Customary and Reasonable Fees
The Dodd-Frank requirement that appraisers must be paid fees that are customary and reasonable for the market area and property type, regardless of whether they are engaged directly by a lender or through an AMC.
This provision was enacted to address concerns that AMCs were significantly reducing appraiser compensation. "Customary" refers to the typical fee charged for similar services in the geographic area, while "reasonable" accounts for the scope and complexity of the assignment. Compliance can be demonstrated through fee surveys, academic studies, or the AMC's own analysis of market rates. Despite this requirement, many appraisers argue that AMC fees remain below pre-AMC levels, which has contributed to appraiser shortages in some markets.
Related Terms
Appraisal Management Company (AMC)
AMCA third-party company that manages the appraisal process on behalf of lenders, handling appraiser selection, order assignment, quality review, and delivery.
Dodd-Frank Act (Appraisal Provisions)
The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..
Appraiser Independence
The legal requirement that appraisers must be free from improper influence, coercion, or pressure from parties with a financial interest in the transaction outcome.
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USPAPThe nationally recognized ethical and performance standards for the appraisal profession, established by The Appraisal Foundation.
FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act)
FIRREAThe 1989 federal law that established the modern appraisal regulatory framework, requiring state licensing of appraisers and USPAP compliance for all federally related real estate transactions..
Competency Rule
A USPAP rule requiring that an appraiser must have the knowledge and experience necessary to complete an assignment competently, or must take steps to acquire it before accepting the assignment..
USPAP Ethics Rule
The USPAP rule establishing requirements for appraiser conduct, management, confidentiality, and record keeping.