AMC Rules

[Mike Kennedy]

Once regulated, they will be embedded into the system forever. Once embedded, they will become the default process for appraisal management (they will achieve by regulation what now is achieved by implication... that AMCs are the required way to order a mortgage finance appraisal).

Exactly correct.

 

[Meandering]

Cost plus is corporate welfare, for corporations that are not needed in the process. Why should appraiser's fees support this kind of corporate welfare for companies that have no liability in the process, and are not responsible for any part of the process other than contacting a qualified appraiser for any lender that can not separate the lending and appraisal functions themselves.

By regulation AMCs are not responsible for the quality of the report, the selection of the appraiser or paying the appraiser. These are all things that the lender is responsible for, by regulation. The AMC has no intended use of the report, and, they refuse to produce agency agreements. In most states, agency can not be implied for our services.

AMCs will be embedded in the system with the cost plus model which seeks to legitimize a service that is not needed. FHA regulations do not allow for borrowers to pay management fees. The GSEs consistently state that AMCs are not needed. The regulations preclude them from being responsible for anything. There is no good reason why there should be a cost plus for entities that are not needed in the system. If AMCs want to be paid, they should be paid from the lenders, what the lenders are willing to pay them. That, will stop them from being embedded in the system.

.

 

[Eli]

Wondered when you were going to speak up. lol.

 

[Meandering]

I've been busy.

 

[Amy Perkins]

http://appraisalmanagernews.com/Montana AMC Audit Draft.pdf

Here is the link. If they get audited they have to disclose the fees paid to the appraiser. I guess they better start paying us our C&R fees.

 

[Amy Perkins]

It's a draft so don't get too excited

 

[Non Sequitur]

http://appraisalmanagernews.com/Montana AMC Audit Draft.pdf

Here is the link. If they get audited they have to disclose the fees paid to the appraiser. I guess they better start paying us our C&R fees.

A disaster in the making. But appraisers are begging for this, so lets get it done.

 

[Mike Kennedy]

"By regulation AMCs are responsible for the quality of the report, the selection of the appraiser or paying the appraiser. "

Fixed it for you.

FDIC Appraisal Regulations
IAG 2010 SECTION V - PAGE 6

"An institution or its agent must directly select and engage appraisers."

Pages 18 & 19
XVI. Third Party Arrangements
An institution that engages a third party to perform certain collateral valuation functions on its behalf is responsible for understanding and managing the risks associated with the arrangement. An institution should use caution if it engages a third party to administer any part of its appraisal and evaluation function, including the ordering or reviewing of appraisals and evaluations, selecting an appraiser or person to perform evaluations, or providing access to analytical methods or technological tools.


An institution is accountable for ensuring that any services performed by a third party, both affiliated and unaffiliated entities, comply with applicable laws and regulations and are consistent with supervisory guidance.32

Therefore, an institution should have the resources and expertise necessary for performing ongoing oversight of third party arrangements.

An institution should have internal controls for identifying, monitoring, and managing the risks associated with using a third party arrangement for valuation services, including compliance, legal, reputational, and operational risks. While the arrangement may allow an institution to achieve specific business objectives, such as gaining access to expertise that is not available internally, the reduced operational control over outsourced activities poses additional risk. Consistent with safe and sound practices, an institution should have a written contract that clearly defines the expectations and obligations of both the financial institution and the third party, including that the third party will perform its services in compliance with the Agencies’ appraisal regulations and consistent with supervisory guidance."

 

[Restrain]

States will regulate because they can charge annual registration fees to the AMCs, fattening the state coffers.

 

[Eli]

"By regulation AMCs are responsible for the quality of the report, the selection of the appraiser or paying the appraiser. "

Fixed it for you.

FDIC Appraisal Regulations
IAG 2010 SECTION V - PAGE 6

"An institution or its agent must directly select and engage appraisers."

Pages 18 & 19
XVI. Third Party Arrangements
An institution that engages a third party to perform certain collateral valuation functions on its behalf is responsible for understanding and managing the risks associated with the arrangement. An institution should use caution if it engages a third party to administer any part of its appraisal and evaluation function, including the ordering or reviewing of appraisals and evaluations, selecting an appraiser or person to perform evaluations, or providing access to analytical methods or technological tools.


An institution is accountable for ensuring that any services performed by a third party, both affiliated and unaffiliated entities, comply with applicable laws and regulations and are consistent with supervisory guidance.32

Therefore, an institution should have the resources and expertise necessary for performing ongoing oversight of third party arrangements.

An institution should have internal controls for identifying, monitoring, and managing the risks associated with using a third party arrangement for valuation services, including compliance, legal, reputational, and operational risks. While the arrangement may allow an institution to achieve specific business objectives, such as gaining access to expertise that is not available internally, the reduced operational control over outsourced activities poses additional risk. Consistent with safe and sound practices, an institution should have a written contract that clearly defines the expectations and obligations of both the financial institution and the third party, including that the third party will perform its services in compliance with the Agencies’ appraisal regulations and consistent with supervisory guidance."

Good stuff!

And, if this were a court room, I will play judge (not). I know which party is going to get the blame. Hint: (It is not the party with the most gold although it will likely cost the lenders with part ownership in their AMC's something, if nothing other than future profit). I know some people won't like my ruling so see you don't want me as judge. lol. How much it will cost everyone (society included) will probably depend on how long some parties take to change their business philosophy or how long it takes some to go under from state or federal regulation. I'm not certain a change in business philosophy will fix the problem of the oligopsony power so I don't want to be judge. I tend to prefer mercy in many cases, but economic beings have no mercy and deserve no mercy. They are not people. But the public does deserve mercy and I hope that the King of judges gives his ruling and it is in line with promoting the public's trust and best interest. What am I saying? The King judge has already ruled. We are just waiting on the results. lol. But Blessed Hope with action is still a good thing and can change a lot of other things including judges.