A Loos Blog

Finally the Federal Government has passed H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009. 

One key feature of this legislation is that it stops the practice of secret fees collected by the Appraisal Management Companies.  For years the “AMC’s” kept a portion of the appraisal fee paid by the borrower and did not disclose this to fee-split anyone including the borrower.    The split of fees is not the issue.  If the AMC provides a good value to the borrower and appraiser, then the service provided may well be worth the fee paid to the AMC.

The issue is that every other person involved in the real estate transaction is required to disclose fee and fee splits to the borrower – these are most often reported at closing on the HUD-1 form. 

The bill has other very important features, such as requiring an interior inspection on all sub-prime loans, significant monetary penalties for violating appraisal independence,  and providing stronger resources for state and federal oversight and enforcement. 

To view this legislation, visit Appraisal Institutes News Article:

AI HR1728