When you pay $450 to $550 at settlement for an appraisal on a home purchase or refinancing, do you assume that all or most of the money is going to the appraiser who performs the valuation?

That’s logical, but probably not correct. Despite new Federal Reserve regulations, which took effect April 1, that require lenders to pay appraisers fair fees, growing numbers of them say they are still being offered $200 to $250 — even as little as $134 — for work that gets billed out to consumers on settlement sheets at $450 and higher.

Last year’s Dodd-Frank financial reform law mandated that appraisers receive fees that are “customary and reasonable” for their local market areas, yet the largest national appraisal organization, the 25,000-member Appraisal Institute, says that is not happening. Leslie Sellers, immediate past president of the group, said in an interview that “the average fees across the country today are about $225 to $250 — nowhere near reasonable or customary” in most markets.

Who’s getting the differential between what consumers are billed and what appraisers are paid? Sellers says management companies that connect lenders with local appraisers take a percentage for their services. But often lenders “turn [appraisals] into a profit center of their own off the backs of appraisers and consumers themselves.”

Should you care? Absolutely, for several reasons:

l  Accurate appraisals are in your interest as a consumer. They can be deal-breakers on a purchase if they are low-balled. But performed competently, they are accurate measures of your equity when you refinance or seek a second mortgage.

l  Most experienced independent appraisers refuse to work for $200 to $250 because they can’t pay their overhead at those rates. Less-experienced appraisers who sometimes have to travel long distances from their home markets tend to be more willing to work for the lower amounts.

l  It’s a matter of principle: You resist overpaying for products elsewhere, so why not for appraisals? Besides, federal law prohibits home real estate settlement-related charges when no actual services are rendered. What additional services are being supplied when an appraiser is paid half of what you’re being charged by the lender at closing?

Tom Kirchmeyer, president of Kirchmeyer & Associates — an independent appraisal management company based in Buffalo, with 8,000 affiliated appraisers around the country — says consumers often have no idea what they’re really paying for because “there’s no transparency” in the process. Kirchmeyer favors mandatory disclosure of how much the appraiser is receiving and how much the appraisal management company that arranged the assignment is receiving. So does Richard Hagar of American Home Appraisals in Seattle, who says that major lenders that own or are affiliated with appraisal management companies oppose it, because they “know that if [the financial facts] are disclosed, consumers are going to riot.”

In a hypothetical example, say the appraiser receives $250 and the management company receives $100. How can the lender, which is charging $500 for “appraisal services” as noted on the HUD-1 standard settlement sheet, justify the $150 difference?

It can’t, says Gary Crabtree, head of Affiliated Appraisers in Bakersfield, Calif. Worse yet, he says, employing “subprime” appraisers for low fees often leads to lowballed valuations that are harmful to homeowners and buyers.

As a recent example, Crabtree says an unhappy homeowner showed him a valuation performed by a low-cost appraiser hired by the appraisal management affiliate of a large national bank. The house was 4,000 square feet, sited next to a country club, and the owner had just spent $250,000 on renovations.

Crabtree, who refuses to do appraisals for the low fees paid by the bank’s affiliate, said the house should have been valued around $600,000. But the appraiser hired for the assignment valued it at just $320,000, using distressed sales and properties located outside the area as comparables.

How is this happening when Congress mandated higher “customary and reasonable” fees? Appraisers say much of the blame goes to the Federal Reserve, whose regulations that took effect April 1 created a giant loophole for lenders and management companies that wanted to keep playing low-ball games with fees. The Fed rule allows them to consider their own low payments in their calculation of what is “customary and reasonable” — a concept that was never part of the Dodd-Frank legislation.

The Appraisal Institute’s Sellers says his group and others are seeking to persuade the Fed to tighten its regulation. But in the meantime, consumers should demand transparency: Of my $500 appraisal fee, who got what? And why?