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house Bill H.R. 3619

Should Appraisal Fees & Management Fees for Mortgage Applications be Disclosed to Consumers Up Front?

Argument in favor

Prospective homebuyers should receive as much transparency as possible about the fees associated with their home purchase. Therefore, they should receive separate estimates of the appraisal fee and appraisal management fee. Preventing creditors from charging customers the amount disclosed on the LE will protect customers from unscrupulous creditors who may try to raise appraisal management fees on customers midway through the loan process in order to make an extra buck.

jimK's Opinion
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09/19/2019
Years ago, we moved to different homes in different states several times and were often surprised at requirements to pay seller fees when purchasing, weird bank charges and other things- with the threat of not being able to complete the purchase unless we agreed since the 'seller' could not be reached or the brokerage lawyer was not available to make corrections. Being somewhat contrary, I resisted - threatening to walk out only for them to suddenly find the seller or the lawyer that was not available. Still split some costs we should not have- but we were not trampled. Latter moves were either in States that had better oversight or else abuses had been cleaned up generally. I don't know which. The point is that first time home buyers in particular, can be taken advantage of by costs that suddenly appear and threaten their new ‘dream home’ purchase; and who do not know that they are being taken advantage of. Yes, assure these purchases entail no ‘closing’ surprises.
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burrkitty's Opinion
···
09/19/2019
When is transparency ever bad? I don’t give a flying F#€£ about banks being inconvenienced or losing money from being honest. They are effing vultures anyway.
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Patricia's Opinion
···
09/19/2019
Why wouldn’t it already be disclosed!?!? The reason to hide it would be to rip off the consumer. Once again whose side is Congress on? the consumer or big business!?!?
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Argument opposed

This bill would effectively lock in appraisal management fees at the time of a mortgage application, and while that’s good for prospective homebuyers, it increases pressure on lenders and AMCs. This could lead to one of two undesirable situations: either lenders and AMCs lose money if they underestimate their appraisal management fees or lenders and AMCs respond to this bill by raising appraisal management fees to give themselves leeway on the fees, leading to higher costs for potential homebuyers.

Carmine's Opinion
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09/19/2019
This bill would effectively lock in appraisal management fees at the time of a mortgage application, and while that’s good for prospective homebuyers, it increases pressure on lenders and AMCs. This could lead to one of two undesirable situations: either lenders and AMCs lose money if they underestimate their appraisal management fees or lenders and AMCs respond to this bill by raising appraisal management fees to give themselves leeway on the fees, leading to higher costs for potential homebuyers.
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Darlene's Opinion
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09/19/2019
A better mechanism is approximate fees. This give both parties ballpark figures but does not lock down the fees.
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Doug's Opinion
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09/19/2019
These items are already disclosed, if you know where to look or ask for the documents to be explained to you.
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What is House Bill H.R. 3619?

This bill — the Appraisal Reform Act of 2019 — would amend the TILA-RESPA Integrated Disclosure (TRID) rules to require the disclosure of the appraisal management fee separate from the appraisal fee on the Loan Estimate (LE) and Closing Disclosure (CD). This would mean each fee would need to be disclosed separately.

Further, this bill would require the creditor to not charge the consumer more than the amount disclosed on the LE unless there’s a valid “changed circumstance,” defined as: 

  • An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction;
  • Information specific to the consumer or transaction that the creditor relied upon when providing the disclosure and that was inaccurate or changed after the disclosures were provided; or
  • New information specific to the consumer or transaction that the creditor did not rely when providing the disclosure.

Absent a valid changed circumstance, a creditor wouldn’t be able to adjust the appraisal management fee three days after a mortgage application is provided, even if it determines that additional work is needed.

Impact

Homebuyers; lenders and appraisal management companies (AMCs); Loan Estimates (LEs) for mortgages; Closing Disclosures (CDs) for mortgages; fee disclosures for mortgages; and TILA/RESPA.

Cost of House Bill H.R. 3619

A CBO cost estimate is unavailable.

More Information

In-DepthRep. William Lacy Clay (D-MO) introduced this bill to require lenders and appraisal management companies (AMCs) to disclose appraisal management upfront and give them to consumers shortly after receiving a mortgage application. In a press release, he says: 

“AMCs facilitate more than two-thirds of all appraisals, according to estimates. For closed-end forward mortgage transactions, TRID requires a creditor to provide the consumer with a good faith estimate of the credit costs and transaction terms no later than the third business day after receiving the application. For certain unaffiliated charges for which the consumer is not allowed to shop (such as appraisal fees), the creditor must not charge the consumer more than the amount disclosed on the LE unless there is a valid changed circumstance. These are ‘zero tolerance’ fees, meaning that the creditor must reimburse the consumer for the amount by which the actual charge exceeds the amount disclosed on the LE.”

Independent appraisers have pushed for separate fee disclosures since the TRID forms were implemented in 2015. Writing for Alston & Bird’s Consumer Finance ABstract, Nanci Weissgold notes that this bill could impose an additional burden on lenders and AMCs by effectively locking in appraisal management fees at the time of application.

This legislation passed the House Financial Services Committee by voice vote with the support of two bipartisan cosponsors (one from each party).


Of NoteThe loan estimate (LE) provides disclosures meant to help consumers understand a mortgage loan transaction. The closing disclosure (CD) provides the actual transaction costs. As amended by the Dodd-Frank Act, Section 4(c) of the RESPA currently allows the optional disclosure of the appraisal management fee separate from the appraisal fee. However, it doesn’t require separate itemization on the LE and CD. 


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / valentinrussanov)

AKA

Appraisal Fee Transparency Act of 2019

Official Title

To amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to provide the Appraisal Subcommittee with the authority to modify annual registry fees for appraisal management companies, to maintain a registry of trainees and charge a lower trainee registry fee, and to allow grants to States to assist appraiser and potential appraiser compliance with the Real Property Appraiser Qualification Criteria, and for other purposes.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
  • The house has not voted
      house Committees
      Committee on Financial Services
    IntroducedJuly 5th, 2019
    Years ago, we moved to different homes in different states several times and were often surprised at requirements to pay seller fees when purchasing, weird bank charges and other things- with the threat of not being able to complete the purchase unless we agreed since the 'seller' could not be reached or the brokerage lawyer was not available to make corrections. Being somewhat contrary, I resisted - threatening to walk out only for them to suddenly find the seller or the lawyer that was not available. Still split some costs we should not have- but we were not trampled. Latter moves were either in States that had better oversight or else abuses had been cleaned up generally. I don't know which. The point is that first time home buyers in particular, can be taken advantage of by costs that suddenly appear and threaten their new ‘dream home’ purchase; and who do not know that they are being taken advantage of. Yes, assure these purchases entail no ‘closing’ surprises.
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    When is transparency ever bad? I don’t give a flying F#€£ about banks being inconvenienced or losing money from being honest. They are effing vultures anyway.
    Like (25)
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    Why wouldn’t it already be disclosed!?!? The reason to hide it would be to rip off the consumer. Once again whose side is Congress on? the consumer or big business!?!?
    Like (18)
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    No one should ever borrow money without full disclosure of all fees along with all other terms of the loan agreement.
    Like (15)
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    Informed consumers is important.
    Like (13)
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    Yes. And if not, the seller and lawyer and realtor should be held liable and accountable. It is an outrage
    Like (11)
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    All fees not absolutely visible to the buyer or seller should be disclosed and explained to seller/sellee...why wouldn’t if or shouldn’t it be!!!
    Like (8)
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    Full disclosure should be the law. All other aspects of reality transactions require full disclosure or risk of breach of contract.
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    Yes! Any cost to the consumer whether buying a house or anything should be made known verbally and when in print it is obvious and not so small it is missed.
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    Lenders will just raise fees.
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    Prospective homebuyers should receive as much transparency as possible about the fees associated with their home purchase. Therefore, they should receive separate estimates of the appraisal fee and appraisal management fee. Preventing creditors from charging customers the amount disclosed on the LE will protect customers from unscrupulous creditors who may try to raise appraisal management fees on customers midway through the loan process in order to make an extra buck.
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    Hidden fees of any sort are wrong. Why is this a question?
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    We should encourage the most transparency for prospective homeowners, especially for first time buyers who are unfamiliar with the process.
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    Yes. Disclosure up front is essential.
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    Of course. How else can you plan?
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    Of course
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    Yes and the only reason somebody would not want to do it it's because they're trying to pull something over on the people!
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    Why would you not have to disclose - unless there is illegal manipulation.
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    Transparency is key. Why wouldn’t one want that?
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    Transparency always a good thing.
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