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

[Sandra Koutsopoulos]

The lending business has changed quite a bit in the last 50 years for sure. Used to be they'd be lending their own money and wanted to ensure they had a good shot of getting their money back at a profit. Then mortgage folks would originate loans with a credit line, step out of the line of fire once the loan was sold off to an entity (investors?), and they'd go originate some more loans; but if too many went bad, entities they'd sell those loans to wouldn't take their loans anymore, so they still had some skin in the game.

Now it seems loans are originated, become assets in the stock market, and the business of those businesses is to to make as much profit as possible using the fewest paid employees as possible, so they hand off that bothersome bump in the road of choosing the appraiser and primary responsibility for vetting the work to AMCs, whose primary business is to make money and keep lenders sending them dough.

And where do we come in? We're the folks that give our professional opinion regarding the real estate value, so that all the other moneymakers in the game can move forward to make profit. If they could pay us a penny for that job, they'd do it, just to get the value stamp... oh, that's right, with AI they don't have to pay flesh & blood appraisers, the robots can be TRUSTED to accurately value things... at least good enough so the profit machine keeps churning.

But what if the robots are wrong... often enough to throw a klinker into the works? Hmmm.... Even AI on Google has a disclaimer that says they can make mistakes and to double check the information they give. And then I think about Tesla cars, for example, that run amok and run into things/ppl/crash scenes, or set the dang car on fire if wheels are moved in the wrong way (My towtruck guy told me they're not allowed to tow certain Teslas b/c they will explode in a ball of flames), or lock the inhabitants inside the car with no safety override escape so the occupants burn alive inside, as happened here in SoCal a couple years ago to 3 young ppl.

That thing about overriding errors is crucial to keep everybody safe, not only in Teslas, but in financial transactions where a robotic value is WRONG! Where's the protections for the public, for the money-people, or for us citizens who will be again asked to bail out the lenders/investors due to relying on the poor judgment of the robots/AI?

 

[George Hatch]

The moral hazards of TBTF almost cannot be overstated.

 

[J Grant]

That's an excellent response to an argument I never made. Lenders have alternatives they can exercise at their own discretion.

All my clients are direct engagement. That doesn't mean their motives include some form of compassion or altruism or social responsibility. If I get hit by the Big Giant Meteor tomorrow every one of them is just going to go to the next appraiser on their list. I'll be a distant memory by this time next week.

My clients, except for one, are all direct engagement. (They are national-scale clients.) Of course, if I quit tomorrow, they would replace me. That is not the point. The point is, because they don't use an AMC, they are not soliciting fee bids for regular assignments. They pay C and R to their appraisers for regular work. I only submit a fee quote on a high-value/complex assignment.

Nobody was talking about compassion or altruism. I notice you often make this kind of dig at appraisers, as if we are naive children expecting compassion. We are business people objecting to being exploited for large sums of money by the AMC/lender alliance, which has allowed the fee gouging to reach egregious levels .I am AMC-free, but it took years after the HVCC to get back there.

You have never experienced what residential appraisers did- having your clients shut you out overnight and go from direct engamgent ot using an AMC and cutting your fee by 50% for the same work.

 

[AppraisingLA123]

Let's get real you can't boycott something you have no control of and it's as silly as kidnapping a homeless person and holding them for a $ million dollar ransom.

The fact is you have no plan just venting which is okay but don't expect a support group to show up hold your hand and sing kumbaya.

who said anything about boycotting or anyone holding my hand. He was saying boycott, and i made fun of that idea.

 

[George Hatch]

You have never experienced what residential appraisers did- having your clients shut you out overnight and go from direct engamgent ot using an AMC and cutting your fee by 50% for the same work.

You're mostly right, I got out of the MB trade many years before the HVCC came along. But the fees for what I do have also declined over the years; that decline being *entirely* driven by the competition in the marketplace. The declines in the fees aren't as drastic as what has happened to the SFR appraisers but it's not insignificant, either. All of the CGs here will attest to that.

And I do understand the anger at the rug pull as well as the advocacy for "fight". I just don't see any path forward for the appraisers other than working with what they've got. Up to and including giving up the self-employment gig at some point and punching a clock in some AMC cubicle farm. If/when the market for services ends up going in that direction.

It's apparent that the lenders and the GSEs have been watching the two groups of appraisals (AMCs vs direct engagement) for years and comparing them against each other. By their actions they are demonstrating the conclusions they have come to. If they think there's any difference in utility between the two groups of appraisers that difference obviously hasn't meant enough to them to prompt for "do not accept" the AMC appraisals.

Same with the waivers and hybrids. They've been engaging, using, watching, comparing and coming to their own conclusions; most coming to those conclusions on the big data-driven basis. And they are demonstrating their opinions about the utility-to-them of these various alternatives. My PFA guess is that unless/until enough appraisers withdraw from the market for services it's going to get worse for those who remain. I think it's very possible that the fees for the assignments that do remain might drop even further.

I am not the bad guy for bringing these possibilities into the discussion. They exist, anyone who puts a little thought into the situation can see they exist, and IMO there is no virtue in gaslighting those issues in service of how that discussion makes people feel.

 

[AppraisingLA123]

AMCs have to pay as little as possible, or else they will go out of business. Taht's how they survive and compete. Unless, we expose them, and report them nothing is going to happen. All of you are wasting time, TALKING. That's all you do. Some of you instead of thanking me for showing you all the SOLUTION, steer the conversation into towards ridiclous ideas like lets all boycott them, like we are in a effing union or something.

 

[George Hatch]

Thanking you for what? For stating the same thing (report them and sue them into submission) that people have been saying since 2009?

Get back to us when you come up with some new tangent to consider that hasn't already been beaten to the bones.

 

[Non Sequitur]

 

[J Grant]

GH- It's apparent that the lenders and the GSEs have been watching the two groups of appraisals (AMCs vs direct engagement) for years and comparing them against each other. By their actions they are demonstrating the conclusions they have come to. If they think there's any difference in utility between the two groups of appraisers that difference obviously hasn't meant enough to them to prompt for "do not accept" the AMC appraisals.

That's their call if they do not think there is any difference in utility between the two groups of appraisers ( should be appraisals , not appraisers- some appraisers work for both) . But this does not address the fee issue. The lender should pay for the cost of the AMC service, since the lnder is the part that benefits from the service. It should not be taken out of a split of the appraisal fee.

I bet that if lenders had to pay a hard cost for AMC service, they might start using their own panels again - no way would a lender pay an AMC $200 to process a report. The AMC would be lucky to get $75 !! That is why the AMC's fight so hard to keep their compensation coming out of the appraisal fee split.

Of course, over time, low fees will see the more competent appraisers avoid AMC work if possible. And even the competent will have to churn and burn and shortcut to make $ from the low fees.

If a lender can pass the AMC cost charge on to the borrower, fine. It's just disgusting to watch it come out of the appraisal fee. Even if lenders accept the work- some of the reports I see from AMC;s are awful. Witness the posts here from appraisers who seem totally clueless, posts that start with..."I am doing a job for an AMC...

 

[George Hatch]

In 2026 the most junior appraisers from the Big Bang will have accrued over 15 years of experience. The majority are at or above 20 years of experience. That's who some people have been calling unqualified and incompetent.