Waivers, huh?

[George Hatch]

Question
Does anyone think that if AMCs were banned and banks had to create their own ordering department and vet appraisers themselves, that appraisers would not net higher fees while at the same time the BORROWER would pay LESS for the appraisal. The miniscule additional cost of managing a credit department or whatever you want to call it hardly justifies the sort of arbitrage an AMC is able to garner. After all, even using the AMC a bank will and does still have to process the request, review the reports, and vet the AMC as well as the appraisers. It's not like the AMC is free to the bank.

Maybe the banks who currently operate through the AMCs at those volumes would somehow stop trying to control their total fees. Maybe the ex-AMC clerks they hired to do the same work would stop shopping by fees. But in order to get there nothing short of outlawing the lenders' use of the AMCs is going to force them to retake the *fixed* overhead related to these functions back under their roof. Those fixed costs continue regardless of whether or not they're generating the volumes it takes to pay them.

The point is that staff appraisers already work for a split of the fee that the borrowers pay for everything related to the appraisal. And by the time the lender does their accounting for the fixed/variable overhead those appraiser compensation packages end up looking a lot like a 50% split against their billables. IRL the lenders' end on those splits is nowhere near "miniscule". Tiffany just acknowledged that she knows "they hide it in the closing costs" in reference to their combined overhead .

There is no "free" to the borrower - they're paying for all of the lenders' overhead. The borrowers surely are paying more when there's an AMC is involved, but that's not what concerns appraisers. Appraisers are mad because the fees the AMCs pay is lower than what non-AMCs pay.

 

[andrew81]

This is not a good analogy, wish I could up with something better, but this is what you get lol.

I see it as a retail store in a mall closing because malls themselves are not what the customer wants. It is not the malls fault, customers like the new shiny strip-mall, and customers prefer online shopping.
A store in a failing mall can close shop or move to the strip-mall. The strip-mall has higher rent, but, there is the opportunity to get more business due to traffic.
The store moves to the strip-mall, raises it prices a few dollars to cover the cost, has a few more customers, but due to lower online prices, still not enough customers to stay in business.

Is it now the strip-malls fault there is less demand for the product?

Our product can be reproduced online.

 

[George Hatch]

The way I would put it is that some parts of the appraisal business will atrophy for lack of user demand - only the timing is in question. The more difficult work will remain in play long after the machine gobbles up the easiest work. That's already been happening. I don't consider myself a mean person for commenting on the obvious.

 

[Tom D]

appraisers will still be needed for those properties outside the middle of the bell curve where an avm might be accurate. rural appraisers might be survivors because there aren't many and those properties are the hardest to figure. appraisers will be needed for quality control work against the avm model. before certification there were probable 800 appraisers in my state, after certification 4,000. it will go back to pre certification number. question is, will it then become a specialty with a higher income, or just a factory job.

 

[J Grant]

The erstwhile complaint was about the GSEs being backed by the taxpayers, to which I pointed out that it isn't just the GSEs. Heck, even some of my clients (FRT Lenders) are ultimately backed by the taxpayers to some extent. It isn't just the GSEs and has never been limited to the GSEs.

Now you're going back to waivers for 0-80% LTV mortgages somehow resulting in some big threat to the general economy and the taxpayers. But that's a connection nobody here can connect the dots for.

Nodobycan also disconnects the dots and proves it is not a threat until it is one- year out with lots of pain to show for it.

Again, I ask you , if the 0-80 percent loans are such low risk, then why are not lenders who agree to use a waiver or are responsible for the collateral value ???

The lenders are responsible for the collateral value when they use an appraisal, so it does impose a new burden on the taxpayer - loans where the lenders no longer must buy back a mortgage with a bad collateral evaluation done -explain how THAT benefits the taxpayer?

And if a 0-80 percent loan for a purchase uses a value in a waiter that is over priced, it sets the next round of comps for a waiver or appraisal. t should be disclosed for MLS and on public records when a waiver is granted - is it ? Not as far as I now. So, outside of trusting the stakeholders, who can keep track of them and when they're used ? We see on MLS if there is a mortgage and if itis FHA or VA fiannced.

 

[J Grant]

The way I would put it is that some parts of the appraisal business will atrophy for lack of user demand - only the timing is in question. The more difficult work will remain in play long after the machine gobbles up the easiest work. That's already been happening. I don't consider myself a mean person for commenting on the obvious.

That is not the only kind of comment you make and is not at all why I object to some of your comments. We can all understand commenting on economic realities., which is neutral

But you have gone out of our way, over the years, including on this thread to belittle appraisers and make them look bad, a favorite is showing them up to be hypocrites - if the fee was higher, nobody would object to a hybrid - ( but you never point out the reverse, if the fee was higher, no AMC would order a hybrid) , calling appraisers who object to a waiver of other reduction of business as feeling entitled but not the profiteers as being entitled.

The valuation process des not go away in a waiver. An AVM is still done, the control offer it is out of any thrid party oversight. Does anyone get to see it ? Idks.

There is still a fee for a valuation from the borrower in many cases; only it never reached the appraiser now - if an AMC is used for a PDC collection, it goes to them. Why don't you call that out as an entitlement

 

[CGinMN]

Again, I ask you , if the 0-80 percent loans are such low risk, then why are not lenders who agree to use a waiver or are responsible for the collateral value ???

Because it is based on the GSEs collateral risk assessment, not their own.

 

[Zoe]

The point of comparability is who covers their losses, not what role they play in the mortgage market. So are VA losses covered by the taxpayers or not? How about FHA or the others?

VA has not had any losses to cover GH.

 

[Zoe]

Here is the thing that VA does that AMCs and GSEs don't. They back their appraisers against all foes and forces. If appraiser is wrong, they punish that appraiser and sometimes severely. Those are big differences. They don't do fastest and cheapest as their protocol.

When a bank holds a loan in-house, they operate differently than an AMC and GSE.

None the less, VA has never had a loss to cover by the taxpayer. They were able to absorb their losses in the great recession.

 

[Zoe]

Pretty remarkable for VA considering they insure 100% financing many times.