AMC Rules

[Meandering]

FDIC Appraisal Regulations
IAG 2010 SECTION V - PAGE 6

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

You get a copy of agent agreements????

Otherwise, if they are not agents, they are not responsible via regulation. If there were agency agreements, AMCs could not get away with owing appraisers money while lenders continue to operate.

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

Implied Warranty of Authority

Whenever an agent signs a contract with a third party, there is an implied warranty of authority. Consequently, a lawsuit may be filed against an agent that does not have the actual authority to enter into the agreement, whether that means the agent had no authority or that he acted beyond the scope of the authority the principal provided.

If, however, the agent states that he does not make a warranty of authority or the third party knows that the agent does not have the necessary authority, there is no warranty of authority, and so the agent is not subject to any lawsuit arising from violating that warranty.

Agent Liability to Third Party

The issue of agent liability to third parties is important. Because agents would often rather not be held liable for commitments they make on behalf of another person, it is important for agents—and principals and third parties—to understand when agent liability attaches.


- See more at: http://www.garrettham.com/blog/agent-liability-to-third-party/#sthash.iMBIgCfZ.dpuf

 

[EddieB]

IMO, the hill that appraisers should fight on is the co-mingling of fees. Every FRT ends with a HUD-1.

Naysayers complain that consumers don't care about this info, and most probably don't. But what this does accomplish is simple. It distinguishes the separate entities and makes each justify their role in the process.

Appraisers should have no problem justifying their fee, whatever you want to call it, C&R, complex assignment, etc.

Personally, I don't have an issue with the AMC's cut. Be it a percentage, flat fee, contract rate, AMC fee schedule. When my fee is separate, they can stand or fall on their own.

Why do I think this way? What TBTF, or AMC, or national proponents of a C&R survey pushed for this simple solution. Why did the CFPB have multiple HUD-1 drafts with the fee separate but still finalize with a co-mingled fee.

I realize this doesn't directly concern AMC rules, but this is where I would start.

 

[Non Sequitur]

IMO, the hill that appraisers should fight on is the co-mingling of fees. Every FRT ends with a HUD-1.

I agree with the no co-mingling concept but the argument has been raised by title attorneys and they lost. Basically, "attacking" AMCs (and that's what it boils down to) this way is a non starter but does sound good for the appraiser masses.

 

[EddieB]

How is asking an AMC to justify their fee any different from asking the appraiser to justify theirs?

Sorry, I don't see this as attacking the AMC model, quite the opposite, it would make them competitive (and transparent) on the same level as appraisers. Point taken on the title attorneys.

 

[Eli]

I agree with the no co-mingling concept but the argument has been raised by title attorneys and they lost. Basically, "attacking" AMCs (and that's what it boils down to) this way is a non starter but does sound good for the appraiser masses.

True unless you added HUD-1 as a determining factor in complying with the existing law of C&R as a bear minimum. It needs to be divided in order to prove compliance with another law, not necessarily C&R. Maybe there is another law it need to be separated to comply with. But we've already got one law that it should be separated to prove compliance with or am I off base? What about three approaches (or more) to C&R reconciled to prove compliance with bear minimums?

 

[Eli]

Or, my choice (inexperienced favorite approach to value due to not solving the problem yet) would be use the commingled fee combined with all other commingled or not from HUD-1 and that be a bare minimum. That appears more market based imo. Treat it for what it is being disclosed as. ???? Of course this is feeding the monster. What would help the public the most? big picture??? Can the monster be tamed?

 

[Meandering]

I agree with the no co-mingling concept but the argument has been raised by title attorneys and they lost. Basically, "attacking" AMCs (and that's what it boils down to) this way is a non starter but does sound good for the appraiser masses.

You are correct, and it is the CFPB that is protecting the smoke and mirrors of comingled fees, when the law is very clear that the appraisal and management services are separate and distinct. FHA is clear that borrowers will not be charged a management fee. This is just one of the problems that other industries are having with the CFPB. It might be a bigger question for the Department of Justice.

After all, these are consumer protection laws, and there fails to be any consumer protection from fee splitting, comingling, and charges above "bona fide" which, are required by the law.


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[Meandering]

True unless you added HUD-1 as a determining factor in complying with the existing law of C&R as a bear minimum. It needs to be divided in order to prove compliance with another law, not necessarily C&R. Maybe there is another law it need to be separated to comply with. But we've already got one law that it should be separated to prove compliance with or am I off base? What about three approaches (or more) to C&R reconciled to prove compliance with bear minimums?

You can't use the current HUD-1 to determine if C&R is being paid, because the current HUD-1 does not separate the management fee and the fee paid to the appraiser. Under the Frank/Dodd, AMCs are not owed C&R and they are not defined as "fee appraisers" unless they issue W2s as the employer of "fee appraisers". If you are not an employee you by law, are supposed to be paid C&R, but not the third party AMC. They are only allowed to charge reasonable fees for bona fide services.


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[Eli]

You can't use the current HUD-1 to determine if C&R is being paid, because the current HUD-1 does not separate the management fee and the fee paid to the appraiser. Under the Frank/Dodd, AMCs are not owed C&R and they are not defined as "fee appraisers" unless they issue W2s as the employer of "fee appraisers". If you are not an employee you by law, are supposed to be paid C&R, but not the third party AMC. They are only allowed to charge reasonable fees for bona fide services.


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No argument here. My opinion above was biased with a bit of anger involved. It was pretty much a full frontal assault or maybe a backwards assault. idk, how do you fight something with no conscience? lol.

 

[Non Sequitur]

How is asking an AMC to justify their fee any different from asking the appraiser to justify theirs?

You aren't asking that, what you asked is that the fee be broken down on the HUD1. Not going to happen, that's been settled a long time ago.

Sorry, I don't see this as attacking the AMC model, quite the opposite, it would make them competitive (and transparent) on the same level as appraisers. Point taken on the title attorneys.

Don't be sorry, this is a place to throw around ideas and to generally blow off steam.

But IMO the HUD1 argument, C&R, pushing for laws on top of laws, is all motivated by the belief that we can attack and force AMCs to do business the way we [appraisers] want. The opposite has happened and now AMCs are cemented into position, largely due to the continued effort to "regulate" them.