The New York Times recently took a look at the home appraisal industry and how it works and doesn't work:
Appraisers who work on behalf of these companies typically receive less pay than those who do not. Some appraisers say the lower fees mean consumers are less likely to get a high-quality appraisal, which could jeopardize their loans. . . In the New York region, for example, an appraisal of a single-family home will cost around $300 to $500. But independent appraisers say that when a big bank orders an appraisal, it typically pays the appraiser about $200 of that fee and pockets the rest.
Here's what Congress should do: Require that lenders disclose to home buyers how much of the money they pay for the appraisal is actually used for the appraisal -- and how much is just skimmed off for an undisclosed profit for the bank.
Given all the cash that United States taxpayer has poured into Bank of America, I think we deserve better than to be charged $600 for a $200 service and not told about the difference. There's is no way in hell that lenders should be allowed to profit by paying a third party to conduct the appraisal without that being disclosed to the consumer. That just seems obvious. There's nothing wrong with a lender paying $200 for a third-party appraisal and charging the consumer $600 for it: But the consumer should be told that that's what's happening.
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