FANNIE bonds with AMCs, over your dead low paid body.

[Sandra Koutsopoulos]

I think the borrower would care if they were informed. If they are not informed, how can they care? Not informing the borrower misleads them into believing their $ appraisal fee went to the appraiser , and that no AMC is used, since it is not disclosed.

The part that borrowers would care about the most is how their appraiser is chosen by the AMC, by a low fee, in a flea market type bid that can bypass more qualified appraisers.
The lack of discloser wert AMC fee splits is why appraisers doing AMC orders are instructed not to include an invoice. When appraisers get the order directly from the lender, typically, the appraiser includes their invoice.

J Grant is right for sure about borrowers likely to care about how their appraisal fee is being used. In virtually all the AMC's instructions for the appraiser, it specifically states appraiser is not to speak to borrower about fee splits. Why might that be?! Because if Borrowers understood that the person who is valuing his property for his very important loan was only getting 1/2 of what Borrower was paying, they might (and do) think they're not getting their money's worth.

Whenever I have a conversation with the general public, or friends, or sellers or buyers or borrowers, and the topic of how much appraisers get paid, and/or what part of appraisal fee we actually receive, without exception they are shocked and dismayed. They THINK they are getting a $700 appraisal; they're actually getting a $375 appraisal, with $425 (or whatever) going to an entity which is not actively evaluating the worth of their property. Many have told me in light of the fee vs the split that the appraiser receives, the Borrowers are over-paying. When bearing the $700 cost (or whatever) of an appraisal, people want to feel they're getting $700 value of expertise for their money. They've told me they feel they're getting ripped off. Even Realtors have no clue that our fees have been eroded down to the level of day-workers who cluster at Home Depot looking for a day's pay. We just stay glued to our in-box to grab any AMC quote that pops up. Demeaning, time-waster.

Appraisers are not getting paid what they're worth (via AMCs), and Borrowers are not getting their money's worth either. (Shhhhh..... don't speak to anybody about the appraisal/AMC fee split....shhhhh....) ...ever wonder WHY!?!?!?!?!

 

[J Grant]

If you don't like it when I point out your internal inconsistencies then perhaps you should reconsider some of those inconsistencies.

Bottom line here is that what everyone is complaining about - even when it's with cause - is that the users are changing some of their own user-driven preferences. Which they are entitled to do. Fannie previously gaveth and now Fannie is taketh away and it's coming out of the appraiser's pockets even if only indirectly.

These changes in these user expectations do incur more risk on their end. Less is always less. The results of taking on these additional risks may turn out to be unacceptable to them and their backers. Bad deals are made during good times. Catastrophe may ensue. They may end up having remorse for their decisions. I have never suggested otherwise.

But the point remains, appraisers have no way to dictate terms to these lenders and the GSEs. No way to resist these changes in these user expectations short of declining to perform those assignments, as is 100% within their rights. Then the lenders will do what they do and find an alternate vendor or exercise one of their other options. But WRT to them migrating to using more of these so-called hybrids? It's going to happen anyway; appraisers may as well just lay back and let it happen. Think of England.

Good post except for the lay back part. Only the AMC's, or more accuratley, mainly AMC;s will order these hybrids. The hybrid does not save the borrower money, and there is no reason a lender would order one since it takes more admin - choosing a PDR person, choosing an appraiser, and syncing the two.

It is a product designed to enrich AMC;s who can do the extra admin for additional profit by paying low fees for the PDR portion as well as using these products to increase output from staff appraisers.

 

[DWiley]

I think the borrower would care if they were informed. If they are not informed, how can they care? Not informing the borrower misleads them into believing their $ appraisal fee went to the appraiser , and that no AMC is used, since it is not disclosed.

The part that borrowers would care about the most is how their appraiser is chosen by the AMC, by a low fee, in a flea market type bid that can bypass more qualified appraisers.
The lack of discloser wert AMC fee splits is why appraisers doing AMC orders are instructed not to include an invoice. When appraisers get the order directly from the lender, typically, the appraiser includes their invoice.

Two things:

First, you do know that fee disclosures are required in appraisal reports in many states. What consumer reaction has occurred in those states, and how does it compare to consumer reaction in states where no such disclosure is required?

Second, if you feel that this is so critical, do you make similar inquiries when you sign up for appraiser CE? Do you ask how the fee is being split and how much the instructor makes (after all, the instructor is probably a fellow appraiser just trying to make a buck - surely you are concerned about the instructor getting a C&R fee, right)? Do you ask the school if they just went with the cheapest instructor? Do you ask what "cut" the school is making?

 

[George Hatch]

That seldom happens when dealing with OPM.

Entirely true. It would take a catastrophic loss to reverse course on some of these more recent decisions, including AMC usage and the various waivers and hybrids and such.

The flip side to that is what happens if no such loss (attributable to the appraisal situation) occurs? If THEY THINK there's no reason or advantage to reverse on these policies then how likely is such a reversal?

 

[chad hampton]

I don’t care about fee disclosure hidden on page 65 of a report that the public was never going to read. If they want to be transparent, they would charge the public two fees - an appraisal fee and AMC fee. Then I guarantee you can sit back, pop some popcorn and watch the fireworks.

 

[George Hatch]

I don't know so I'm just asking. Are we aware of any lenders who already break their disclosures into 2 separate lines? Because whatever comes of that could be compared to what comes of the lender not disclosing that split.

 

[J Grant]

Two things:

First, you do know that fee disclosures are required in appraisal reports in many states. What consumer reaction has occurred in those states, and how does it compare to consumer reaction in states where no such disclosure is required?

Second, if you feel that this is so critical, do you make similar inquiries when you sign up for appraiser CE? Do you ask how the fee is being split and how much the instructor makes (after all, the instructor is probably a fellow appraiser just trying to make a buck - surely you are concerned about the instructor getting a C&R fee, right)? Do you ask the school if they just went with the cheapest instructor? Do you ask what "cut" the school is making?

There are only a handful of states with the breakdown discloses - and there are lawsuits working their way through the courts now wrt AMC fee splits and borrowers so they do care -

I can not do a study on states with disclosure and no disclosure, I have no access to that. Perhaps the fee splits are less egregious in states where disclosure is mandatory?

In addition, the reasons that consumers might not care that much is because a simple numerical fee breakdown still does not reveal HOW - their appraiser was chosen - in a flea market style bid .

 

[Dublin ohio]

J Grant is right for sure about borrowers likely to care about how their appraisal fee is being used. In virtually all the AMC's instructions for the appraiser, it specifically states appraiser is not to speak to borrower about fee splits. Why might that be?! Because if Borrowers understood that the person who is valuing his property for his very important loan was only getting 1/2 of what Borrower was paying, they might (and do) think they're not getting their money's worth.

Whenever I have a conversation with the general public, or friends, or sellers or buyers or borrowers, and the topic of how much appraisers get paid, and/or what part of appraisal fee we actually receive, without exception they are shocked and dismayed. They THINK they are getting a $700 appraisal; they're actually getting a $375 appraisal, with $425 (or whatever) going to an entity which is not actively evaluating the worth of their property. Many have told me in light of the fee vs the split that the appraiser receives, the Borrowers are over-paying. When bearing the $700 cost (or whatever) of an appraisal, people want to feel they're getting $700 value of expertise for their money. They've told me they feel they're getting ripped off. Even Realtors have no clue that our fees have been eroded down to the level of day-workers who cluster at Home Depot looking for a day's pay. We just stay glued to our in-box to grab any AMC quote that pops up. Demeaning, time-waster.

Appraisers are not getting paid what they're worth (via AMCs), and Borrowers are not getting their money's worth either. (Shhhhh..... don't speak to anybody about the appraisal/AMC fee split....shhhhh....) ...ever wonder WHY!?!?!?!?!

For quite a few years my state has required that my fee be disclosed within the report. So they know what I was paid and they know what they paid. I guess the borrowers are either too stupid to compare the differences or dgaf

 

[J Grant]

Two things:

First, you do know that fee disclosures are required in appraisal reports in many states. What consumer reaction has occurred in those states, and how does it compare to consumer reaction in states where no such disclosure is required?

Second, if you feel that this is so critical, do you make similar inquiries when you sign up for appraiser CE? Do you ask how the fee is being split and how much the instructor makes (after all, the instructor is probably a fellow appraiser just trying to make a buck - surely you are concerned about the instructor getting a C&R fee, right)? Do you ask the school if they just went with the cheapest instructor? Do you ask what "cut" the school is making?

Sorry but the second is a silly analogy. I pick the mid-range price CE, not the cheapest, but regardless, it is not the same, at all, as a borrower not knowing that their all-important appraiser selection is bid out flea market style to the lowest fee, often overlooking more competent, and that includes Geo competent appraisers.)., All the CE providers must conform with state regs so the product we recieve is fairly similar regardless which one we choose or what they pay the instructors.

I have had many RE agents complain to me about far-away appraisers who mangle the assignment and back when I did work for AMC;s borrowers would try to find out how much we were being paid ( we were not allowed to tell them of course )

Why are you against mandatory disclosure of the fee in all states? Of course, the real question is why support the fee split system at all, since it creates numerous problems. The lender should pay a cost to the AMC for their AMC service and leave the appraisal fee out of it.

The comparison

 

[George Hatch]

For quite a few years my state has required that my fee be disclosed within the report. So they know what I was paid and they know what they paid. I guess the borrowers are either too stupid to compare the differences or dgaf

If required in their state, I can't think of a reason why the appraiser couldn't include that disclosure atop pg 3 of the URAR. No need to bury it anywhere unless a client required it to be buried on pg45. .