Will TRID have an impact on appraisal fees?

With TRID implementation lenders will not be asking appraisers for an hours worth of research so they can request a warranted higher appraisal fee, but rather they are setting a flat fee (0 adjustment section) and telling our industry to take it or leave regardless of the complexities. The lender is trying to obtain business from the borrower and is motivated to keep all costs to a minimum including the appraisal fee. Lenders have shown NO concern that the average split appraisal fee of today (80% via AMC’s) is equal to wages from 20 years ago, so why would they change with TRID? In setting a standard fee now, they are not taking into account the higher entry standards into the profession (7 to 10 years), higher business expenses, the increased scope of work and NOW will not consider appraiser input prior to setting a nonnegotiable appraisal fee. If the borrower is shopping for a loan, and lender AAA correctly identifies the property as complex and bumps the appraisal fee up $200, will lender BBB have a better chance to obtain the loan if they did not adjust the appraisal fee up (lower total fees)? What motivation will the lender have to raise the total cost of the loan (higher appraisal fee) when it could hurt their bottom line? As useless as Dodd/Frank is, it at least established that an appraiser could request higher fees based on property complexity, but if the fees are going to be preset by way of the new regulation, I believe this is an issue. You can forget telling the lender the property is complex because it is a 5,000 sf detached condominium with an accessory unit that is located Ocean/Bay front, etc.. What specific state, county, city, neighborhood, PUD/condo project, property characteristic data is going to be available to the lender to establish the appraisal fee in advance? Will the lender be able to compute the higher liability to the appraiser when there is a lower % down payment, pending litigation within the development, an investor flip with a seemingly overnight increase in value of 20 to 50%? With the home address known by the lender but the specific appraiser unknown at the time the documents are presented to the borrower, how will the lender know the travel distance to the property for the appraiser? As a business, does the appraiser get to bill for added expenses (travel)? In more isolated areas with round trips often in the 100 to 150 mile range, is the appraiser simply going to eat the costs? When complex property characteristics are unknown (undisclosed guest quarters, illegal conversions, etc.), will we be asked to compete the assignment at the same fee? With appraisal fees locked in, will asking for a complexity fees post inspection create bad blood toward the appraiser (responsible for delays) and create undo pressure not to disclose complexities in the future? With AMC’s working with multiple lenders that have significantly varying scope of work requirements between clients, with their SET appraisal fee policy, will the appraiser have the option to counter offer? Again, Dodd/Frank does give this ammunition (varying scope of work) to the appraiser to ask for higher fees, but with a flat fee is the appraiser out of luck? With TRID and a flat appraisal fee established in advance, lenders are AGAIN asking us to do more for the same fee.

1 Answer

Obviously, no one here is able to answer these "questions" with any degree of accuracy, Bill. Have you contacted CFPB to voice your concerns? How about your congressmen? What have any professional appraisal groups done to make the powers that be aware of the possible impact of the requirements? Merely venting on a mortgage chat room will have no impact, seems like your efforts might be better spent in a manner that could produce credible results.