Consumer complaint received 2024-06-03
Product: Mortgage — Home equity loan or line of credit (HELOC)
Issue: Closing on a mortgage — Fees or costs after closing
Company: CITIZENS FINANCIAL GROUP, INC. (PA)

I am writing in response to your request for information on fees imposed in residential mortgage transactions. With 24 years of experience as a professional certified XXXX XXXX XXXX, I have observed significant industry changes impacting both consumers and XXXX. 

When I began my career in 2000, XXXX XXXX were received directly from lenders and brokers, with fees paid either by the borrower directly to the XXXX or by the lender/broker after report completion. Challenges in obtaining payment for XXXX  were common if a loan did not close, often resulting in financial losses for XXXX. At that time, the typical fee for a full single-family XXXX  in my geographic was around XXXX XXXX {$350.00}. 

The subprime mortgage crisis brought about the Dodd-Frank Act and the establishment of the CFPB which was to protect consumers. While these measures have had positive effects, they have also introduced negative consequences for both consumers and XXXX. Borrowers are now required to cover not only the appraisal cost but also additional fees imposed by lenders for ordering and processing the appraisal, without clear disclosure. Many lenders prohibit appraisers from including invoices or discussing fees with borrowers, leading to misunderstandings and dissatisfaction by the consumer which reflects negatively on the appraiser.

For example, a borrower might believe they paid {$800.00} for an appraisal, while the appraiser receives only {$350.00}. The remaining amount is retained by AMCs ( Appraisal Management Companies ) as processing and sometimes there are additional technology fees charged to the appraiser. Attached are redacted examples to illustrate this issue : XXXX. XXXX XXXX XXXX : Pays {$180.00} for a hybrid report plus a {$20.00} technology fee, resulting in a net payment of {$160.00} to the appraiser. The actual borrower fee remains undisclosed. 
XXXX. XXXX XXXX XXXX : Offers {$330.00} minus a {$12.00} technology fee, netting {$320.00} to the appraiser. The AMC fee is {$240.00}, with the borrower unknowingly most likely paying {$580.00}. 
XXXX. XXXX XXXX : Offers {$220.00} for an FHA loan appraisal, a fee level unchanged from 2000, failing to meet the " customary and reasonable '' standards required by Dodd-Frank .

These examples highlight the disparity between what borrowers pay and what appraisers receive. The current environment incentivizes AMCs to secure appraisals at the lowest possible cost to maximize their portion of the fee. This often results in appraisers being underpaid relative to the professional standards and costs required to maintain licensure, education, and technology in addition to the consumer unknowingly paying a higher fee than what the appraiser receives under the misleading understanding that they are paying that fee for the appraisal.

The customary and reasonable fee requirement must reflect actual payments to appraisers rather than the total borrower charge to cover the cost of a vendor for the lender. The current system allows for non-transparent fee structures that disadvantage both consumers and appraisers.

I urge the CFPB to address these discrepancies and ensure transparency in fee structures. Implementing fair compensation standards will help sustain the XXXX XXXX and protect consumer interests.

Thank you for your attention to this matter.