On February 9, 2017, Sen. Pamela J. Althoff in the Illinois Senate introduced legislation that would remove a provision requiring written disclosure to a mortgage loan applicant of the total compensation paid to the real estate appraiser when the home appraisal has been ordered through an appraisal management company. Basically, the state’s new legislation will increase home appraisal fees.
I recently posted about this on social media and not long after, fellow real estate appraiser Mr. Ryan Lundquist, from California, has outlined what happened with him in a recent experience in a blog post of his titled “The ugly truth about appraisal fees“. According to Mr. Lundquist California does not require disclosure of the compensation to the real estate appraiser, at the present time Illinois does.
The Issue: I was asked to appraise something challenging, so I quoted a fee that was higher than a standard fee in Sacramento but still reasonable for the job because the house was funky. Anyway, I was comfortable with the fee and it was accepted by the AMC (Appraisal Management Company) that the lender hired to manage the appraisal ordering process. But then things got interesting because through the course of the transaction someone showed me an email from the loan officer where I learned the AMC was actually charging the buyer $345 higher than the fee I quoted. What the?
I think this is a GIANT step backward and goes directly against ensuring public trust.
You should definitely read his post as his recent experience is a very good example of why repealing this law is a very, very bad idea.
Call For Action – Please OPPOSE SB1817
Make your voice heard and contact senate members of the Illinois General Assembly to oppose SB1817. Below is a sample letter:
Please OPPOSE SB1817
Dear [Decision Maker],
I write to express my strong opposition to SB1817 (Althoff), which removes a provision requiring written disclosure to a borrower or loan applicant of the total compensation to the appraiser or appraisal firm when an appraisal obtained through an appraisal management company is used for loan purposes.
It is common practice that appraisers are told NOT to attach an invoice to the appraisal report. If this provision is removed borrowers or loan applicants would not have the benefit of knowing the total compensation to the appraiser or appraisal firm. This legislation is a giant step backwards and severely clouds transparency in the loan application process. It puts borrowers or loan applicants at very high risk of questionable practices and being gouged on appraisal fees.
Please vote “NO” on this legislation.
[City, State, ZIP]
Did I leave anything out or do you want to join the conversation? Let me know in the comments below.
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Thanks for reading,
Since my original post, Mr. Lundquist has been interviewed by Kenneth R. Harney of the Chicago Tribune and he wrote an article related to this called “are you paying unseen add-on fees for your appraisal?” I encourage you to read it.