Home Lenders FAQs - Lenders What are the FHA/HUD requirements regarding the fees of an Appraisal Management Company (AMC) or Third Party Organization?
What are the FHA/HUD requirements regarding the fees of an Appraisal Management Company (AMC) or Third Party Organization?

FHA does not require the use of AMCs or other third party organizations for appraisal ordering, but recognizes that some lenders use AMCs and/or other third party organizations to help ensure appraiser independence. To address several questions that have already been raised regarding compensation, this mortgagee letter (ML 2009-28, dated: September 18, 2009, effective: January 01, 2010) corrects and expands existing fee requirements set forth in Mortgagee Letter 1997-46.

FHA-approved lenders must ensure that:

  • FHA Appraisers are not prohibited by the lender, AMC or other third party, from recording the fee the appraiser was paid for the performance of the appraisal in the appraisal report.
  • FHA Roster appraisers are compensated at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.
  • 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.
  • Any management fees charged by an AMC or other third party must be for actual services related to ordering, processing or reviewing of appraisals performed for FHA financing.
  • AMC and other third party fees must not exceed what is customary and reasonable for such services provided in the market area of the property being appraised.


Source: www.hud.gov, Mortgagee Letter 2009-28

 

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