FHA Changes Appraisal Fee Policy

The Federal Housing Administration is giving appraisers the freedom to record their fee on the appraisal report that is separate from the fee charged by the appraisal management company. "The fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal," FHA mortgagee letter 2009-28 says. Previously, FHA required the appraiser and management company's fees to be combined and based on customary and reasonable fees in the local market. Appraisers claimed this policy inadvertently capped the fees they could charge. The new policy "correctly separates fees for services charged by appraisers from the fees charged by appraisal management companies, allowing each to float at reasonable and customary levels," the Appraisal Institute said. FHA does not require lenders to use AMCs. But if they do, lenders must "ensure that FHA appraisers are not prohibited" by the AMC from recording their fee.