FANNIE bonds with AMCs, over your dead low paid body.

[J Grant]

[slow clap for the obvious] This is how AMCs operate. Your AI-Vomitron just summarized an excellent rebuttal to an argument that nobody ever made.

It is obvious to us, but the majority of borrowers and consumers had no idea. If mainstream AI is telling, it is no longer a secret. As the lawsuits settle and get media coverage, the sleazy truth will ooze out to the masses.

Some lenders who use AMC's might want to get in front of it and clean up their act - just saying.

 

[George Hatch]

Why would I ask an AMC that and why would they answer me?

But follow the logic - an AMC does not make a dime more by hiring an appraiser who charges $300 vs hiring an appraiser who charges $500. The lender paid the AMC the same $75 an order, regardless ( $75 ia an example, the lenders are cheap when it is their money)
.
It is likely they would instruct the AMC to pay all the appraisers the same flat fee of X$ (regional C and R ) to keep things simple. Lenders charge borrowers a same C and R fee for regular orders in a region because lenders sell loans, not appraisals.

What logic?

If Road Runner AMC offers a $300 appraiser payout then ACMEs choices are to either compete by fee to lower their payout or to cede that client's business to the competition. Rinse/repeat that surrender to their competition until they surrender themselves right out of business.

Why are you not getting $1000 appraisal fees for appraising $500k condos? Because your competition does the same thing for less. Which is the same reason they're doing the same thing for less; because if they didn't you would just underbid them in order to get more assignments at their expense.

 

[J Grant]

My daily rate was the same for teaching as it was for appraising. Except I didn't work for splits as an appraiser.

Personally, I don't think "Instructor" splits is that great of an example. As consumers appraisers buy all sorts of services and software and E&O and vehicle costs and such without giving any thought to how much of that transaction went to the workerbee vs the people they were working for. Appraisers watch and compare the totals of their various alternatives to each other.

In terms of goods and services there's nothing special about the appraisal business. Jake and Elwood Blues might say "we're on a mission, from God" but that doesn't apply to the appraisal business.

There is something special, or let's say unique, to the REGULATED res loan appraisal end of the business - the consumer (borrower ) is not allowed to pick the appraiser. In other areas of appraising, the consumer is allowed to choose the appraiser. And in other professional service businesses, the consumer/customer is allowed to choose a professional. That is how a normal market reaches a balanced supply and demand. The special circumstance of prohibitions around selection for regulated loans creates a very unbalanced supply and demand (favoring the AMC side ).

 

[George Hatch]

It is obvious to us, but the majority of borrowers and consumers had no idea. If mainstream AI is telling, it is no longer a secret. As the lawsuits settle and get media coverage, the sleazy truth will ooze out to the masses.

Some lenders who use AMC's might want to get in front of it and clean up their act - just saying.

I don't know how any of those lawsuits will turn out. I only know that after 15 years of this nothing about the bundled fee conflict has changed and nothing has worked yet.

 

[J Grant]

What logic?

If Road Runner AMC offers a $300 appraiser payout then ACMEs choices are to either compete by fee to lower their payout or to cede that client's business to the competition. Rinse/repeat that surrender to their competition until they surrender themselves right out of business.

Why are you not getting $1000 appraisal fees for appraising $500k condos? Because your competition does the same thing for less. Which is the same reason they're doing the same thing for less; because if they didn't you would just underbid them in order to get more assignments at their expense.

Are you being deliberately obtuse?

If the lender tells the AMC to pay all appraisers $450 in X region and sends the AMC $450 for each order for the appraiser and pays the AMC a separate cost of $100 tomanage then order, it eliminates appraiser fee shopping by the AMC.

 

[George Hatch]

There is something special, or let's say unique, to the REGULATED res loan appraisal end of the business - the consumer (borrower ) is not allowed to pick the appraiser. In other areas of appraising, the consumer is allowed to choose the appraiser. And in other professional service businesses, the consumer/customer is allowed to choose a professional. That is how a normal market reaches a balanced supply and demand. The special circumstance of prohibitions around selection for regulated loans creates a very unbalanced supply and demand (favoring the AMC side ).

The lenders make these choices. Are you saying the lenders have no choice between direct engagement vs this AMC or that AMC?

The lenders are the responsible party for their use of the appraisals and they are the intended users of these appraisals. It would be immoral to hold them to account for their responsibilities without also acknowledging their discretion in making these choices.

 

[J Grant]

OK

When you buy a car, do you care how much the sales person is making vs the dealer or manufacturer?
When you buy milk at the grocery store, do you care how much the store is making vs the farmer vs the distributor?
When you buy gas, do you care how much the gas station owner makes, vs the clerk, vs the oil company?
When you pay for a meal in a restaurant, do you get concerned about how the owner makes vs the chef vs the waiter?
When you pay a bill at a doctor's office, do you concern yourself over the split beteeen the doctor, the nurse, etc?
When you pay your accountant, do you get worked up over how much goes to the accountant and how much to the partners in the firm?

Just give me one example where the concern over how fees/costs are split manifests itself in the way so many think it will manifest in appraisal land.

I wish somebody would make the disclosure mandatory so the whole argument would go away. I have never found anyone who is not an appraiser who cares what appraisers make.

More deflection-

As a consumer, I have a CHOICE of which car dealer, grocery store, restaurant etc to go to. And if one of these places is underpaying people and it shows up in lousy service or an inferior product, I might choose to go elsewhere. People do get what they pay for in the end.

The consumer borrower has no choice about which appraiser gets hired - they enturst the bank or lender to do it for them. They should be informed when that bank or lender outsources their choic of an appraiser to an AMC , who then conducts a sleazy flea market auction to find a cheap fee or bid - even if that appraiser has less experience or competence for the assignment. toohyruaruavctoil

 

[George Hatch]

Are you being deliberately obtuse?

If the lender tells the AMC to pay all appraisers $450 in X region and sends the AMC $450 for each order for the appraiser and pays the AMC a separate cost of $100 tomanage then order, it eliminates appraiser fee shopping by the AMC.

As I read it you are assuming the lender will arbitrarily designate a single regional fee instead of comparing their options. Expedience isn't even part of their considerations because they aren't the ones doing the shopping; all the shopping will be done by the AMC.

 

[George Hatch]

More deflection-

As a consumer, I have a CHOICE of which car dealer, grocery store, restaurant etc to go to. And if one of these places is underpaying people and it shows up in lousy service or an inferior product, I might choose to go elsewhere. People do get what they pay for in the end.

The consumer borrower has no choice about which appraiser gets hired - they enturst the bank or lender to do it for them. They should be informed when that bank or lender outsources their choic of an appraiser to an AMC , who then conducts a sleazy flea market auction to find a cheap fee or bid - even if that appraiser has less experience or competence for the assignment. toohyruaruavctoil

Of course. If you have a moral objection to how BofA treats the appraisers you might take your business to Chase. Of if you think their service or quality are inadequate you might take your business elsewhere. Same as any other goods/services. As in, not special and (as it turns out) not blessed by the angels or kissed by God.

Meanwhile it's literally none of the borrower's business which appraisers the lender chooses because the appraisal isn't being performed for their benefit. The appraisal fee comes under the cost of doing business. They can complain about the service after the fact but in the end they're the ones who want to borrow someone else's money. They're the applicant, not the creditor. They have to meet the lender's qualifying criteria.

 

[Surf Cat]

Some lenders who use AMC's might want to get in front of it and clean up their act - just saying.

This ain't going to happen.

Like the married couple trying to reconcile after the husband cheated, or the wife stealing funds from the account to shop secretly. Try as they may, there's too much stuff that bubbles to the surface thus, they split.

The users of old school appraisal reports have had it.

Was it the fault of appraisal education? Appraisers that were mentors who shouldn't have been? Appraisers hitting a predetermined value to make the deal work for mortgage brokers? Churn and burn fee shops? The GSE's accepting unsupported "drival" valuations? AMC fees with their use of newbies as opposed to experienced appraisers? A little of everything I suppose. Set up a circular firing squad.

They're moving on to a different product. The new uad 3.6... what could go wrong? They'll cross that bridge when they get to it. With the 3.6, they're going to data mine the snot out of the last of the old school appraisers.... then cut the cord.