COD At The Door?

In the past, it was common for appraisers to collect their fees directly from the borrower at the time of the property visit (i.e., at the door).  I would take credit cards, checks, or cash while at the door. Many years ago, this was common. Now, however, that rarely happens and we usually have to wait 30- to 60-days for payment from the AMC client.  So recently, when I got a COD order from HUD, I was really surprised. In fact, I thought something was bogus. I needed to check this out since it was so out-of-the-ordinary.

To check it out, I got with my All Stars and Mastermind students, as well as my peers across this great country, to ask them what they thought of a COD coming thru HUD.  Some had never heard of such a request. Others told me it was an acceptable practice. In other words, there was no consensus as to what to do. So what did I decide to do?

I decided to do my own research.  I searched the Fannie Mae Selling Guide for some guidance on the matter.  I searched the HUD 4000.1 document for advice or instruction on collecting the fee from the property owner at the door.  I queried USPAP (via some USPAP experts) about what it said about such practices. I even looked at the Idaho appraisal statutes on-line to see of they could help me answer the collect-at-the-door question.  After all of this personal and secondary research, this is what I found:

ü  Freddie and Fannie do not allow appraisers to collect at the door.  The borrower must pay the correspondent lender the appraisal fee, which then pays the appraiser once the entire loan process is complete (which includes a review, as may include a field review);

ü  FHA is not clear on the question.  However, I had a letter from HUD saying it was OK.  So I called my local HUD office and they told me to follow the mortgage letter (which itself was not clear).  However, FHA does not have any restrictions on COD.  Given this lack of clarity, I choose to interpret that as not allowing it;

ü  Idaho state appraisal statute (incomprehensible to me as a non-attorney) gave me no guidance on the question;

ü  USPAP says nothing on the issue since USPAP does not address an appraiser’s business plan or practices.  This is because USPAP is mainly about appraisal ethics, and says essentially nothing on a appraiser’s business practices;

ü  For non-lender work, it is perfectly OK to collect at the door since, in this case, the property owner is likely the client; and

ü  Since collection of the appraisal fee is not an appraisal function, but a business function, the above authorities (except for Fannie and Freddie) do not even address this issue.

 

Since there is so little guidance on this issue, to be on the safe side, I have chosen not to collect any fees at the door.  I expect to receive payment thru my client.  Note that my research is just that – my research.  If you were to research the issue, you might deduce a different answer.  Therefore, the collect-at-the-door question is one only you can answer.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 35 Can an Appraiser Collect at the Door (COD) on Financial Transactions

14 Comments on “COD At The Door?”

  1. Pingback: COD At The Door? - Appraisal Buzz

  2. 12 -20 years ago it was very common for the LOE to say COD at door. My problem was the homeowner about 50% of the time had NO idea they were supposed to pay my $250 or $300 bill . Some did , most did not. Then you got into a tussle with the AMC or realtor about getting paid. Glad we don’t to COD for Hud or AMC clients now

  3. I think it should go back to being COD. I NEVER and I mean NEVER had a problem collecting as I was clear at the time of making he appt that the $350+ fee was expected at time of inspection, cash, card, money order, cashiers check or Paypal. Or no appraisal can be conducted. I think all AMC’s should have us collect OUR part of the fee like we used to, that way COESTER and others can’t screw appraisers.

  4. I really don’t care who pays me, as long as I get paid in a timely fashion. Since HVCC COD disappeared and had to rely on the AMC for payment. Depending on the AMC, this could take from a week to three months or more. The longest wait was when we were paid at the close of escrow, which was around 30 days or less. Why the AMC will not pay in less than 30 days is a mystery to me. If some of them can pay in less than a week, why can’t they all do it?

  5. My only thought is that if the client has given you the okay to collect at the door and the FHA guidelines are vague I would confirm in writing through the scope of work that you will collect at the door. I would then put the responsibility thumbs up or down from the client. IF they remain silent then they have accepted your terms and since FHA is vague, in my opinion you would be covered. Since I rarely, if ever, do work for an AMC, I am not familiar with their payment practice but if they are waiting 60 days to pay on funds they have already collected based on their direction of collection from their client, the lender then I am with several others 60 days makes no sense. I guess that is another reason why I don’t work with AMC’s. Course they also don’t like my fee structure either, which may help me not work with them. My thought, confirm in writing and take the money and run to the bank. Seems to be more and more AMC’s going down the creek with a hole in their boat and no oars to paddle with.

  6. Just had USDA request the same thing, I called USDA and confirmed in some loan payoffs they are having the borrower pay for the appraisal directly. Very unusual now for this to happen.

  7. The only way I will accept COD at the door is from the client. Approximately 14 years ago I accepted a COD at the door assignment from an AMC and the owner did not pay. The AMC told me to proceed and it would be taken care of. I completed the assignment was was told by the AMC some 90+ days later that the owner claimed to pay me in cash. I never got paid and never did another assignment for that AMC.

  8. I have one lender that requires COD payments at the time of inspection by the borrower. They are a credit union who helps people rebuild their credit. I believe all the loans are kept in house.

  9. I always liked the COD except for the poor people that had to go through the finance companies. They were refinancing at 2 to 3 times the normal rate and usually their houses were in bad shape.

  10. I think ALL appraisal assignments should be COD at the door. Then there is no question as to what the Appraiser’s fee is, and there is no way for the AMC to add on huge fees and try to claim it went to the “appraisers fee”.

    When I was getting COD orders (before AMCs came to be) I always let the person know when I scheduled that the fee is due when I arrive, so no surprises. I also gave them a receipt that BOTH OF US SIGNED and I kept a copy as well. Then when I finished the inspection, I stopped at the same bank the check was drawn from and CASHED the check…no check deposits in my account. That way, if the check was no good, I knew right away, and wouldn’t complete the report or submit anything until I was paid.

    With this process, I always got paid and never had to wait 30, 60, 90 days the way some pay now. The worst thing about the way Appraisals are ordered now is when AMCs realized they could “negotiate” with appraisers to lower their fee and then add on anything they could get away with to the fee the AMC gets paid. Many DOUBLE the fee paid to the appraiser and the borrower NEVER HAS A CLUE because the TRID statements will NOT separate and identify the true Appraiser’s fee.

    We sincerely need transparency on all HUD / TRID paperwork to protect the borrowing public. CODs would stop all that.

  11. Compliments to Dustin for doing the research. Helps understand the difference between the various report users.

    But I’m with Brad on this one. If the LOE from the HUD lender said collect at the door, that’s what I would have done. That letter would be kept in my workfile also. And yes, per the other poster, providing a receipt to the borrower is a good idea.

    For private assignments, I always explain my fee collection process, which is to be paid by the client at the time of inspection…or if they are out of the area, to mail payment and once the check clears, the report will be transmitted. Never a problem with this.

    For private work, NEVER provide a completed report to the client until you are paid.

  12. I think we should definitely go back to the COD form of payment. As stated in previous comments, AMC’s are driving our prices down, for they are only looking for the lowest bid on an appraisal order so that they can keep their profits to a maximum. And as the saying goes – “you get what you paid for.” Also, AMC’s like Coester, can’t rip off appraiser’s – how do you sue an AMC that doesn’t pay you and is located 3,000 miles from you? Any suggestions?

  13. My question is why is the homeowner paying ever? It is a report for the bank, shouldn’t it be included in the bank fees? This is why homeowners think they can turn us in to the state for a low appraisal. If you pay for something you think you have a right to it.

  14. And I cashed the check on the way home! Got burned a few times, then, never delivered an appraisal until I had been paid. I liked it better than the AMC’s riding out their 45 days/

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