The entire system is screwed up on purpose.
1. AMC's are officially recognized as agents of the lender, per regulatory language. The AMC's are loan production.
2. Rendering the notion AMC's support independence as contrary to their legally defined role in the origination process. AMC's are loan production.
3. Arguments about independence are meaningless without addressing the manipulative practices of AMC's. The AMC's are subject to lender pressure same as an appraiser, except the AMC is not separated from loan production. The AMC appeals to loan production to maintain the lender AMC income service relationships.
4. AMC's clearly abuse the process of engagement to the point more than three out of four appraisers refuse to work with them. The AMC's engage in misleading grading, tiered ranking, and disproportionate compensation to appraisers, to conceal the primary goal; Cutting actually independent appraisers out of the loop. In order to satisfy their primary function as a for profit business, which is to retain lender client relationships and grow the income stream. Appraiser independence is clearly contrary to these goals.
5. Lenders never stopped pressuring appraisers for favorable value based results. These days, the lenders use their AMC agents providing lenders agency to pressure the appraiser instead. If the AMC does not play along, the AMC is replaced. How's that for independence?
AMC's the long arm of predatory lending.
6. It's not a coincidence that when HVCC was almost mirror copied to DF Reg Z Appraiser Independence rules, a very important requirement was removed. The requirement to notify an appraiser why they were taken out of active rotation for order assignment, in writing, and give the appraiser a chance to rebut and argue against false claims, misinterpretations of ethics, etc.
You just cant effectively pressure independent appraisers, without the never ending threat of diminishing their work load and cutting their fees, taking them out of assignment rotation.
That's why the AMC grading model developed, as a regulatory work around to supporting real independence, in order to appease their lender clients, so the AMC could provide more profitable agency for their lender clients. Push more deals through and pressure appraisers at all times. Your grading! Your grading! ARCC posted AMC whistleblower disclosure papers illustrating this practice.
According to the Appraisal Regulation Compliance Council, the median average AMC fee charged to borrowers was 65% of the appraisal fee.
appraisersblogs.com
According to the Appraisal Regulation Compliance Council, the median average AMC fee charged to borrowers was 65% of the appraisal fee.
appraisersblogs.com
Appraisers still arguing about the moot details of a failed regulatory structure without by now having recognized how the system is clearly manipulated, are either being intentionally misleading, or they're stupid as all can be and should not be trusted to advise anyone on sound practices.
The entire program can be run effectively with several simple methodology corrections; 1. Stop improperly co mingled appraisal fee and AMC service fee splits. Distinctly different billing for the distinctly different services. Eliminate the ability to drive down service quality by way of junk fee raking while defrauding consumers under the ridiculous most unethical notion that ethics require appraisers to be complicit in consumer billing fraud in order to maintain an illusion of client confidentiality. The lender and the AMC are the same entity as far as the appraiser is concerned. Agency means full representation. When the appraiser deals with the AMC, the AMC stands in the lenders shoes and represents them. That's what agency means. 2. Engage in rotational distribution of all appraisal orders, to all approved panel appraisers. If an appraiser is good enough and met the qualifications to be on a lender's approved appraisal panel, and/or associated lenders agent the AMC's approved appraiser panel, the appraiser should expect a fair share of working assignments. This would put an end to preferential imbalanced assignment trends to appraisers whom violate the management rule, as by discounting the appraisers provide a thing of value to the client in order to be the preferred selectee. Cost savings from reduced cost appraisal services are not returned to the consumer but rather held as a variable unearned fee or junk fee profit rake by the AMC. This is the financial incentive for AMC's to prefer discounting appraisers, and not pass cost savings back to borrowing consumers. Discounting for AMC volume is a bribe. Raking this surplus is supposed to be illegal practice falling under junk fee or unearned fee billing rules. 3. Follow the C&R billing rule or at least the spirit of this, with stable fees for all appraisers on panel. If AMC's can't figure out what a fair standard fee in any given area is by now, they're plainly incompetent. Their primary working duty is engaging appraisers and they've collectively processed hundreds of millions of appraisal assignments by now. Who's still buying this idea they can't figure out what market rate fees are by now? A single individual mortgage broker used to figure out market rate appraisal fees in a single afternoon by simply surveying all their approved appraisers, and then picking the lowest fee figure, that the majority of all panel appraisers would accept. And that's how prior to AMC's, lenders had access to nearly every appraiser in this country, and why AMC's can't reach the majority. Sending the lions share of appraisal assignments to only the select subset of the lowest fee appraisers, this promotes incompetency and creates systemic training deficiencies in the few appraiser's still willing to violate basic ethical principals of honesty, transparency, and fair practices. aka; AMC appraisers.
AMC's engagement process is clearly unethical. Appraisers whom work for AMC's and push volume, violate the management rule. There are clear as day conflict of interest issues with an agent of the lender overseeing appraisal oversight boards. We have investigated ourselves and determined we have done nothing wrong. Clearly AMC's should have better federal oversight from the comptroller per the ASC's original structuring guidelines, and the AMC's should be overseen as well by the mortgage oversight side instead. Why is an appraisal board overseeing an agent of the lender? There is clearly a limit to effective oversight, as a group of less than ten individual appraisal board members are powerless to provide any effective oversight against national corporations whom are backed by the national and international lender and mbs investor community, specifically their 'AMC agents'.
Appraiser independence is a myth. Those whom structured the regulatory oversight system are either corrupt or incompetent.
Don't worry, nobody will ever go to jail.
What singular program still holds up to this day as honest, ethical, fair, and balanced? The VA panel. Standard market rate fees across the board for everyone. Rotational relatively equalized order distribution. Permanent appointments that lenders can't just remove appraisers on a whim or downgrade the appraisers position.
The IVPI proposal was modeled around a similar premise.
Lenders know very well they achieve higher closing stats when they use AMC's. The same lenders are required to work with the VA system for the other half of their origination orders. Honest consumer protection is only for veterans, the regular non military citizens of this country are not given equivalent protection. That's called unequal protection under the law.
Who's still buying this? AMC's are corrupt as they come. It's fitting they meet every year in vegas. As their business plan is nothing short of mob style rackateering.
