Mortgage Lender and Appraisal Management Companies Face Class Action Lawsuit Over Appraisal Management Fee Disclosure: Is TRID a Defense or a Detriment?
On December 16, 2025, a class action lawsuit was filed in Florida court against two appraisal management companies (AMCs) and a large wholesale mortgage lender. The lawsuit alleges deceptive and unfair practices in violation of Florida’s trade practices statute, and fraudulent and negligent misrepresentation. The claims are based on the AMCs charging for an appraisal, only passing on a portion of the fee to the appraiser, not adding any “tangible benefit” to the process, and the lender and AMCs not disclosing the breakout of the fee. The TRID disclosures, which implement the statutory Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) disclosure requirements, disclose appraisal fees on both the Loan Estimate (LE) and the Closing Disclosure (CD). Is there risk to mortgage lenders and investors that do not require a breakout of the AMC fee? Can the mortgage industry use TRID as a defense in these types of cases?
I will generally highlight some points made in the complaint regarding the appraisal, AMCs, and TRID. The complaint alleges that the AMCs provide no benefits to the borrower, and that the only benefit to the lender is protection under appraiser independence laws. In addition, the complaint discusses how the Closing Disclosure (CD) discloses the appraisal fee and its recipient, but alleges that the CD does not disclose that the recipient is not the appraiser and that the AMC retains a significant portion of the fee. The complaint also argues that the CD comes too late anyway, because “the borrower has already chosen a lender…and gone through the application process” by the time it is received. The complaint also argues that the lender did not otherwise disclose these points to consumers, or that the lender uses the AMC for its own benefit. The complaint alleges that borrowers could demand more competitive appraisal fees if these aspects of the AMC fee were disclosed.
The complaint claims:
Violations by the AMCs of the Florida Deceptive and Unfair Trade Practices Act;
Unjust enrichment of the AMCs based on the AMC fees bearing “no connection to the value or cost of the services they provided”;
Fraudulent misrepresentation by the mortgage lender based on alleged misrepresentations that the “appraisal fees charged to Plaintiff were for appraisal services” when a “significant portion of the fees were retained by the AMCs for non-appraisal services” and the lender “knew that its representations were false”; and
Negligent misrepresentation by the mortgage lender based on the same facts as above.
I will make a couple points worth considering. First, although TRID requires disclosure of appraisal fees on the LE and CD (notably, the complaint did not mention the LE), and the lender’s disclosures may have been compliant with TRID, state law claims of misrepresentation or unfairness are different from federal compliance with technical disclosure rules. That being said, the issue of whether the AMC fee should be broken out on the LE and/or CD was dealt with by the CFPB when the TRID final rule was first issued in 2013 (I led this final rule when I was at the CFPB). The Dodd-Frank Act’s section 1475 added a provision to RESPA providing that the settlement statement required by RESPA (i.e., the CD) “may include, in the case of an appraisal coordinated by an appraisal management company…a clear disclosure of— (1) the fee paid directly to the appraiser by such company; and (2) the administration fee charged by such company.” 12 USC 2603(c) (emphasis added). The CFPB interpreted the word “may” (rightly so) as Congress making this breakout an option, but not requiring the breakout of the AMC fee. The CFPB stated regarding this issue in the preamble of the final rule, among other things, that “it would be inappropriate to use its authority to modify the statutory disclosure provision of Dodd-Frank Act section 1475, because requiring breakouts of such charges to be disclosed in all cases may tend to produce information overload.” In other words, the CFPB was worried that the breakout would actually harm overall consumer understanding of the transaction. This, and other statements made by the CFPB in the preamble and throughout the development of the final rule, may be helpful to the AMCs and the mortgage lender in defending claims of misrepresentation or unfairness. In addition, it bears mentioning that I have always advocated that consumer testing can be useful to defend against misrepresentation and deception claims. My experience leading the consumer testing of the TRID forms when I was at the CFPB has shown me what a powerful tool consumer testing can be in many different scenarios, including legal defenses.
Second, the mortgage industry should pay close attention to this case, and any similar cases regarding AMC fees. I have seen many, if not most, mortgage lenders not break out the AMC fee on the TRID forms, which is a compliant way to disclose such fees on the forms. But if state courts begin to find that such disclosure method is unfair, deceptive, or worse, fraudulent under state law, mortgage lenders and investors could find themselves facing class action lawsuits and significant liability.
Please email me at rich@garrishorn.com if you would like to discuss any of the issues in this blog post or legal assistance.
