The Louisiana Real Estate Appraisers Board has fined an appraisal management company $5,000 for failing to pay "customary and reasonable" fees to appraisers.
It marks the first time a state has taken action against an AMC under a provision of the Dodd-Frank Act.
Coester Appraisal Management of Rockville, Md., was ordered Thursday by the Louisiana appraisal board to use a third-party appraisal fee schedule compiled by the Southeastern Louisiana University Business Center in Hammond, La.
The company also must submit detailed quarterly activity reports to the state appraisal board for a year and forfeit all rights of appeal, said Bruce Unangst, the board's executive director.
Coester, which has a network of roughly 3,000 appraisers in 50 states, did not admit wrongdoing. The company's lawyer, Robert Rieger, with Adams and Reese LLP, declined to comment.
A provision of Dodd-Frank requires that mortgage lenders pay appraisers "customary and reasonable" fees.
But appraisers have long complained that AMCs take a cut of their appraisal fees, in violation of the law.
Unangst said the Louisiana board intends "to continue to move aggressively in providing a level playing field for all industry participants."
The Dodd-Frank appraisal standards were created to address the fee compression that is said to have resulted from the Home Valuation Code of Conduct, which took effect in 2009 and barred loan officers and brokers from selecting appraisers. Many blame the HVCC which sought to prevent commissioned sales representatives from bullying appraisers into inflating valuations for driving business to appraisal management companies that act as middlemen. Traditionally, AMCs took a cut of the fees for the appraisals they arranged.