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ABOLISH and OUTLAW bank owned/affiliated and/or contracted management companies.
- Thread starter Armando Acosta
- Start date
- Status
kerrylanger
Member
- Joined
- Sep 6, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Wisconsin
To: U.S. Congress
We beseech the U.S. congress to propose a bill mandating the abolishment of bank owned/ affiliated and/or contracted management companies for the following reasons: So the purpose is to abolish all AMCs? Who then should order the appraisal (and how)?
The appraisal should be ordered by the bank, the mortgage company, or by the person borrowing the money (that is what a free market is about, the consumer should have a choice).
• ‘Appraiser Independence’ (per FIRREA law chapter 564-5-6) does not exist as bank owned management companies have an interest in the outcome of the transaction. And if the appraisal is ordered by the bank or lender or mortgage broker, don't they have an interest in the outcome?
Yes, they do have an interest in the outcome which is why free trade should exist, so that an appraisal can be ordered by anyone, especially the consumer, or the AGENT working in behalf of the consumer, as FIRREA chapter 564 5 and 6 clearly dictates
• Management companies control the appraisal ordering process, negating appraiser independence, and coerce appraisers to obey their whim. Furthermore, management companies do not accept appraisal work from appraisers that do not tow the line and do what the management companies dictate.
• Bank owned/affiliated and/or contracted management companies deceptively state appraisal fees of $500.00+ (for residential appraisals) on closing statements, and abate an ever diminishing compensation to the appraiser. As a result, said management companies are not providing “Truth in Lending” and are providing innacurate disclosure, as they are profiting on each appraisal fee (which is a clear conflict of interest).
• Management companies oftentimes dictate to the appraiser their desired value, in addition to unreasonable (if not impossible) turnaround times for job completion, thereby causing the work product delivered to be of an ever lesser quality. We propose tha a minimum of one week is needed to complete appraisal assignments (residential assignments), accurately, with ample time to research/inspect and verify information, and to complete appraisal assignments already in process. Who says a minimum of one week is needed? I do lots of cookie cutters and certainly don't need a week to complete an appraisal (but I think Greg probably needs about a month for his)!
He’s right, I cannot verify information, finish jobs presently in progress, research new ones, talk on the phone for hours each day, and get an appraisal done at the blink of an eye, unless I do shoddy work (If one has a cookie cutter and can get it out FAST, then so be it – its always nice to be ahead of schedule). I betcha Em TEE is one of those appraisers that works 10 to 20 hours a day 7 days a week, and that is absurd. I know FIVE appraisers dead of heart attacks before 45 (Really).
• Many bank owned management companies are now filing bankruptcy in an attempt to hide behind a corporate veil. Consequently, appraisers are not paid on jobs performed. Accordingly, said management companies are retaining the appraisal fees and in no way independent of the transaction. Mortgage brokers have done this too. Should they also be abolished?
No, Mtg brokers should not be abolished – the point is appraisers should and MUST collect their fees directly from the consumer, which I sent to you moments ago in the last revision If you let someone else collect YOUR money, then expect to get burned
• Bank owned/affiliated and/or contracted management companies are not fiduciaries to a transaction, but are interested parties of the first part.
• In addition, management companies appear to be price fixing appraiser’s fees. How did you come to this conclusion? I see all sorts of fee ranges by different AMCs. This alleged collusion by lenders/bankers/appraisal management companies is contrary to anti-trust laws. Have you talked to an attorney to find out what legally constitutes collusion and how management companies are violating anti-trust laws?
I’ll let Ron Howson, an appraiser in California answer this one)
• Appraisers who are not on key lenders (management companies) approved lists cannot receive work from clients in the mortgage community (mortgage brokers/realtors), which puts appraisers out of business. Every lender has approved appraiser lists. This didn't start with AMCs.
Ignorance is NOT bliss. All Lenders MUST approve every appraiser for AGENCY generated work by virtue of licensure, and with evidence of competency to perform AN ASSIGNMENT, which is precisely what FIRREA chapter 564 5-7 states. (Please go to the appraisalunion.org website, where that is explained at length).
• Damage to PRINCIPALS (buyers/sellers) oftentimes occurs when substantial money paid to management companies for appraisal fees are lost, if/when; the bank (who controls the management co.) decides to not fund the loan. The principal then wants the appraisal report (which the management company routinely refuses to give to the principal) - hence, the ensuing obstacle created via the next BANK owned/controlled mgmt co. (who subsequently refuses to take the report from the appraiser who is not on their approved list), creates havoc and chaos in endeavoring to fund the principal’s transaction. This whole paragraph doesn't make sense. Oftentimes, a lender will decide not to go forward on a loan, or a buyer will change lenders. This has nothing to do with an AMC. This happened before AMCs were even around.
(Lenders cannot do this by law, nor can AMC’s. I defer you to FIRREA 564-5-7, once again)The Fair credit reporting act, and also plays a role in this answer wherein lenders deny credit against the law) The paragraph above is extremely accurate. I have had Agents, wherein their client has paid me several thousand dollars for a commercial appraisal, and the bank turns it down, and they refuse to give the client a copy, and the client is SOL)HR 3837, has addressed that problem (Read it please)
• Accordingly, damage may result in foreclosure to the principal if they are facing a balloon mortgage or a lapse of contract; and once expired, the transaction can fall apart. Either the principal’s deposit or equity can be lost, as trade has been restrained for the principal. Again, I don't see how this relates to AMCs.
(Boy and how does it ever)
• The actual client (mortgage broker or Real Estate agent
since when was a Realtor ever a client in a typical purchase appraisal)
(Law of Agency – once you understand it, then this question will dissapear READ FIRREA 564 5-7)
is typically forced by the lender to order a NEW appraisal, as the management company more often than not steers the client (mortgage broker/or Real estate broker to their approved appraiser) - unnecessarily creating time constraints and extra fees contrary to the FIRREA anti-discrimination appraiser law Chapter 564.5-6, which management companies openly, defiantly, and routinely violate.
• Summary: Results of this illegal restraint of trade by lenders/management companies are:
1. Appraiser’s lose the relationship between the mortgage brokerage/real estate agent client and their fee, and accordingly their livelihood.
2. The mortgage broker/Real Estate agent in many cases will lose their commission, along with their client.
3. The principal will lose the appraisal fee and/or their property.
ABOLISH and OUTLAW bank owned/affiliated and/or contracted management companies.
We believe this will restore integrity to the real estate profession (appraisers, mortgage brokers, title companies, etc.) and allow free trade and commerce among ethical professionals.
Sincerely,
The Undersigned
Sorry if this is confusing. I had to copy and paste each answer. I still don't know how to get colored fonts on here. I also can't get the advanced emotocons.
We beseech the U.S. congress to propose a bill mandating the abolishment of bank owned/ affiliated and/or contracted management companies for the following reasons: So the purpose is to abolish all AMCs? Who then should order the appraisal (and how)?
The appraisal should be ordered by the bank, the mortgage company, or by the person borrowing the money (that is what a free market is about, the consumer should have a choice).
• ‘Appraiser Independence’ (per FIRREA law chapter 564-5-6) does not exist as bank owned management companies have an interest in the outcome of the transaction. And if the appraisal is ordered by the bank or lender or mortgage broker, don't they have an interest in the outcome?
Yes, they do have an interest in the outcome which is why free trade should exist, so that an appraisal can be ordered by anyone, especially the consumer, or the AGENT working in behalf of the consumer, as FIRREA chapter 564 5 and 6 clearly dictates
• Management companies control the appraisal ordering process, negating appraiser independence, and coerce appraisers to obey their whim. Furthermore, management companies do not accept appraisal work from appraisers that do not tow the line and do what the management companies dictate.
• Bank owned/affiliated and/or contracted management companies deceptively state appraisal fees of $500.00+ (for residential appraisals) on closing statements, and abate an ever diminishing compensation to the appraiser. As a result, said management companies are not providing “Truth in Lending” and are providing innacurate disclosure, as they are profiting on each appraisal fee (which is a clear conflict of interest).
• Management companies oftentimes dictate to the appraiser their desired value, in addition to unreasonable (if not impossible) turnaround times for job completion, thereby causing the work product delivered to be of an ever lesser quality. We propose tha a minimum of one week is needed to complete appraisal assignments (residential assignments), accurately, with ample time to research/inspect and verify information, and to complete appraisal assignments already in process. Who says a minimum of one week is needed? I do lots of cookie cutters and certainly don't need a week to complete an appraisal (but I think Greg probably needs about a month for his)!
He’s right, I cannot verify information, finish jobs presently in progress, research new ones, talk on the phone for hours each day, and get an appraisal done at the blink of an eye, unless I do shoddy work (If one has a cookie cutter and can get it out FAST, then so be it – its always nice to be ahead of schedule). I betcha Em TEE is one of those appraisers that works 10 to 20 hours a day 7 days a week, and that is absurd. I know FIVE appraisers dead of heart attacks before 45 (Really).
• Many bank owned management companies are now filing bankruptcy in an attempt to hide behind a corporate veil. Consequently, appraisers are not paid on jobs performed. Accordingly, said management companies are retaining the appraisal fees and in no way independent of the transaction. Mortgage brokers have done this too. Should they also be abolished?
No, Mtg brokers should not be abolished – the point is appraisers should and MUST collect their fees directly from the consumer, which I sent to you moments ago in the last revision If you let someone else collect YOUR money, then expect to get burned
• Bank owned/affiliated and/or contracted management companies are not fiduciaries to a transaction, but are interested parties of the first part.
• In addition, management companies appear to be price fixing appraiser’s fees. How did you come to this conclusion? I see all sorts of fee ranges by different AMCs. This alleged collusion by lenders/bankers/appraisal management companies is contrary to anti-trust laws. Have you talked to an attorney to find out what legally constitutes collusion and how management companies are violating anti-trust laws?
I’ll let Ron Howson, an appraiser in California answer this one)
• Appraisers who are not on key lenders (management companies) approved lists cannot receive work from clients in the mortgage community (mortgage brokers/realtors), which puts appraisers out of business. Every lender has approved appraiser lists. This didn't start with AMCs.
Ignorance is NOT bliss. All Lenders MUST approve every appraiser for AGENCY generated work by virtue of licensure, and with evidence of competency to perform AN ASSIGNMENT, which is precisely what FIRREA chapter 564 5-7 states. (Please go to the appraisalunion.org website, where that is explained at length).
• Damage to PRINCIPALS (buyers/sellers) oftentimes occurs when substantial money paid to management companies for appraisal fees are lost, if/when; the bank (who controls the management co.) decides to not fund the loan. The principal then wants the appraisal report (which the management company routinely refuses to give to the principal) - hence, the ensuing obstacle created via the next BANK owned/controlled mgmt co. (who subsequently refuses to take the report from the appraiser who is not on their approved list), creates havoc and chaos in endeavoring to fund the principal’s transaction. This whole paragraph doesn't make sense. Oftentimes, a lender will decide not to go forward on a loan, or a buyer will change lenders. This has nothing to do with an AMC. This happened before AMCs were even around.
(Lenders cannot do this by law, nor can AMC’s. I defer you to FIRREA 564-5-7, once again)The Fair credit reporting act, and also plays a role in this answer wherein lenders deny credit against the law) The paragraph above is extremely accurate. I have had Agents, wherein their client has paid me several thousand dollars for a commercial appraisal, and the bank turns it down, and they refuse to give the client a copy, and the client is SOL)HR 3837, has addressed that problem (Read it please)
• Accordingly, damage may result in foreclosure to the principal if they are facing a balloon mortgage or a lapse of contract; and once expired, the transaction can fall apart. Either the principal’s deposit or equity can be lost, as trade has been restrained for the principal. Again, I don't see how this relates to AMCs.
(Boy and how does it ever)
• The actual client (mortgage broker or Real Estate agent
since when was a Realtor ever a client in a typical purchase appraisal)
(Law of Agency – once you understand it, then this question will dissapear READ FIRREA 564 5-7)
is typically forced by the lender to order a NEW appraisal, as the management company more often than not steers the client (mortgage broker/or Real estate broker to their approved appraiser) - unnecessarily creating time constraints and extra fees contrary to the FIRREA anti-discrimination appraiser law Chapter 564.5-6, which management companies openly, defiantly, and routinely violate.
• Summary: Results of this illegal restraint of trade by lenders/management companies are:
1. Appraiser’s lose the relationship between the mortgage brokerage/real estate agent client and their fee, and accordingly their livelihood.
2. The mortgage broker/Real Estate agent in many cases will lose their commission, along with their client.
3. The principal will lose the appraisal fee and/or their property.
ABOLISH and OUTLAW bank owned/affiliated and/or contracted management companies.
We believe this will restore integrity to the real estate profession (appraisers, mortgage brokers, title companies, etc.) and allow free trade and commerce among ethical professionals.
Sincerely,
The Undersigned
Sorry if this is confusing. I had to copy and paste each answer. I still don't know how to get colored fonts on here. I also can't get the advanced emotocons.
Last edited:
CraigButterfield
Sophomore Member
- Joined
- Nov 14, 2007
- Professional Status
- Certified General Appraiser
- State
- Florida
Abolish Bank Owned Mngmnt Co's
Originally Posted by kerrylanger http://appraisersforum.com/showthread.php?p=1504461#post1504461
To: U.S. Congress
We beseech the U.S. congress to propose a bill mandating the abolishment of bank owned/ affiliated and/or contracted management companies for the following reasons: So the purpose is to abolish all AMCs? Who then should order the appraisal (and how)?
The appraisal should be ordered by the bank, the mortgage company, or by the person borrowing the money (that is what a free market is about, the consumer should have a choice).The consumer does have a choice because the consumer is the lender. The borrower is asking the bank for money, and the bank is asking us to assess the value of the collateral to protect their assets. The borrower might benefit from the information provided in the report but the report is still done for the lender.
The truth is that the person paying thousands of dollars for the appraisal is the CONSUMER (By virtue of monies expended by said CONSUMER, it should be self evident).
The banks assets must be protected, yes, but ANY licensed appraiser, who is competent to handle the assignment is supposed to do just that. That’s an appraisers job, believe it or not. Furthermore, it is usually not the banks assets as they sell paper, and rarely ever hold onto their loans, so it is pooled assets, mortgage backed securities. Read the notated PDF of FIRREA, see appraisal Union.org – it’s all in black and white and purple.
• ‘Appraiser Independence’ (per FIRREA law chapter 564-5-6) does not exist as bank owned management companies have an interest in the outcome of the transaction. And if the appraisal is ordered by the bank or lender or mortgage broker, don't they have an interest in the outcome?
Yes, they do have an interest in the outcome which is why free trade should exist, so that an appraisal can be ordered by anyone, especially the consumer, or the AGENT working in behalf of the consumer, as FIRREA chapter 564 5 and 6 clearly dictates
• Management companies control the appraisal ordering process, negating appraiser independence, and coerce appraisers to obey their whim. Furthermore, management companies do not accept appraisal work from appraisers that do not tow the line and do what the management companies dictate.
• Bank owned/affiliated and/or contracted management companies deceptively state appraisal fees of $500.00+ (for residential appraisals) on closing statements, and abate an ever diminishing compensation to the appraiser. As a result, said management companies are not providing “Truth in Lending” and are providing innacurate disclosure, as they are profiting on each appraisal fee (which is a clear conflict of interest).
• Management companies oftentimes dictate to the appraiser their desired value, in addition to unreasonable (if not impossible) turnaround times for job completion, thereby causing the work product delivered to be of an ever lesser quality. We propose tha a minimum of one week is needed to complete appraisal assignments (residential assignments), accurately, with ample time to research/inspect and verify information, and to complete appraisal assignments already in process. Who says a minimum of one week is needed? I do lots of cookie cutters and certainly don't need a week to complete an appraisal (but I think Greg probably needs about a month for his)!
He’s right, I cannot verify information, finish jobs presently in progress, research new ones, talk on the phone for hours each day, and get an appraisal done at the blink of an eye, unless I do shoddy work (If one has a cookie cutter and can get it out FAST, then so be it – its always nice to be ahead of schedule). I betcha Em TEE is one of those appraisers that works 10 to 20 hours a day 7 days a week, and that is absurd. I know FIVE appraisers dead of heart attacks before 45 (Really).These are business issues. If you don't have time to talk on the phones, you can hire a secretary. If you do not have time to call zoning departments, assessors, etc. for basic research information, you can hire an assistant. If you have too many jobs on your plate, quote a hire fee to make it worth your while to work a 20 hour day. If you don’t want to work a 20 hour day that is fine, but that is a personal choice and you can't say it is wrong if someone else does. But to say an appraiser MUST have 7 days to finish a report is crazy.
No it is not ! One should have reasonable time to VERIFY information, and phone calls are NOT always returned instantly. Usually, and typically it takes DAYS to get answers. Some jobs are slam dunk, others are not. I have 6 secretaries, and work 9am to 5pm, M-F.
• In addition, management companies appear to be price fixing appraiser’s fees. How did you come to this conclusion? I see all sorts of fee ranges by different AMCs. This alleged collusion by lenders/bankers/appraisal management companies is contrary to anti-trust laws. Have you talked to an attorney to find out what legally constitutes collusion and how management companies are violating anti-trust laws? IMO, low fees have to do more with an abundance of starving appraisers than anything to do with AMCs. It's supply and demand. AMCs don't need to fix prices when many appraisers are willing to take any fee to keep food on the table. (That my friend IS price fixing) Ron Howson, an appraiser in Ca, can add to that)
Now your getting closer to the point – SUPPLY and DEMAND – and that DOES NOT EXIST, as the mnmt co’s and the banks control the ordering process. I perform commercial appraisals, and when a prospectivce client desires to hire me, then oftentimes they cannot, as SUPPLY and DEMAND is restrained by both the banks and the Mngmnt co’s SE FIRREA 564-5-7 (It is on the PDF on the appraialunion.org site).
If your neighbor says, hey Fred, I know you do appraisals, and I need your help; are the first words out of your mouth – Yes, I do, but NOT for YOU. You better see IF the bank will take my work! You must be joking, if you think that Supply and demand is relative here, if someone who wants to contract YOUR services cannot, as BIG business controls who or who cannot do an appraisal) WAKE UP !
I’ll let Ron Howson, an appraiser in California answer this one)
• Appraisers who are not on key lenders (management companies) approved lists cannot receive work from clients in the mortgage community (mortgage brokers/realtors), which puts appraisers out of business. Every lender has approved appraiser lists. This didn't start with AMCs.
Ignorance is NOT bliss. All Lenders MUST approve every appraiser for AGENCY generated work by virtue of licensure, and with evidence of competency to perform AN ASSIGNMENT, which is precisely what FIRREA chapter 564 5-7 states. (Please go to the appraisalunion.org website, where that is explained at length).I would focus on the "evidence of competency" of that statement. Lenders can perform their own due diligence on determining an appraiser's competency and to my knowledge, nothing states the time frame that the due diligence must be completed. It could take some time. It is unrealistic to believe that a loan should be put on hold until an appraiser shows that they are competent. In addition, competency is an opinion. An appraiser can believe that they are competent, but the lender can disagree.
FIRREA states “To evidence competency for AN ASSIGNMENT – in the singular (AN ASSIGNMENT to me means several thousand dollars). I once again urge you to grasp FIRREA 564-5-7, and also to grasp what “Restraint of Trade/Anti-trust means”. An ASSIGNMENT is NOW, not after the ASSIGNMENT is long gone. The loan should NOT be put on hold, and need not be put on hold. If you stick to your guns that an appraisal can be done in a DAY, well guess what, a lender CAN also APPROVE an appraiser in a DAY, and MUST. Read FIRREA, and get the point. I can e-mail a warehouse report to a lender, and they will have it in seconds – two hours later, then can say, Yeah – this appraiser does a good job at appraising warehouses – he IS competent to perform the assignment, we better take his work – it IS the law !
I have copied the below, to expedite getting through to you, as I do not know that you have yet read FIRREA, on the appraisalunion.org website
There is: No “Our list is closed”, or “were not adding any new appraisers to our list at this time”, or “The mortgage company said that – “the BANK said we must use one of their approved appraisers”) – NOT ACCORDING TO THE LAW As IT HAS STOOD FOR 17 YEARS) (…Competency to perform AN assignment “in the singular” see FIRREA attachment 564.6)”
FIRREA states:
1. (a) Membership in appraisal organizations. A State certified appraiser or a State licensed appraiser may not be excluded from consideration for an assignment for a federally related transaction solely by virtue of membership or lack of membership in any particular appraisal organization.
2. Any determination of competency shall be based upon the individual's experience and educational background as they relate to the particular appraisal assignment
3. Sec. 564.7 Enforcement.
Institutions and institution-affiliated parties, including staff appraisers and fee appraisers, who violate this part may be subject to removal and/or prohibition orders, cease and desist orders, and the imposition of civil money penalties pursuant to the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq., as amended, or other applicable law.
*A lender must consider an appraiser based upon licensure and competency for AN ASSIGNMENT (in the singular) and Not based on membership (or lack thereof).
A lender cannot say, we approve appraisers once a year (see for AN ASSIGNMENT ABOVE), nor can they say, we are NOT adding to our list now (AN ASSIGNMENT).
When an AGENCY generated appraisal job via a Real Estate Agent or a Mortgage Brokerage AGENT comes to the appraiser, then the APPRAISER INDEPENDENCE, and the LAW OF AGENCY supersede a lender having any control over the ordering process, or steering the agent to “One of THEIR” approved appraisers.
*If they refuse to accept any appraiser’s work (who has valid experience/education and in good standing), the lender is in violation and can be forcibly shut down with a Cease and Desist order.
(Lenders cannot do this by law, nor can AMC’s. I defer you to FIRREA 564-5-7, once again)The Fair credit reporting act, and also plays a role in this answer wherein lenders deny credit against the law) The paragraph above is extremely accurate. I have had Agents, wherein their client has paid me several thousand dollars for a commercial appraisal, and the bank turns it down, and they refuse to give the client a copy, and the client is SOL)HR 3837, has addressed that problem (Read it please) Not sure what HR 3837 has to do with this because that bill has to do with appraisals of charitable contributions.
Charitable contributions – Hugh ?? You must be thinking of some other bill !
However at this time, providing a copy of a commercial appraisal is handled on a state by state basis. There is no national law that states a lender must provide a copy of a commercial appraisal, unless the property fits the definition of "dwelling"
.
The below is taken from HR3837 – You can read HR3837 by going to the appraisalunion.org website
`(3) FREE COPY OF APPRAISAL- A creditor shall provide 1 copy of each appraisal conducted in accordance with this subsection in connection with a mortgage referred to in section 103(aa) to the consumer without charge, and at least 3 days prior to the transaction closing date.
• Accordingly, damage may result in foreclosure to the principal if they are facing a balloon mortgage or a lapse of contract; and once expired, the transaction can fall apart. Either the principal’s deposit or equity can be lost, as trade has been restrained for the principal. Again, I don't see how this relates to AMCs.
Same here AMC's are controlling theordering process, not the Free market through mtg generated agency relationships, that is how, and why.
Originally Posted by kerrylanger http://appraisersforum.com/showthread.php?p=1504461#post1504461
To: U.S. Congress
We beseech the U.S. congress to propose a bill mandating the abolishment of bank owned/ affiliated and/or contracted management companies for the following reasons: So the purpose is to abolish all AMCs? Who then should order the appraisal (and how)?
The appraisal should be ordered by the bank, the mortgage company, or by the person borrowing the money (that is what a free market is about, the consumer should have a choice).The consumer does have a choice because the consumer is the lender. The borrower is asking the bank for money, and the bank is asking us to assess the value of the collateral to protect their assets. The borrower might benefit from the information provided in the report but the report is still done for the lender.
The truth is that the person paying thousands of dollars for the appraisal is the CONSUMER (By virtue of monies expended by said CONSUMER, it should be self evident).
The banks assets must be protected, yes, but ANY licensed appraiser, who is competent to handle the assignment is supposed to do just that. That’s an appraisers job, believe it or not. Furthermore, it is usually not the banks assets as they sell paper, and rarely ever hold onto their loans, so it is pooled assets, mortgage backed securities. Read the notated PDF of FIRREA, see appraisal Union.org – it’s all in black and white and purple.
• ‘Appraiser Independence’ (per FIRREA law chapter 564-5-6) does not exist as bank owned management companies have an interest in the outcome of the transaction. And if the appraisal is ordered by the bank or lender or mortgage broker, don't they have an interest in the outcome?
Yes, they do have an interest in the outcome which is why free trade should exist, so that an appraisal can be ordered by anyone, especially the consumer, or the AGENT working in behalf of the consumer, as FIRREA chapter 564 5 and 6 clearly dictates
• Management companies control the appraisal ordering process, negating appraiser independence, and coerce appraisers to obey their whim. Furthermore, management companies do not accept appraisal work from appraisers that do not tow the line and do what the management companies dictate.
• Bank owned/affiliated and/or contracted management companies deceptively state appraisal fees of $500.00+ (for residential appraisals) on closing statements, and abate an ever diminishing compensation to the appraiser. As a result, said management companies are not providing “Truth in Lending” and are providing innacurate disclosure, as they are profiting on each appraisal fee (which is a clear conflict of interest).
• Management companies oftentimes dictate to the appraiser their desired value, in addition to unreasonable (if not impossible) turnaround times for job completion, thereby causing the work product delivered to be of an ever lesser quality. We propose tha a minimum of one week is needed to complete appraisal assignments (residential assignments), accurately, with ample time to research/inspect and verify information, and to complete appraisal assignments already in process. Who says a minimum of one week is needed? I do lots of cookie cutters and certainly don't need a week to complete an appraisal (but I think Greg probably needs about a month for his)!
He’s right, I cannot verify information, finish jobs presently in progress, research new ones, talk on the phone for hours each day, and get an appraisal done at the blink of an eye, unless I do shoddy work (If one has a cookie cutter and can get it out FAST, then so be it – its always nice to be ahead of schedule). I betcha Em TEE is one of those appraisers that works 10 to 20 hours a day 7 days a week, and that is absurd. I know FIVE appraisers dead of heart attacks before 45 (Really).These are business issues. If you don't have time to talk on the phones, you can hire a secretary. If you do not have time to call zoning departments, assessors, etc. for basic research information, you can hire an assistant. If you have too many jobs on your plate, quote a hire fee to make it worth your while to work a 20 hour day. If you don’t want to work a 20 hour day that is fine, but that is a personal choice and you can't say it is wrong if someone else does. But to say an appraiser MUST have 7 days to finish a report is crazy.
No it is not ! One should have reasonable time to VERIFY information, and phone calls are NOT always returned instantly. Usually, and typically it takes DAYS to get answers. Some jobs are slam dunk, others are not. I have 6 secretaries, and work 9am to 5pm, M-F.
• In addition, management companies appear to be price fixing appraiser’s fees. How did you come to this conclusion? I see all sorts of fee ranges by different AMCs. This alleged collusion by lenders/bankers/appraisal management companies is contrary to anti-trust laws. Have you talked to an attorney to find out what legally constitutes collusion and how management companies are violating anti-trust laws? IMO, low fees have to do more with an abundance of starving appraisers than anything to do with AMCs. It's supply and demand. AMCs don't need to fix prices when many appraisers are willing to take any fee to keep food on the table. (That my friend IS price fixing) Ron Howson, an appraiser in Ca, can add to that)
Now your getting closer to the point – SUPPLY and DEMAND – and that DOES NOT EXIST, as the mnmt co’s and the banks control the ordering process. I perform commercial appraisals, and when a prospectivce client desires to hire me, then oftentimes they cannot, as SUPPLY and DEMAND is restrained by both the banks and the Mngmnt co’s SE FIRREA 564-5-7 (It is on the PDF on the appraialunion.org site).
If your neighbor says, hey Fred, I know you do appraisals, and I need your help; are the first words out of your mouth – Yes, I do, but NOT for YOU. You better see IF the bank will take my work! You must be joking, if you think that Supply and demand is relative here, if someone who wants to contract YOUR services cannot, as BIG business controls who or who cannot do an appraisal) WAKE UP !
I’ll let Ron Howson, an appraiser in California answer this one)
• Appraisers who are not on key lenders (management companies) approved lists cannot receive work from clients in the mortgage community (mortgage brokers/realtors), which puts appraisers out of business. Every lender has approved appraiser lists. This didn't start with AMCs.
Ignorance is NOT bliss. All Lenders MUST approve every appraiser for AGENCY generated work by virtue of licensure, and with evidence of competency to perform AN ASSIGNMENT, which is precisely what FIRREA chapter 564 5-7 states. (Please go to the appraisalunion.org website, where that is explained at length).I would focus on the "evidence of competency" of that statement. Lenders can perform their own due diligence on determining an appraiser's competency and to my knowledge, nothing states the time frame that the due diligence must be completed. It could take some time. It is unrealistic to believe that a loan should be put on hold until an appraiser shows that they are competent. In addition, competency is an opinion. An appraiser can believe that they are competent, but the lender can disagree.
FIRREA states “To evidence competency for AN ASSIGNMENT – in the singular (AN ASSIGNMENT to me means several thousand dollars). I once again urge you to grasp FIRREA 564-5-7, and also to grasp what “Restraint of Trade/Anti-trust means”. An ASSIGNMENT is NOW, not after the ASSIGNMENT is long gone. The loan should NOT be put on hold, and need not be put on hold. If you stick to your guns that an appraisal can be done in a DAY, well guess what, a lender CAN also APPROVE an appraiser in a DAY, and MUST. Read FIRREA, and get the point. I can e-mail a warehouse report to a lender, and they will have it in seconds – two hours later, then can say, Yeah – this appraiser does a good job at appraising warehouses – he IS competent to perform the assignment, we better take his work – it IS the law !
I have copied the below, to expedite getting through to you, as I do not know that you have yet read FIRREA, on the appraisalunion.org website
There is: No “Our list is closed”, or “were not adding any new appraisers to our list at this time”, or “The mortgage company said that – “the BANK said we must use one of their approved appraisers”) – NOT ACCORDING TO THE LAW As IT HAS STOOD FOR 17 YEARS) (…Competency to perform AN assignment “in the singular” see FIRREA attachment 564.6)”
FIRREA states:
1. (a) Membership in appraisal organizations. A State certified appraiser or a State licensed appraiser may not be excluded from consideration for an assignment for a federally related transaction solely by virtue of membership or lack of membership in any particular appraisal organization.
2. Any determination of competency shall be based upon the individual's experience and educational background as they relate to the particular appraisal assignment
3. Sec. 564.7 Enforcement.
Institutions and institution-affiliated parties, including staff appraisers and fee appraisers, who violate this part may be subject to removal and/or prohibition orders, cease and desist orders, and the imposition of civil money penalties pursuant to the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq., as amended, or other applicable law.
*A lender must consider an appraiser based upon licensure and competency for AN ASSIGNMENT (in the singular) and Not based on membership (or lack thereof).
A lender cannot say, we approve appraisers once a year (see for AN ASSIGNMENT ABOVE), nor can they say, we are NOT adding to our list now (AN ASSIGNMENT).
When an AGENCY generated appraisal job via a Real Estate Agent or a Mortgage Brokerage AGENT comes to the appraiser, then the APPRAISER INDEPENDENCE, and the LAW OF AGENCY supersede a lender having any control over the ordering process, or steering the agent to “One of THEIR” approved appraisers.
*If they refuse to accept any appraiser’s work (who has valid experience/education and in good standing), the lender is in violation and can be forcibly shut down with a Cease and Desist order.
(Lenders cannot do this by law, nor can AMC’s. I defer you to FIRREA 564-5-7, once again)The Fair credit reporting act, and also plays a role in this answer wherein lenders deny credit against the law) The paragraph above is extremely accurate. I have had Agents, wherein their client has paid me several thousand dollars for a commercial appraisal, and the bank turns it down, and they refuse to give the client a copy, and the client is SOL)HR 3837, has addressed that problem (Read it please) Not sure what HR 3837 has to do with this because that bill has to do with appraisals of charitable contributions.
Charitable contributions – Hugh ?? You must be thinking of some other bill !
However at this time, providing a copy of a commercial appraisal is handled on a state by state basis. There is no national law that states a lender must provide a copy of a commercial appraisal, unless the property fits the definition of "dwelling"
.
The below is taken from HR3837 – You can read HR3837 by going to the appraisalunion.org website
`(3) FREE COPY OF APPRAISAL- A creditor shall provide 1 copy of each appraisal conducted in accordance with this subsection in connection with a mortgage referred to in section 103(aa) to the consumer without charge, and at least 3 days prior to the transaction closing date.
• Accordingly, damage may result in foreclosure to the principal if they are facing a balloon mortgage or a lapse of contract; and once expired, the transaction can fall apart. Either the principal’s deposit or equity can be lost, as trade has been restrained for the principal. Again, I don't see how this relates to AMCs.
Same here AMC's are controlling theordering process, not the Free market through mtg generated agency relationships, that is how, and why.
Marcia Langley
Senior Member
- Joined
- Aug 26, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Missouri
Craig,
Respectfully, I think there are too many issues in the document to effectively address all in one thread in this sort of a forum.
It may be benificial for you to start one thread at a time for each issue.
So far, after reading all of the above posts, I still have the same concerns I had at the beginning.
In my opinion the overriding concern for appraisers and the public trust is the broad issue of appraiser independence. I'd be more swayed by a document that detailed it's points through the lens of how each item undermined that independence.
For example, take the issue of restrictive turn times. I am one of the loudest complainers about arbitrary turn time demands from clients. Looking at this issue from the appraiser independence point of view, any arbitrary turn time, whether one week or one day is equally arbitrary. The appraiser should be able to tailor the turn time to the complexity and resource constraints of the assignment. IMO an arbitrary turn time of any length is an undermining of appraiser independence.
Also, I agree with Em Tee that many of these items are true for many, or most clients. Because of that this sounds like a vendetta against AMCs. Like the others said, I don't like AMCs either, but if you want real attention from lawmakers you have to be careful to not to seem to have an agenda that has nothing to do with the public trust.
And all references to fees sound like exactly that.
One reason the financial institutions have been so successful in holding up for AMCs is because all of their verbiage on the subject is designed to convince the law makers that the 'separation' provided by an AMC benifits the public trust. It's the 'impression' they have been able to convey, not the actual substance.
If they had published their desire to control fees they would never have made the headway that they have. Now your document seems to be making the mistake that the sophisticated banking industry was able to circumvent.
IMO every reference to fees should be removed from the document.
Respectfully, I think there are too many issues in the document to effectively address all in one thread in this sort of a forum.
It may be benificial for you to start one thread at a time for each issue.
So far, after reading all of the above posts, I still have the same concerns I had at the beginning.
In my opinion the overriding concern for appraisers and the public trust is the broad issue of appraiser independence. I'd be more swayed by a document that detailed it's points through the lens of how each item undermined that independence.
For example, take the issue of restrictive turn times. I am one of the loudest complainers about arbitrary turn time demands from clients. Looking at this issue from the appraiser independence point of view, any arbitrary turn time, whether one week or one day is equally arbitrary. The appraiser should be able to tailor the turn time to the complexity and resource constraints of the assignment. IMO an arbitrary turn time of any length is an undermining of appraiser independence.
Also, I agree with Em Tee that many of these items are true for many, or most clients. Because of that this sounds like a vendetta against AMCs. Like the others said, I don't like AMCs either, but if you want real attention from lawmakers you have to be careful to not to seem to have an agenda that has nothing to do with the public trust.
And all references to fees sound like exactly that.
One reason the financial institutions have been so successful in holding up for AMCs is because all of their verbiage on the subject is designed to convince the law makers that the 'separation' provided by an AMC benifits the public trust. It's the 'impression' they have been able to convey, not the actual substance.
If they had published their desire to control fees they would never have made the headway that they have. Now your document seems to be making the mistake that the sophisticated banking industry was able to circumvent.
IMO every reference to fees should be removed from the document.
CraigButterfield
Sophomore Member
- Joined
- Nov 14, 2007
- Professional Status
- Certified General Appraiser
- State
- Florida
Abolish Bank owned mngmnt co's
EmTee States:The consumer does have a choice because the consumer is the lender. The borrower is asking the bank for money, and the bank is asking us to assess the value of the collateral to protect their assets. The borrower might benefit from the information provided in the report but the report is still done for the lender.
No, the CONSUMER is NOT the lender. The truth is that the person paying thousands of dollars for the appraisal is the CONSUMER (By virtue of monies expended by said CONSUMER, it should be self evident).
I got back on the Forum to add this:
No, the bank is not the consumer – the Principal IS the consumer. The CONSUMER is at the end of the chain – the consumer is not the middle man (and not a fiduciary). The Bank is NOT loaning its money, which may come as a big surprise to anyone reading this.
The BANK is in FACT an AGENT who is loaning the money of their depositors, and or their stockholders, and the BANK is a Fiduciary, and has responsibilities to both stockholders, and depositors, but in NO way is it their money!!
EmTee States:The consumer does have a choice because the consumer is the lender. The borrower is asking the bank for money, and the bank is asking us to assess the value of the collateral to protect their assets. The borrower might benefit from the information provided in the report but the report is still done for the lender.
No, the CONSUMER is NOT the lender. The truth is that the person paying thousands of dollars for the appraisal is the CONSUMER (By virtue of monies expended by said CONSUMER, it should be self evident).
I got back on the Forum to add this:
No, the bank is not the consumer – the Principal IS the consumer. The CONSUMER is at the end of the chain – the consumer is not the middle man (and not a fiduciary). The Bank is NOT loaning its money, which may come as a big surprise to anyone reading this.
The BANK is in FACT an AGENT who is loaning the money of their depositors, and or their stockholders, and the BANK is a Fiduciary, and has responsibilities to both stockholders, and depositors, but in NO way is it their money!!
Marcia Langley
Senior Member
- Joined
- Aug 26, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Missouri
In the spirit of using terms as they are understood in the industry and among lawmakers, I agree with Craig that lenders and their agents should be referred to as clients and borrowers should be referred to as consumers.
I support HR 3837 but I think making the borrower into the client is a mistake and would not support that.
Forcing the lender and his agent into automatically provide every appraisal performed to the borrower would be a good thing.
I support HR 3837 but I think making the borrower into the client is a mistake and would not support that.
Forcing the lender and his agent into automatically provide every appraisal performed to the borrower would be a good thing.
CraigButterfield
Sophomore Member
- Joined
- Nov 14, 2007
- Professional Status
- Certified General Appraiser
- State
- Florida
CraigButterfield
Sophomore Member
- Joined
- Nov 14, 2007
- Professional Status
- Certified General Appraiser
- State
- Florida
Abolish Bank owned mngmnt co's
Why is the man paying me $4,000 for an appraisal NOT the client - There is an answer; because the banks got a law written saying they are the clients to control the deal, and THEY must engage. This is precisely why appraisers are in the prediciment we are.
Why is the man paying me $4,000 for an appraisal NOT the client - There is an answer; because the banks got a law written saying they are the clients to control the deal, and THEY must engage. This is precisely why appraisers are in the prediciment we are.
Marcia Langley
Senior Member
- Joined
- Aug 26, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Missouri
Craig, we can agree to disagree regarding who the client should be but that brings me back to the point that there is simply too much stuff in your petition.
The goal of a petition is to attract signers. The more stuff that is in it, the more disagreement there will be among potential signers.
If I disagree with even one point in the petition, I won't sign it. As a contrast, look at the simplicity of the appraiser's petition in this forum. It has attracted a lot of signees and is, in my opinion, still the best explanation of the crux of the problem.
The goal of a petition is to attract signers. The more stuff that is in it, the more disagreement there will be among potential signers.
If I disagree with even one point in the petition, I won't sign it. As a contrast, look at the simplicity of the appraiser's petition in this forum. It has attracted a lot of signees and is, in my opinion, still the best explanation of the crux of the problem.
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