More AMC and PDC Bull

[J Grant]

They're lenders, not our peers. Their view of appraisals is different than out view, as is appropriate given the different roles.

So what's the stated intended use of the appraisal? To aid in making a mortgage decision.

We can reasonably elaborate on that decision as their effort to avoid overencumbering the property. And to avoid loaning on other disqualifying property attributes. I can't really see them having any alternate prevailing use, can you?

If not to cut back on gross overvaluations, what other reason would Congress have to cut the AMCs off?

I am not advocating Congress cut the AMCs off. I am advocating that the lender pay the AMCs a hard cost for the AMC service, and not have the AMC compensation tied to the appraisal fee. (such as the fee split of a bundled fee.) Or second choice, cap the fee split going to an AMC at 15%, and if a lender wants to pay over that, so be it.

Wrt gross overvaluation - I have not seen it officially stated anywhere as a standard.

- The problem is that the AMC;s are not effective firewalls against lender pressure to hit values. The AMC has to keep their lender customer "happy, - (not getting low values to kill deals ), which creates a conflict of interest for the AMC.

 

[George Hatch]

I am not advocating Congress cut the AMCs off. I am advocating that the lender pay the AMCs a hard cost for the AMC service, and not have the AMC compensation tied to the appraisal fee. (such as the fee split of a bundled fee.) Or second choice, cap the fee split going to an AMC at 15%, and if a lender wants to pay over that, so be it.

Pretty much the same thing: Overvalued appraisals due to low appraisal fees from the AMCs will be the only motivation that will prompt Congress to intervene (again) in the loop.

If such problems don't show up in the data it would be reasonable to expect the status quo to continue indefinitely.

 

[Zoe]

Pretty much the same thing: Overvalued appraisals due to low appraisal fees from the AMCs will be the only motivation that will prompt Congress to intervene (again) in the loop.

If such problems don't show up in the data it would be reasonable to expect the status quo to continue indefinitely.

Idk. Some lawsuits going on with non separation of fees could spur HUD and FDIC, FTC, etc could get things changed. It would take an act of Congress to get it changed where fees were separated on truth in lending disclosures. The Big regulators say change it and Congress will do it.

I think a big lawsuit is going on in California. Everything starts in California.

 

[George Hatch]

The feds won't do like the Virginia board just did by acting on the basis of a single example of the problem they're looking for. What the feds will need is an ongoing pattern of overvalued properties at the rate that's significantly more common than occurs among the direct engagement appraisals.

 

[sputnam]

Sputnam and G Hatch think it's fine that the AMC low pay system exists and has chased away many well-qualified appraisers from mortgage lending work. They seem to be on speed dial to pop up and defend the system, endlessly repeating inane statements such as the lenders are okay with the nominally sufficient - if they are it is bnefcause they get an extra benefit from it - $ under the table, free of cost service allowing them to close their own panel ordering, or $ profit if the lender decides to open a captive order AMC under an umbrella division.

It would seem that a number of appraisals done over the past two decades, since HVCC ushered in AMC dominance, are sub par, since the GSEs use the poor quality as an excuse to use waivers- (now called value acceptance)

As for the segment of good appraisals done for AMC's, the lenders benefited from experienced appraisers stuck doing AMC work post HVCC; many of this group of appraisers are retiring or in their last years of accepting work.

Absolutely untrue. I don't think it's fine or not fine. I am a realist. The AMC system exists and I have no power to stop it. My comments speak to the idea that instead of whining about AMCs low pay... Stop accepting low fee assignments. Only appraisers can do that. And, as already stated... as long as there are appraiser who will accept lower fees, the AMCs will continue to offer and pay lower fees.

There is no question that a piece of the proximate cause for 'bad' appraisals is $. However, appraisers are also to blame. Many are poorly trained and mentored. Some, cut corners in the work. I haven't yet found any passage in USPAP that says.. you have to do it right, unless you aren't getting paid enough. If an appraiser accepts an assignment, their obligation is to do the best work they are capable of... every time... regardless of how much or how little they are being paid for it.

I am all for transparency and disclosure in the Lending process... but that is between the consumer and the Lender. As an appraiser, what your Lender tells you or doesn't tell you is none of my business. My business is to develop and report a credible opinion of value.

 

[sputnam]

I am not advocating Congress cut the AMCs off. I am advocating that the lender pay the AMCs a hard cost for the AMC service, and not have the AMC compensation tied to the appraisal fee. (such as the fee split of a bundled fee.) Or second choice, cap the fee split going to an AMC at 15%, and if a lender wants to pay over that, so be it.

Some AMCs use exactly that model. Cost plus. They solicit bids from appraisers and add a fee on top of that in their billing of the Client.

 

[Carnivore]

For the appraiser it is still a blind bidding system. I think the AMC's make the appraisers sweat waiting for a response. The AMC can't wait to long because the lender often may have more than one AMC in their speed dial. The loan officers job is to make the loan. lenders are competitive alsoI don't see this system changing much

For res appraisers as long as there is more than enough nothing will change. Direct assignment lender clients are the ticket for res appraisers
but thats no guarantee either, I did read recently in some article that res appraisers are leaving and going back to W2 employment in some other field. What it said is these people want a steady paycheck and less uncertainty and a future for advancement. makes perfect sense.

 

[J Grant]

Some AMCs use exactly that model. Cost plus. They solicit bids from appraisers and add a fee on top of that in their billing of the Client.

That is not how cost plus works. Cost plus is the lender requires the AMC to pay the same X amount to all of its panel in a region, and agrees to only charge the lender Y amount - so that the AMC does not have to solicit bids. The AMC typically pays the appraiser about 15% less than the C and R the lender gets from the borrower-paid appraisal. Cost plus is often an AMC that a lender owns under a different name.

 

[J Grant]

Absolutely untrue. I don't think it's fine or not fine. I am a realist. The AMC system exists and I have no power to stop it. My comments speak to the idea that instead of whining about AMCs low pay... Stop accepting low fee assignments. Only appraisers can do that. And, as already stated... as long as there are appraiser who will accept lower fees, the AMCs will continue to offer and pay lower fees.

There is no question that a piece of the proximate cause for 'bad' appraisals is $. However, appraisers are also to blame. Many are poorly trained and mentored. Some, cut corners in the work. I haven't yet found any passage in USPAP that says.. you have to do it right, unless you aren't getting paid enough. If an appraiser accepts an assignment, their obligation is to do the best work they are capable of... every time... regardless of how much or how little they are being paid for it.

I am all for transparency and disclosure in the Lending process... but that is between the consumer and the Lender. As an appraiser, what your Lender tells you or doesn't tell you is none of my business. My business is to develop and report a credible opinion of value.

I think I told you hundreds of times that I do not accept AMC assignments except for one lender-owned. Appraisers do not need lectures about not accepting low-fee assignments. It cost me opportunity time to comment here, and myself or others commenting on the topic is not "whining." That is called gaslighting my friend.

If it were a normal supply/demand environment, the appraisers could far more easily refuse to work for low fees for AMC's but that is not the case. The majority of the volume of lender work from AMCs is from a small number of large-volume AMCs, despite the fact that several hundred total might be registered. If 7 appraisers hold out for a higher fee and one bids a low fee, the AMC will dump all the work on that one appraiser.

You mention appraisers cutting corners in the QC reviews you do for AMC;s. The appraisers are to blame, but more so the AMCs for hiring them. That AMC might have bypassed 7 more competent appraisers to give the order to the fast churn out, cut corners, low fee person. The AMC and lender who enables it are far more to blame than the appraisers. Just as you tell appraisers not to accept low fee work, why are AMC's accepting all these crappy appraisals from people poorly trained and mentored? We see good appraisers on the board doing second jobs because they are passed over for work when an AMC hires the corner cutter. Those appraisers forced out of their own field are the ones who, in fact, stopped accepting low fees.

 

[George Hatch]

The lenders decide what they will and won't accept. Not the AMCs. Even if you wanted to blame the AMCs that doesn't change anything because the lenders decide which AMCs they do/don't engage.