One of the thorniest issues surrounding mortgage lending is the fees, established by appraisal management companies, and paid to appraisers for property appraisals.
That could change soon, thanks to a technological innovation created by an AMC.
The issue surrounding appraisal fees stems from the somewhat vague definition of “customary and reasonable fees,” which are the fees to be paid to the appraiser by the appraisal management company for an appraisal.
The vague definition comes from the Dodd-Frank Wall Street Reform Act, which established that AMCs would be required to pay appraisers “customary and reasonable” fees for an appraisal based on a number of factors.
In many instances, the rules surrounding customary and reasonable fees vary from state to state and market to market. The fluid nature of the fees led to several conflicts between appraisers and AMCs over what exactly is “customary and reasonable.”
But those days could be over soon, courtesy of CoesterVMS, which recently filed for a patent for its customary and reasonable fee appraisal fee disclosure calculator.
According Brian Coester, CEO of CoesterVMS, the appraisal fee calculator provides an accurate fee rate quote for an appraisal, using a number of factors, both local and national, to determine a precise appraisal fee amount.
Per details provided by CoesterVMS, which is an AMC, the appraisal fee calculator can save lenders time and money and assists in compliance with customary and reasonable fee calculation.
According to CoesterVMS, the appraisal fee calculator is designed to help loan officers comply with TILA-RESPA Integrated Disclosure requirements, as well as the Dodd-Frank customary and reasonable fee payment requirements under federal and state law.
“It helps eliminate the back and forth on appraiser fee data,” CoesterVMS said in a release.
According to details provided by the company, the quote estimate includes multiple factors including the customary and reasonable appraiser fee for a selected valuation product in a property market, finished square footage, lot size and complexity of the file.
In a statement, Coester said that the appraisal fee calculator takes much of the guesswork and conjecture out of the process and replaces it with quantifiable information.
“We are confident that our fee calculator improves the valuation process and is the way forward for the industry,” Coester said.
It's been a busy year for Coester; HousingWire named him to both the Rising Stars and Vanguard awards for outstanding performance among younger members of mortgage finance and excellent leadership values, respectively.
“We have several data service providers that use our calculator already for customary and reasonable fee calculation and that is the reason why we are filing for a patent,” Coester continued.
“The industry needs tools such as our disclosure calculator for compliance and to ensure that valuation fees are not a surprise,” Coester continued. “Ultimately, every lender and appraisal management company will need the ability to quote an exact fee and we are glad to be the first company to offer this to the industry.”
