The Consumer Financial Protection Burean (CFPB) is taking dead aim at appraisal disclosures; but why should we care?
One of the CFPB’s key missions is to bring clarity and better disclosures about the often costly fees that home buyers and sellers are surprised with at closings.
In their most recent disclosure under review, the consumer agency is trying to make sure that appraisal disclosure is clear and understandable.
In a poll of its members last year by the National Assn. of Realtors, 70% reported consumers were being charged higher appraisal fees at closing — sometimes $100 more than was the typical charge previously.
At the same time, appraiser members reported sharp reductions in their own compensation, by 40% to 50% per assignment. Many of the Realtors polled also said they saw significant increases in the number of appraisers who were unfamiliar with local market conditions because they were from another geographic area.
So appraisal costs are increasing, appraisers are being paid less and are often done by people not familiar with the local market conditions. This sure seems like a good place for the CFPB to step in.
The CFPB has a statutory deadline in July to produce an improved version of the HUD-1 settlement form. How it comes down on real estate appraisal fee disclosures — more transparency for consumers or not — will be a revealing early test of the mission of the agency.