM
Frank, as someone who indicates you are a consumer advocate I can take off my appraiser hat and approach the issue from a non-industry professional and ask the same questions. As a consumer I can read the headline “Third California Lender Fined for LOC Rule Violations”, and although I may know nothing about the topic, the people that do (CFFB) are finding multiple violations under the current laws. Taking my personal feelings out of the equation, I have no reason to doubt these illegal payments were real and that the CFFB findings are fact. If my approach of a flat fee is off target, then what do the professionals on this site suggest is the answer to curb this ongoing illegal activity? To answer that question, the first step would be to agree there’s a problem, of which I have not read any strong comments to condemn these violator’s actions. Frank, if you say I’m coming from a place of ignorance as it relates to your profession, then why try to speak as to what I do. 30% of my yearly business comes from residential loans and trust me, as a business owner I have had to push hard for that 30%. The other 70% comes from soliciting agents, attorneys, and as an expert witness, etc., so nothing is handed to me. As it relates to always getting paid Frank, let me correct you on a few things. With the push for faster delivery times the amount of work that appraisers must do prior to the inspection is out of control, and when the orders are cancelled, we get nothing. In addition, 20% of my day revolves around dealing with past appraisals that I’ve already been paid on where anyone and everyone can continually ask irrelevant questions of. Your thought that I can’t make a change in my industry and that somehow I have sour grapes, could not be further from the truth. I have and will continue to push for the appraiser/consumer cause, and hey look at me, does it look like I have a problem telling anyone what I think.
on Thu Jun 11 2015, 5:32 PM
Our industry didn't "self regulate" very well and thusly we are burdened with more regulations than many would consider ideal. I'm fine with how things are presently and there is plenty of money to be made. I think the only real unfortunate aspect of the regulation is that easy borrowers pay more than they might have previously because we have to use the same method to calculate compensation as the difficult borrowers. Back in those halcyon days of yore I had the ability to charge more or less for the time I would spend on a particular file - now everything is cheeseburger, cheeseburger, cheeseburger.
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Jun 11 2015, 4:07 PM
Bill-I think you're missing the point. You are making your compensation proposal based on a complete place of ignorance about what we do for a living because you have simply never done it. I would venture to say there are many within the housing industry that think what you do is simply provide a simple report. You are assigned business you never have to solicit, you plug in data per guidelines and produce an opinion of value. It takes a few days to do that, and you get paid your fee regardless of whether the transaction closes. Your posts sound like the sour grape rants of a someone who can't make any changes in his own industry so he wants everyone else to play by his perspective of how the world should work. If you want to solve the problems within the mortgage industry why not get your license, work in the industry, learn how the compensation system is structured and works, and then offer your flat fee compensation structure as a grassroots alternative to current compensation models in place. You can' have an open debate about how to fix something you understand nothing about without looking like someone who simply needs to rant because no one within your own industry will listen to you. I think you have it in you to be constructive, but each post alienates you from gaining any allies for what you are suggesting because of the undertones of resentment that permeate them.
on Thu Jun 11 2015, 4:05 PM
As indicated under Jobs and Announcements I find it no surprise that my often associated client “iServe” is growing its footprint. As someone who has performed dozens of appraisals over the years for this company, I say thanks to you and your staff for always being professional. But I do have a question for you Ken Michael. Approximately 1 year ago your company started using a software portal provider (GlobalDMS) and most recently started using a separate provider (Mercury Network). My question is this. If these portals are being used for the benefit of your company, than why must the appraiser pay out of pocket $13 to $15 per transaction, just for the ability to upload the report for you review? If the automated process helps reduces your company’s staff and lower costs, then why not pick up the appraisal delivery fees? Or if the portal system is designed to help meet the regulations to protect the consumer, than educate and disclose as such on the HUD-1 and bill the borrower. As previously stated in other comments I have posted on this site, the Mercury Network was recently sold off and the press release offers interesting reading. Although these $13 to $15 fees to the appraiser sound innocent, the Mercury Network conducts 20,000 transactions a day, and at a fee of $13.75 per transaction, this single company could generate gross fees of 100 million a year. I ask Mr. Michael, will you reconsider not charging the appraiser for delivery fees?
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Thu Jun 11 2015, 4:00 PM
Plan for the worst and hope for the best? As in "this is how bad it COULD get" based on past precedent. It might not get that bad, but it's easier to plan on that and be pleasantly surprised if it doesn't happen than to be complacent and shocked if it does.
on Thu Jun 11 2015, 1:23 PM
I think many are missing the point concerning my recent posts about multiple reports of violations of the Loan Originator Compensation (LOC) Rule. I ask the following questions. With 3 reported violations this month (multi-million dollar settlements), are these isolated incidents or just a scratch on the surface? What type of culture was present at these companies when these illegal schemes were filtered from CEO’s/branch managers down? And most importantly, what can be done to reduce or eliminate future violations? If I take that last question and insert “appraiser violations”, the laundry list of changes to the appraisal profession have been extensive. In suggesting a flat fee for LO’s I was simply applying the same solution (in part) that the government wrote into the CFFB as it relates to appraiser compensation. The government has suggested within the CFFB that appraisers are to be paid a set fee (customary and reasonable) (traditionally by state) as determined by way of independent studies or known government appraisal fees (VA). I ask will this customary and reasonable flat LO fee be double what the typical rate is now? Are you in fact doing double the work? While proposing a similar solution to what has already happened within my industry, I’m not sure why my suggestions have been called, misguided, an attack on the entire mortgage industry, etc. As a certified appraiser our industry has also been under attack as it relates to entry into the field, and I ask, will raising the requirements for LO’s help weed out the bad immoral apples that have been featured in the past few days? If the trip to hold a license takes 6 to 8 years, will these people take a different paths in life? I’m hoping these recent LOC rule violations are isolated and not the sign of a bigger problem, but as an industry, we must have an open debate on what the solutions are to fix them.
on Thu Jun 11 2015, 10:23 AM
on Thu Jun 11 2015, 9:34 AM
sorry for the grammar... this just gets my blood boiling...
on Thu Jun 11 2015, 9:26 AM
This is the way I put it to make sense the laymen. I want to go back to 'old' days and charge what I thought was a fair rate (YSP or SRP). I work twice as hard now for half as much. The only ones making money are the Executives and CEOs So instead of me making 2-3pts on a deal and putting that money back into my local Market. Now all my $$ goes to arse VP who does nothing.....but gets richer.. So yes lets punish us hard working LO. Example: when your car breaks down does the Govt set a price they can charge you no matter how hard your work? NO. So why should work less for the pain in the arse loan? well I don't.. and once again the people who suffer are the ones they so wanted to protect..
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Thu Jun 11 2015, 2:55 AM
Bill--I think Jason makes a valid point-we are both on the same side, but your understanding of the mortgage industry is misguided. You admit you lost the battle with the CFPB as it related to customary and reasonable pay, but have won a victory in the state of Louisiana. Perhaps the Louisiana state regulations will set a precedent and provide you with a foundation to rally more people within your own industry to create more fairness in the fees you are paid. You obviously have a tremendous passion and a lot of experience in your field, and that passion has a much better chance of resonating among others that do what you do for a living.
on Wed Jun 10 2015, 10:30 PM
Bill....I truly appreciate your passion for the industry. That type of involvement and intellectual curiosity is generally associated with someone who cares about what they do and is more likely to excel within their profession. My guess is you pride yourself on the work you do . A comp structure and regulatory framework that may not reward this passion as much as it should is surely frustrating. One of your prior posts on delegating work, and your challenge in doing that is one that particularly hit home. However, your understanding of the mortgage industry is misguided. I don't think anyone here will be able to help you understand. I have always thought it would be good for me to sit and chat with an appraiser sometime as I think with most I would share many of the same frustrations. I have a hard time agreeing with much of the content of your arguments about loan officers only because I know what we do every day to earn a living for our families and serve our clients and partners. I think you may benefit from considering that we are on the same side of the struggle within an industry that may prefer to automate and regulate us out of existence and that the vast majority of folks in both of our professions just want to do a good job, work hard and be rewarded accordingly.
on Wed Jun 10 2015, 8:02 PM
Jack, after years of effort, threats of boycotts, signed petitions, the Treasury Dept. changing the verbiage as it related to customary and reasonable pay, the appraisers have lost the battle with the CFFB. No appraiser wants to go back to endless free value checks, and chasing of payment when the loan doesn't work, but we do want the guidelines to be enforced as they were written. The appraisers have moved on from federal enforcement and are now focusing state by state. You won't read about on this site, but Louisiana has led the way in demanding fair appraiser compensation. Just this week a nationwide AMC (Coaster) was fined for not paying a fair fee so as to meet state requirements. With the state regulations in place appraisers in the state of LA will soon be charging 30 to 60% more.
on Wed Jun 10 2015, 7:40 PM
Frank, my posts are not meant to be argumentative to the mortgage industry as a whole, but to respond to the articles that are presented from an appraiser’s point of view. If the most recent headline on this site states “Third California Lender Fined for LOC Violations” then I think it’s important to ask what the hell is going on. The violations are not single lone wolf problems but seem to be company sponsored and employee supported. Under the heading, “Beware those Celebrity Studded Reverse Mortgage Ads – CFFB”, Ted responded by asking if LO fees should be based on cost of living or should LO’s make the same nationwide (Nebraska to LA)? My post in response was that the idea of a flat fee is not accepted by the appraiser profession, but it is here to stay. If it can happen to my industry, why not ask if your industry is next? As it relates to appraiser compensation, I find it fair when I’m paid at a customary and reasonable rate, and I would ask the LO flat fee to be fair as well.
on Wed Jun 10 2015, 7:30 PM
The CFPB seems to be adverse to any Loan People making a living. Is there a little jealousy regarding people earning their money? There is too much "regulation" of everything already. Selling a loan requires "work" so the LO should not take any compensation for doing his job, but should do it gratis to make everyone happy. I hate this stuff of worrying about how much the other guy is making...What do they call it? Envy? Ask how many of the consumers were unhappy about being able to get a loan when they wanted one. I agree with Jack Martin, while CFPB is regulating, who is regulating them?
on Wed Jun 10 2015, 7:11 PM
Let's go back, waaayyy back, to the days before Dodd-Frank and before CFPB. Our business was largely overseen by the DRE (California). sure there were crooks and rate gougers in the business, and there still are. The difference is that our industry was largely self-policing; the broker was the scapegoat when Wall Street and ratings agencies were to blame. Dodd and Frank had no background in lending, and now one is retired and the other head of the Motion Picture Association. The first casualty was the poor appraiser (pun?); so Mr. Johnson, you should be screaming at congress to bring back things to the way they were! For both of our industries! CFPB is a loose cannon and unregulated. My hats off to them though; instead of leaching off of our government like many of our social programs, if they need money to pay their "Secret Police", to just find someone to sue. Per another report, RPM had no real choice but to pay the $19mm instead of a long legal battle. HMMM, smells a lot like pre-WWII Germany doesn't it? Legal extortion?
Frank Ceizyk
Mortgage Industry Consumer Advocate,
on Wed Jun 10 2015, 6:44 PM
Bill--perhaps the lack of response comes from the confrontational nature of your posts. I have been supportive of your voice, but attacking the entire mortgage industry because you are unhappy with your compensation structure is certainly not going to gain you any allies.You also lower yourself to the same level of originators that would argue that many appraisers are idiots who don't understand markets in their areas and are out to kill deals because they are out of touch with market and sales trends. I don't think the flat fee structure your industry is paid is fair, but rather than asking us to adhere to the same fee structure you obviously loathe, propose a fair structure. You are basically attacking the industry that provides you with work. The function and expertise of an experienced originator requires much more than a knowledge of one component of the transaction--in order to be successful we have to market to get customers from realtors, referrals, financial planners, etc, have a superior knowledge of contract law, title insurance, credit report nuances, income analysis, asset analysis, disclosure requirements from a myriad of regulatory agencies, appraisal guidelines, market forces that affect timings of locks extensions and pricing exceptions, as well as managing the flow of the transaction and communications between compliance, underwriting, processing, document preparation and funding. And don't forget--we don't get paid if the deal doesn't close. Is it a flawed, ridiculous system? Absolutely. Does the entire compensation mechanism need to be revamped in light of the abuses you reference? No doubt. But if you as an appraiser think that proposing a revision to originating compensation to match the compensation that you obviously think is unfair is the solution to the industry ills, then you won't be getting any supportive responses on this site from anyone.
on Wed Jun 10 2015, 6:16 PM
As it relates to the appraiser profession Ted, there is no shortage of AMC companies or government agencies that want to set a flat fee. The VA pays out a set fee for entire states and could care less what the cost of living is or if the neighborhood/city you live in has a $700,000 median value or a $200,000 value. Most AMCs also have set fees per state and remarkably the higher cost of living states (big cities) often will get paid the same or less than middle America or the deep South. It should also be noted that politicians (DODD/Frank) have no issue trying to set a single customary and reasonable fee schedule when it comes to appraiser compensation. Realtor compensation is not in line with the extremely low requirements for entry (70 hours or less). This was evident this week when I killed the deal on 4, 4 unit properties at $670,000 each where the agents and brokers were going to split a 5% commission on $2,680,000 ($134,000). No agent thought to look into the current zoning or ask the question, "can the property be re-built if destroyed"? Ted, when you have multiple articles on this site bringing to light the systematic top down implementation of illegal LO payment schemes, a flat fee could help heal the damage. Raising the qualifications for LO/agent entry, and having a flat fee, could help cure the ongoing illegal practices.
on Wed Jun 10 2015, 5:23 PM
As this site is mostly directed to LO's, I ask, where is the outrage to these never ending articles about under the table / illegal payment schemes? These crimes are not examples of lone wolfs trying to get one over on the public, but systematic from the top down dirty companies and their employees. I asked last week and got little response, but to help with the temptation, I think there should be a flat fee for LO compensation. As a certified appraiser, my license requires that I obey USPAP guidelines and agree that my services / pay are independent of the final market value. Why do we then allow compensation to be based on the loan amount (LO) or the purchase price (agents)? I also think there's a direct connection between the low entry into the LO profession and the abundant articles mentioning multi-million dollar fines. If it took 6 to 8 years to obtain a license like that of a certified appraiser, and as is often the case, an additional 5 to 10 years of experience to gain work, would LO cheating be better or worse? With more to lose (difficulty & time to become licensed), I think the whistle blowing would be much sooner. If this article was appraiser related, on an appraisal website, there would be dozens of comments, but it will come as no shock when there is little to no responses.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Wed Jun 10 2015, 4:48 PM
Who do you propose sets that fixed commission for LO comp, Bill? Would it vary based on cost of living, or would an LO in Nebraska earn the same commission as one in LA? Would Realtors' comp be one set fee, regardless of purchase price as well? How about title companies, homeowner's insurance, home inspectors, and appraisers? Do you propose setting those costs nationally via executive decree, regardless of coverage amount, work involved, and geographic region? I had a borrower who had to pay $250 extra for his appraisal due to his location and appraiser's travel time. Isn't that really unfair on my borrower, not his fault that the appraiser lived so far away?
Ted Rood
Senior Loan Officer , MB Financial Bank
on Wed Jun 10 2015, 4:26 PM
What's next, paying for LO's "Wine of the Month" club from their overage, and calling it a quality incentive?
Curt Sandfort
Owner/Loan Officer, Premier Home Loans
on Wed Jun 10 2015, 4:20 PM
"marketing entities" good grief.
on Wed Jun 10 2015, 10:50 AM
Where would I find the "newsflash" referenced in the first paragraph of this post? I'm interested to learn more.
on Mon Jun 8 2015, 5:19 PM
Or perhaps there are real headwinds in housing that will affect it for years to come.
on Mon Jun 8 2015, 5:18 PM
Jason, with headlines on this site such as “CFPB Fines Lender for Paying Branch Manager on Interest Rates; Hedging Philosophy” and “CFPB Fines Lender over Expense Accounts”, I would disagree that the consumer is being protected. I would agree that society has bad apples, but how can the consumer be confident when these large companies setup illegal payment schemes and you have large groups of LO’s that throw their morals out the window to make a buck. Not that it would eliminate the problem altogether, but if the standards to become a LO were raised to that of a certified appraiser (often 6 to 8 years) then I think with more to lose, the morals may be higher.

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