The Appraiser Shortage Myth Part 43

[Michigan CG]

Setting a fee and capping a percent on the HUD are two different things.

Not different at all, both are price fixing.

 

[DWiley]

I think a feasible project for appraisers would be to work on a consumer outreach website that informs borrowers about AMC issues , fees, and how it impacts appraiser selection for their order.

How about this idea - As an appraiser, charge the appropriate fee for your service, regardless of how that service is engaged, and then don't worry about what others are charging. As a fee appraiser I never really cared what the title company, the flood company, the AMC (if there was one) or anyone else associated with a mortgage transaction was getting paid. I just charged my fee for my service. What others charged was not my concern. If an entity would not pay the fee that I set, then I just didn't accept work from them.

 

[J Grant]

Not different at all, both are price fixing.

It is not price fixing. The AMC can charge whatever price the AMC wants to the lender, and the lender is free to pay it.

All the cap does is limit the amount of $ to a % that can be taken from the borrower paid appraisal fee as a pass through payment to the AMC. The lender is free to pay $1000 an order to an AMC on top of that, if they are so inclined. .

 

[DWiley]

DW- The AMC charges the lender, and what the lender does with the borrower fees is a matter between the lender and the borrower, and has nothing to do with the AMC

Really? Doesn't' the lender take a percent from the total $ appraisal fee the borrower paid, and pass that percent on the the AMC as payment for the AMC service?

Why are you asking me? I don't work for a lender. We bill the lender. The lender pays. How the lender pays is up to the lender. And what we bill the lender has nothing to do with the lender's arrangement with the borrower.

 

[Evincere]

Yes, brokers are still around and still originating loans, but obviously do not have the market share that they once had. There are a few lenders do mostly broker/correspondent business - Flagstar is an example of a big lender that does a lot of broker and correspondent business and the top wholesale lenders (who buy broker loans) are United Wholesale Mortgage, Caliber Home Loans, Freedom Mortgage, and Plaza Home Mortgage per the latest numbers that I have seen.

You have named more than enough. Then, there are the ones you haven't named because you can't know or possibly name them all. And though collection/billing methods may vary, do not lead people to believe that Appraisal fees are not being collected from the Borrowers directly by management companies.

 

[J Grant]

How about this idea - As an appraiser, charge the appropriate fee for your service, regardless of how that service is engaged, and then don't worry about what others are charging. As a fee appraiser I never really cared what the title company, the flood company, the AMC (if there was one) or anyone else associated with a mortgage transaction was getting paid. I just charged my fee for my service. What others charged was not my concern. If an entity would not pay the fee that I set, then I just didn't accept work from them.

That's what I do ,and as a result I only at this point work for direct lenders and one AMC division of a lender who pays better. I do worry what others are charging though, why shouldn't I , every business professional is aware of what others are charging. And though I am mostly AMC free now, it took me years to get there after my direct clients were disbanded following the HVCC .

Back in the day when you were appraising with your company, the AMC model was not nearly so prevalent. Would you as an appraiser work for the lower rates SL pays for many orders? If many good appraisers are not accepting work from an entity, who does that leave to accept the work?

Any self interest or interest in the appraisal profession thriving aside, I think it is disgusting that 1) borrowers are not aware of the pass through fee split BEFORE they write the appraisal check, but more importantly, 2) That borrowers are not informed about HOW the fee splits affect them. They are not informed that the appraisal order might be bid out with a lower fee a component of selection, and what that means- it means the borrower is deprived of the services of many more competent appraisers simply because an AMC can make less profit off them, ( even though the competent appraisers charge below the $ borrower just paid.) Moreover the borrower is not informed it is likely the AMC is free to assign it due to fee profit , to a less experienced person or an appraiser working fast food style to pump out volume, spending the least time possible on their report.

 

[Evincere]

Any fees that the borrower pays go to the LENDER, not the AMC

The AMC charges the lender, and what the lender does with the borrower fees is a matter between the lender and the borrower, and has nothing to do with the AMC.

Wow. Just wow. So as a matter of bookkeeping, you're saying that the AMC bills the Lender for the Appraisal who then doles out (reimbursement) the remainder or whatever is agreed too to the AMC as their service/agency fee FROM the Appraisal fee paid by the Borrower - too the Lender?

Not to muddy the wasters of mistaken identity are you saying what you wrote is standard operating procedure for all AMCs or are you speaking specifically to how your company does business.

 

[J Grant]

Why are you asking me? I don't work for a lender. We bill the lender. The lender pays. How the lender pays is up to the lender. And what we bill the lender has nothing to do with the lender's arrangement with the borrower.

Obviously what you bill the lender has noting to do with the lender's arrangement with the borrower- that is the whole point, your AMC role is hidden from the borrower !

The borrower has no idea when an AMC is involved, or not, nor does the borrower have an upfront knowledge of a fee split upfront when an AMC is involved, or what that means regarding appraiser selection for their order.

Being coy, you must be aware that the lender is paying the AMC from the amount they collect from the borrower. I've had lenders tell me that, surely you know it. Hard to avoid knowing it with the fee split disclosures on the appraisal certain states require

 

[Michigan CG]

It is not price fixing...............................

All the cap does is limit the amount of $ to a % that can be taken

Surely you are intelligent enough to know that is price fixing.......................

 

[J Grant]

Surely you are intelligent enough to know that is price fixing.......................

Did you read my post 63? Do you understand the price is not fixed, only the percent of the borrower paid total appraisal fee going to the AMC is capped?

The AMC can charge whatever price the AMC wants to the lender, and the lender is free to pay the AMC any price it wants. .

AMC PRICE to the lender for their service : $200. Borrower pays appraisal fee to the lender of $500. The percent cap AMC can take from borrower amount is 20% ( $100) . The lender pays out to AMC $100 from the split from the appraisal fee borrower paid to lender, and the lender pays an additional $100 to the AMC.

Total price AMC charged the lender,: $200. Total price paid to AMC by the lender is $200. How is that price fixing?