The Appraiser Shortage Myth Part 43

[TRESinc]

Further, and I ask anyone more well-versed in regulations on the matter to chime in if I am misinterpreting, it is my understanding that Reasonable and Customary as laid out in the regs, requires the fees to be based on direct-lender work, not what AMCs receive through their atypical recruiting/assigning methods.

that is incorrect. there are two methods of determination of C&R.

C&R is a joke. i personally don't care what the government, an AMC or a direct-engagement clients thinks C&R is. i and i alone determine what C&R is for my business and if the client doesn't agree then we don't do business together. it's really just that simple.

 

[J Grant]

Yes, the massive growth of AMC business share was driven by regulations. Those regulations certainly do not require AMC use, but they created an environment that made use of AMCs an appealing option to lenders. There is a reason why so much business goes through AMCs, and that reason is that the AMCs provide a service to the lenders. Does it work perfectly? Absolutely not. I work every day to try to make it better.[/QUOTE]

You left out one critical thing- the AMC model has a huge market share not just doe to the regulations but the fact that AMC service is also FREE of cost to the lender ! How can they say no to that? What is more appealing than free service? Of course noting is "free" the AMC does not operate as normal way businesses do by charging a customer for service. The AMC profits from stripping away part of the borrower paid appraisal fee and keeping it . Thus though a bank technically "pays" an AMC, it costs them nohting.

The AMC free service to lenders/banks is made possible by the loophole in the HUD statement allowing a blended appraisal fee , with no cap on percentages are paid out.
This gives the AMC a huge competitive advantage. If that provision was gone, and the lenders/banks had to actually be charged the cost of using an AMC watch how fast they would dump them, or how low the rates to an AMC would plummet.

 

[timd354]

Another point that must not be over-looked here, is that the AMC model did not come to occupy the market share it enjoys today through traditional free-market behavior, rather has capitalized on government action that violently disrupted an other-wise free-market system

Funny thing is that the history books mention nothing about the days of government/AMC violent overthrow of the appraisal free market. It is odd that there are no stories of government/AMC armed good squads sending loan officers and mortgage brokers who still wanted to be allowed to order appraisals to the re-education camps or of them kicking in the doors of appraiser's homes and offices and forcing them to work at gun point for the AMCs at whatever fees the AMCs dictated...that must have been terrifying and only could have been covered up by a vast conspiracy at the highest levels of government. Eisenhower warned future about the military generations about the military-industrial complex, but it is too bad that he failed to warn us all about the Government-AMC appraiser enslavement complex.

 

[J Grant]

Why would anyone want that? Should barbers also have a minimum fee mandated by the government? How about a mechanic? Pilots? Nurses? Doctors? The lawn boy?

The government gave you Dodd Frank and now you want more government?

Barbers, mechanics, nurses , pilots ( everybody) can compete for buyers of their service in the open market...ANYONE can walk into a baber shop adn choose a barber, same for mechanic. Buyers are not prohibited by regulations from choosing a barber or mechanic, or nurse etc.

This is not the case of lender res appraisal for Fannie, FHA, Freddie/GSE work. Due to regulations The borrower can not choose the appraiser , and limiting the channels even further, individual loan offers can not select an appraiser. Which puts the consolidated buying power in very few hands, and one of those hands is the AMC, which has a vested interest in keeping fee portion paid to appraiser low.

How can you fail to understand the difference? So to address your question, I only want a mandated min fee, such as VA has, for govt regulated lender work for appraisers for that segment of work. I do not want a mandated min fee for barbers, mechanics, nurses etc ( though many of them have plenty of protection with min wage, collective bargaining, unions, labor laws )

The govt did not give me DF, the govt imposed Df ( much of it financial trading and lenders, very little about appraisers ), But since res lending appraiser work is stuck with a host of govt policy and regulation, then it might as well work in the appraiser's favor.

 

[Michigan CG]

Barbers, mechanics, nurses , pilots ( everybody) can compete for buyers of their service in the open market.

And you too can complete in the open market. I have about 25 assignments on my desk right now with about 15 being residential, not one of them is from an AMC.

 

[Eli]

Market power on price will kill the goose on antitrust issues.


Can I get a demonstration quality report?

Why not? Public trust involved like anititust law? Lol

Fastest and cheapest? Sour note.

 

[timd354]

Barbers, mechanics, nurses , pilots ( everybody) can compete for buyers of their service in the open market...ANYONE can walk into a baber shop adn choose a barber, same for mechanic. Buyers are not prohibited by regulations from choosing a barber or mechanic, or nurse etc.

This is not the case of lender res appraisal for Fannie, FHA, Freddie/GSE work. Due to regulations The borrower can not choose the appraiser , and limiting the channels even further, individual loan offers can not select an appraiser. Which puts the consolidated buying power in very few hands, and one of those hands is the AMC, which has a vested interest in keeping fee portion paid to appraiser low.

How can you fail to understand the difference? So to address your question, I only want a mandated min fee, such as VA has, for govt regulated lender work for appraisers for that segment of work. I do not want a mandated min fee for barbers, mechanics, nurses etc ( though many of them have plenty of protection with min wage, collective bargaining, unions, labor laws )

The govt did not give me DF, the govt imposed Df ( much of it financial trading and lenders, very little about appraisers ), But since res lending appraiser work is stuck with a host of govt policy and regulation, then it might as well work in the appraiser's favor.

Your post is complete nonsense. Borrowers can hire any appraiser anytime that they like if they want an appraisal for their own purposes. The reason that lenders it makes sense for lenders to be the ones to order appraisals is that lenders are the ones who the appraisal being done for (you don't pick the barber for your neighbor's haricut do you?) Some lenders order appraisals directly from the suppliers (appraisers) while other choose to order appraisals from wholesalers/aggregators (AMC's) just like what happens in many businesses, so why should appraising be any different than how the rest of the world works?

 

[timd354]

And you too can complete in the open market. I have about 25 assignments on my desk right now with about 15 being residential, not one of them is from an AMC.

Stop talking such crazy nonsense...having to compete in the open market and find clients is hard work, much more difficult than just being handed a government mandated fee as part of a mandated rotation.

 

[J Grant]

Relating from Danny's posts about housing markets and AMC's-

The AMC acts like a property flipper buyer, looking to buy at the lowest price and flip for resale ( the spread between what AMC can pay appraiser and $ they get from the lender who pays out from the borrower appraisal fee).

Moreover, this property flipper has mass purchasing power to buy many houses at a time and buy for years out. Their purchasing power has driven many individual buyers willing to pay more from the market . A few other mass purchasing power property flippers have done the same and now comprise the majority of the buying pool . Now the housing market is comprised of lots of individual sellers, with very few effective buyers, and these buyers have the same agenda ( buy at the lowest price)

 

[J Grant]

Your post is complete nonsense. Borrowers can hire any appraiser anytime that they like if they want an appraisal for their own purposes. The reason that lenders it makes sense for lenders to be the ones to order appraisals is that lenders are the ones who the appraisal being done for (you don't pick the barber for your neighbor's haricut do you?) Some lenders order appraisals directly from the suppliers (appraisers) while other choose to order appraisals from wholesalers/aggregators (AMC's) just like what happens in many businesses, so why should appraising be any different than how the rest of the world works?

Your post is bogus *. The topic is lender work, not work from borrowers. And the fact is individual borrowers rarely order appraisals, the volume is minuscule compared to lender volume.

I have not posted objecting to the fact that lenders are the ones to order appraisals ( I happen to agree with that ), I was pointing out the vast difference to Mich CG of what separates lending work from the normal market of barbers, nurses, etc, where anyone can select who to hire.

Appraisal is different from the way the rest of the world works, in your words, because lender appraisal are subject to a set of regulations that the rest of the world is not.