Federal Reserve Comments

* In response to an invitation to comment on Interim Final Rules we, the undersigned, offer the following comments:

As currently presented the Interim Final Rules have an inherent conflict within “Presumptions 1 and 2” of Customary and Reasonable Fees. This inconsistency is evident by allowing the lender to be compliant by adherence to two diametrically opposed options:

o Presumption 1: Established market fees without specific exclusion of fees paid by AMC

o Presumption 2: Established market fees with specific exclusion of fees paid by AMC (as proposed by the Act)

The existence of Presumption 1 is in conflict with the Congressional intent of Title 14 of the Dodd-Frank Act.
In order to protect lenders and consumers, Congress recognized the critical importance of engaging appraisers at a fee that allows for thorough analysis and diligence by the most competent appraiser. Not engagement based on lowest fee and rushed completion expectations.

Solutions:
o Removal of Presumption 1 in order to remain compliant with original Congressional intent as defined in Presumption 2

o If removal of Presumption 1 is not an option: Clarification that 100% of the fee paid by the consumer is the fee to be paid to the appraiser. Appraisal Management Company fees must be paid by the institution receiving the benefit of these services, the lender, not the consumer. AMC management fees can be defined any number of ways and customarily by Request For Proposal.

Appraisers recognize the valuable services AMCs provide to the lending community, however, the benefits enjoyed by a lender from the AMC’s national coverage, loan underwriting functions, appraiser independence compliance, etc should not be borne by the appraiser through the reduced appraiser fees paid by AMC’s.

Credible appraisal reports play an integral role in the safety and soundness of the lending process. As intended by Congress, Presumption 2 will provide consumer and lender with valuations established by professional appraisers with the resources and time to complete a thorough valuation.