Mortgagee Letter 09-28 discusses appraiser independence and appraiser fees. This letter requires FHA approved lenders to ensure that all parties to the appraisal process; appraisers, AMC’s or other third parties, are compensated at rates that are customary and reasonable and are commensurate with the level of the respective service provided. What does customary and reasonable mean? This can be interpreted differently by anyone reading the letter. HUD responds with this:
"Customary and reasonable appraisal fees are reflective of those fees established and negotiated by an FHA approved self employed independent fee appraiser or an appraisal firm that may directly employ FHA approved roster appraisers or retain FHA approved roster appraisers as independent contractors, for appraisal services rendered, regardless of whether a lender, AMC or a 3rd party company or vendor is ordering/requesting appraisal services. The fee charged must be commensurate with the level of services provided and should reflect the amount of research, level of difficulty, and due diligence required on the appraiser’s part to produce a credible, reliable and accurate appraisal report that is in compliance with all FHA guidelines and USPAP."
The customary appraisal fees in the Hampton Roads market is between $350 and $400 for a single family appraisal. This is far from the $150 to $250 that AMC's want to pay for FHA appraisals. So when is FHA going to enforce this guideline that they set? They are quick to enforce the guidelines having to do with writing the reports and our analysis. I sure hope the FHA backs us appraisers on this and does it quickly. We can't keep working at these low fees. I hate to keep harping on this subject but it is tough times right now. Our educational requirements and licensing requirements have increased as well as what we are required to include in the report, which means we are investing more time in each assignment and our pay is decreasing. We need help and we need it soon! I have bills I need to pay and we are losing good appraisers.