CrossCountry Mortgage sued over inflated appraisal fees

A Florida resident is challenging appraisal fees in a new class action lawsuit against a major lender and an appraisal management company. 

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Clayton Bernholtz sued CrossCountry Mortgage and Class Valuation last month for unjust enrichment, in a state filing the AMC removed to a federal court last week. The 16-page complaint argues that the companies are overcharging borrowers for appraisals and keeping consumers in the dark about the fee breakdown. 

The lawsuit suggests that the appraisal fees ranging from $450 to over $1,000 are contributing to today’s affordability pressures. The filing cites a 2024 paper by an industry group which found some AMCs keeping 40% to 70% of the fees consumers paid for the appraisal. 

“The conduct at issue is a direct contributor to the nationwide home affordability crisis, as it results in needlessly inflated fees to those seeking to purchase a home,” wrote Alex Schultz of Hilgers PLLC, on behalf of Bernholtz, in an email Monday. 

The plaintiff says he paid a $700 fee for an appraisal prior to the closing of his home with CrossCountry Mortgage, a fee he described as an appraisal fee and an “undisclosed management fee.” Bernholtz claims he didn’t receive any disclosures from Class Valuation about its role in the appraisal nor the services it provided. 

The complaint didn’t include a screenshot of Bernholtz’s closing disclosure. Spokespersons for both Class Valuation and CrossCountry Mortgage didn’t respond to requests for comment Monday. 

Criticizing AMCs

The lawsuit criticizes the role of AMCs of giving lenders liability protection while handing off the appraisal work to an independent professional. 

Bernholtz cites a 2024 report by the Appraisal Regulation Compliance Council, which the nonprofit group shared in response to the Consumer Financial Protection Bureau’s past inquiry around junk fees. The AARC found in a smaller sample size that AMCs, including Class Valuation regularly earned a 60% or greater profit in receiving the lender’s appraisal payment from a home buyer, minus the appraiser payout. 

The plaintiff said AMCs need to inform consumers of the fee structure, to promote an efficient market. 

“This would give consumers a chance to demand that lenders compete for the borrower’s business by securing more competitive appraisal fees, and the right to demand a fee that corresponds to the actual appraisal work performed,” the complaint read. 

The complainant wants to certify a class of Florida citizens who since October 2021 paid an appraisal fee for a CrossCountry Mortgage transaction, in which an AMC received the fee. Bernholtz is also suing the companies for violating the Florida Deceptive and Unfair Trade Practices Act. 

A similar class action lawsuit over allegedly inflated appraisal fees against Clear Capital, Rocket Mortgage and AMC Core Valuation Management is also pending in a California state court. The nonprofit Appraisal Institute, which flagged the case, said it’s advocated for greater transparency in appraisal fees.