More AMC and PDC Bull

[J Grant]

I don't think you can find any post where I have opposed the disclosure. When I point out that AMCs already make the disclosure to the lenders, that is just a fact. It is not opposition to additional disclosure to the consumer.

Frankly, I hope it becomes mandatory today. I don't think it would change a thing, but at least the debate would be over.

What I meant was why are you against the lender paying a cost charge for the AMC service, apart from and not connected to the appraisal fee?(Whether the lender can pass that AMC cost line item charge to the borrower or not, I assume they would be able to. )

I did not mean why you are opposed to disclosure to the borrower of an AMC fee split of the appraisal fee (though I am glad you are not opposed to it ). I favor it, however, it is not my primary idea to advocate for, since I agree that it would not change much-, though it might prevent the more usorous fee splits. To change things, the borrower would need to have it disclosed to them upfront, on the loan application, and the borrower made aware that if an AMC is used, the AMC might shop their appraisal via fee bidding. I doubt the simple disclosure you have in mind includes that.

The fact that a simple fee breakout disclosure might not accomplish much is why I advocate for other solutions. 1) put a fee cap on what the AMC gets as a percentage of the bundled appraisal fee. If the lender wants to pay the AMC more than that, they can arrange it. This would prevent the usurious amounts AMC receives from the appraisal fee and ensure equal payments to the appraisers on a panel for regular orders, which would relieve the AMC from picking an appraiser by fee - the AMC could concentrate on quality, geo competence, and service as a metric.

The other solution is to separate the two charges entirely - the lender pays a cost charge to the AMC for the AMC service ( perhaps passed on to the borrower ) and the borrower covers the appraiser's fee in their appraisal fee paid to the lender, and that appraisal fee is not split with an AMC or other third party.

 

[DWiley]

What I meant was why are you against the lender paying a cost charge for the AMC service, apart from and not connected to the appraisal fee?(Whether the lender can pass that AMC cost line item charge to the borrower or not, I assume they would be able to. )

I did not mean why you are opposed to disclosure to the borrower of an AMC fee split of the appraisal fee (though I am glad you are not opposed to it ). I favor it, however, it is not my primary idea to advocate for, since I agree that it would not change much-, though it might prevent the more usorous fee splits. To change things, the borrower would need to have it disclosed to them upfront, on the loan application, and the borrower made aware that if an AMC is used, the AMC might shop their appraisal via fee bidding. I doubt the simple disclosure you have in mind includes that.

The fact that a simple fee breakout disclosure might not accomplish much is why I advocate for other solutions. 1) put a fee cap on what the AMC gets as a percentage of the bundled appraisal fee. If the lender wants to pay the AMC more than that, they can arrange it. This would prevent the usurious amounts AMC receives from the appraisal fee and ensure equal payments to the appraisers on a panel for regular orders, which would relieve the AMC from picking an appraiser by fee - the AMC could concentrate on quality, geo competence, and service as a metric.

The other solution is to separate the two charges entirely - the lender pays a cost charge to the AMC for the AMC service ( perhaps passed on to the borrower ) and the borrower covers the appraiser's fee in their appraisal fee paid to the lender, and that appraisal fee is not split with an AMC or other third party.

Again you attribute to me something I have never said.

I have never understood why certain loan expenses (including appraisal) are carved out as an expense that could be passed directly to the borrower.

 

[Zoe]

I know @Francois K. Gregoire is for separation of fees on truth in lending disclosures and he serves on TAF.

TAF is very limited in their powers.

 

[Overimprovement]

One thing that puzzles me some is... Class has been the #1 AMC villain here for a while. Why are we still talking about them? Why are any of us dealing with them at all?

The short answer is because for any particular appraiser, their source of mortgage work (queue comments about diversifying) comes from a limited supply of lenders. The more lenders in an appraiser's limited coverage area that switch to Class or one of the other garbage AMCs, the harder it is to economically justify NOT working with at least one of them.

Personally, one of my good bank clients switched to Class around '22 or so. I tried them. Took 6 orders, 3 were cancelled within 24 hours (we know why), and 2 of the 3 had such ridiculous requests and stips I quickly cancelled Class. But I had other options at the time, but I feel for appraisers in smaller markets who just don't have much choice in who they work with.

But eventually, that is why I exited--kept losing more and more of my clients to garbage AMCs, and what direct work and 'decent' AMC work remained was not enough to keep going. That was my business decision, exiting vs playing the race to the bottom game, but I admit I had a degree/prior career on which to fall back.

 

[djd09]

the funny part is if madoff, mozilo, or epstien started an AMC they still would be defending them...

 

[chad hampton]

the funny part is if madoff, mozilo, or epstien started an AMC they still would be defending them...

I can see those 3 at the breakfast club. They might be 3 of more ethical ones there.

 

[sputnam]

Most appraisers are not juvenile enough to believe that AMC;s are "evil". And we understand that they are legal - whether they operate legally with regard to usurious upcharges in their split of the appraisal fee could be decided by the courts in the pending consumer lawsuits.

My main issue with the AMC's, as I have often posted, involves the lenders as well, which is that the bundled HUD fee allows lenders free of hard cost AMC service, so of course the lenders love to use AMC's - ( and some lenders profit from the AMC if it is owned by the lender ). The other side of the bundled fee compensation model is that it allows the AMC a huge market share advantage.

If AMC;s had to compete like other free market businesses, where the AMC's customer ( the lender is their customer) had to pay a cost to use an AMC, what does anyone here think a lender would pay an AMC to process an appraisal order? I believe it would be $75 a file. ( or less ). If it were more, a lender would ditch the AMC and form their own panel again.

The AMC knows they could not get $200-$400 an order from a lender if the lender had to pay a hard cost. And the lender does not want to pay the AMC anyting if the lender has to bear the cost, and it is another charge to add to the borrower's application if the lender were to pass the AMC cost on to the borrower.

It is the unfair market advantage that the appraiser subsidizes by getting a split of the appraisal fee when a lender uses an AMC, as well as the usurious fee splits occurring.

Again... not really the point. We are in a chat forum where mostly appraisers gather. What I see, mostly, are appraiser complaining about AMCs not paying well enough or otherwise making life hard on appraisers. What I see much less are appraisers saying... 'I'm not accepting assignments from AMCs unless they pay me I require and they treat me well enough. And that is the ONLY power we have... at least until the lawmakers and users of appraisal services decide that appraisals are no longer needed.

And again... it is none of my business how much a company makes. If I'm a consumer, my business is how much I pay. If I sell to that company, it's how much they pay me.

 

[sputnam]

i have missed no points...every conspiracy has come true...but USPAP requires the appraiser to be independent and you will never be with those snake oil salesmen around

lol.... I am a AQB Certified USPAP Instructor... I know what USPAP requires. As an appraiser, I am about as independent as someone can be. I've lost Clients because I told the truth in reports or wouldn't just give them what they wanted when I deemed it to be a violation of USPAP or my ethics.

I'll say it again. All you do is try to lob shots at other Forumites. You could be offering something of interest.

 

[sputnam]

I know @Francois K. Gregoire is for separation of fees on truth in lending disclosures and he serves on TAF.

TAF is very limited in their powers.

I have no problem with fees being separated and fully disclosed. That's an issue among borrowers, Lenders, and AMCs. When it's an AMC assignment, the Lender and the borrower have nothing to say about how or how much I get paid.

 

[J Grant]

Again... not really the point. We are in a chat forum where mostly appraisers gather. What I see, mostly, are appraiser complaining about AMCs not paying well enough or otherwise making life hard on appraisers. What I see much less are appraisers saying... 'I'm not accepting assignments from AMCs unless they pay me I require and they treat me well enough. And that is the ONLY power we have... at least until the lawmakers and users of appraisal services decide that appraisals are no longer needed.

And again... it is none of my business how much a company makes. If I'm a consumer, my business is how much I pay. If I sell to that company, it's how much they pay me.

A number of appraisers here do not accept AMC assignments, and some choose to go out of business or work part-time because of it. If that is the only power we have, it's not much of a power, because appraisers are not functioning in a free market environment within the regulated mortgage loan environment, and face a tremendously skewed supply/demand imbalance as well as AMC dominance with lenders due to the AMC able to hide their fees from consumers in the bundeled fee as well as charge usuorous rates becaue of it of a fee split.