Truth In Lending?

Anyone who has been in the industry for more than 10 minutes is fully aware of a little old Federal Law, commonly called Truth in Lending. This law was established in 1968 to make sure that consumers had rights and choices when it came to credit. Primarily consumer credit, but there are several provisions that specifically address real estate mortgages as well.

So what? Well, in speaking with a few REALTOR friends of mine, it came as no shock to find out that most HUD 1 closing statements do not show the appraisal fee separate from the fee that is charged by the AMC. Would consumers be concerned at all in knowing that the $450 fee they were charged for the appraisal was actually $200 (or less to the appraiser) and the rest was to the management company.

There have been a lot of discussions flying around the Internet about what is customary and reasonable for an appraisal fee, but I think this discussion is moot. Appraisers did this one to themselves by agreeing to work so very cheaply in the first place. Of course with the federal legislation that was put into place, appraisers who are conducting mortgage appraisals are forced to work with management companies of one type or another and this puts all appraisers into a boat that was not built by all appraisers. In other words, the few appraisers who agreed to work for pennies on the dollar have now set the prices that all appraisers are expected to accept. Although tragic, this is not the worst of it. Consumers are now being misled. They are being charged more and more for appraisal fees when the real fee is for management and marketing. The appraisal fee is well concealed.

Does this concern anyone other than just me? Consumers speak out. Attorneys feel free to jump on board and investigate anyone who has closed a loan since January 1, 2011. You might find you are opening a very large can of worms that no one wants opened.

Score one for the Good Guys

According to FACT, the Texas Governor signed HB 2375 into law on Friday. This legislation modifies the current occupational code that governs how a real estate appraiser conducts business within the State of TexasAmong the more significant changes are:

  • Brings the TALC Statute into compliance with current terminology and State and Federal Laws relating to the regulation of real estate appraisers.
  • Makes it mandatory that a person be certified or licensed under the act in order to perform an appraisal in Texas.
  • Allows the TALC Board to delegate to the Commissioner the authority to approve consent orders and agreements to help expedite enforcement case closure.
  • Allows the board to solicit, accept and administer gifts, grants and donations.
  • Allows for a probationary certificate, license or trainee approval under specified conditions.
  • Allows for up to a 90 day period for late renewal of a certificate, license or trainee approval with payment of 1.5 times the required renewal fee – does not allow appraisal practice during the late renewal period.
  • Requires an applicant to complete additional prescribed education after failing the licensing or certification exam three consecutive times.
  • Repeals the provisional license category.
I applaud the efforts of FACT and encourage Texas Appraisers to check out their site and get involved. It is time we engage and begin to take back our industry.