Fannie Mae REO switching to AMCs

[Sadie]

The Fannie shadow inventory has always been a mystery. In one of their teleconferences after the bubble with about 20 other appraisers I asked about the shadow inventory and the response from the Fannie REO rep was like I had committed heresy and treason by broaching the subject. He hissed and said "There is no shadow inventory!" You're correct, the way they handle it is bizarre. It appears to be yet another example of where when no one is accountable nothing get resolved. It's incredibly wasteful.

i asked to the rep in a one on one conversation and was told "I don't know, but its part of the long term plan" I think there are several answers. At first there were already tons of foreclosure flooding the market and adding more didn't do any good, then after that who knows? They were trying to fix them up, but they were picking the wrong properties at first so they couldn't recoup their investment. Most of my Fannie work in the past few years have been short sales. Fannie Mae is kind of tricksy with their assets, likes to hide in their shadow inventory.

 

[Aokreal1]

I got the same email. I have had Fannie as a client for 25 years. It made me sad. It also made me mad and just enforces the thought that Fannie wants appraisers to just go away, forever.

AMC’s are what’s killing our business. Every profession is getting paid more than five years ago except ours. We’re losing 100 appraisers a year in Florida.
Appraisers, stop taking the low fee orders, have more respect for yourself and your chosen profession.

 

[Zoe]

AMC’s are what’s killing our business. Every profession is getting paid more than five years ago except ours. We’re losing 100 appraisers a year in Florida.
Appraisers, stop taking the low fee orders, have more respect for yourself and your chosen profession.

This is out of the Working RE magazine. Last article in last volume.

"Under pressure: What's driving the Appraiser Exodus and how to fix it.

AMCs were created after the 2008 crisis to protect appraiser independence. The idea made sense. The execution has failed today. Today, borrowers commonly pay $600 to $700 for an appraisal, wile the appraiser often receives about half of that after AMC fees. Turn times lengthen. Panel depth shrinks. Geographic competency erodes. And experienced appraisers quietly step away.".

It is good article. It continues later:

"This is not a workforce inconvenience. It is a structural market risk. The fix is not complicated, but it does require courage.

First appraisal fee transparency must be mandatory. If a borrower pays $650 and the appraiser receives $325, both parties deserve to know. Transparency restores accountability and allows market forces to function.
Second, the AMC model must be reformed. Filters and portals should not replace professional dialogue. Communication between those ordering the work and those producing it must be restored.
Third, training incentives must be rebuilt. Mentorship requires time, risk, and revenue loss. Without meaningful compensation and protection for mentors, the next generation will never reach scale.

Finally, technology must support judgement, not suffocate it. Automation can assist analysis, but it cannot replace local knowledge, experience, and professional interpretation."

The article is longer but it is good and written by David Massey, state certified general and broker in Burlington North Carolina.

 

[J Grant]

This is out of the Working RE magazine. Last article in last volume.

"Under pressure: What's driving the Appraiser Exodus and how to fix it.

AMCs were created after the 2008 crisis to protect appraiser independence. The idea made sense. The execution has failed today. Today, borrowers commonly pay $600 to $700 for an appraisal, wile the appraiser often receives about half of that after AMC fees. Turn times lengthen. Panel depth shrinks. Geographic competency erodes. And experienced appraisers quietly step away.".

It is good article. It continues later:

"This is not a workforce inconvenience. It is a structural market risk. The fix is not complicated, but it does require courage.

First appraisal fee transparency must be mandatory. If a borrower pays $650 and the appraiser receives $325, both parties deserve to know. Transparency restores accountability and allows market forces to function.
Second, the AMC model must be reformed. Filters and portals should not replace professional dialogue. Communication between those ordering the work and those producing it must be restored.
Third, training incentives must be rebuilt. Mentorship requires time, risk, and revenue loss. Without meaningful compensation and protection for mentors, the next generation will never reach scale.

Finally, technology must support judgement, not suffocate it. Automation can assist analysis, but it cannot replace local knowledge, experience, and professional interpretation."

The article is longer but it is good and written by David Massey, state certified general and broker in Burlington North Carolina.

This article stops short of a solution. While disclosure is better than keeping it hidden, the borrower ALSO needs to know not just that a huge chunk of their $ went to the AMC, but that the AMC held a flea market type auction to get the cheapest bid to assign the order, bypassing other, more experienced appraisers. THAT might interest a borrower. Investors and the public need to know that.

And beyond the disclosure, for a solution, the AMC getting paid from the fee split from the bundled fee needs to stop. Just eliminate it with a simple piece of legislation, or cap the % an AMC can take as a split of the borrower covered appraisal fee. Let the lender pay a separate out-of-pocket fee to the AMC that the lender chooses. Since the lender benefits, they should pay for a service that benefits them.

Otherwise, the profession will continue to circle the drain. It will not attract or keep quality people with such low fees, though there are some entities that do not use AMCs and order direct; there is not enough of that work to go around. The standards get lower and lower to attract and keep people who will put up with such awful fees and they still can barely get anyone to sign on. PAREA had only a trickle of people take the course and graduate for good reason.

 

[George Hatch]

I'm 110% in favor of mandatory full disclosure and transparency. I have maybe 10% confidence that it will change anyone's behavior or result in higher splits for the appraisers.

Meanwhile, and WRT to the inflexible (or less flexible) supply of appraiser hours

• When lenders compete, appraisers win
• When appraisers compete, lenders win

 

[Sadie]

I did sign up with all 3 AMCs that Fannie will be using. I just got a VM from Clear Capital saying they are not adding appraisers to their panel at this time due to lack of work.

 

[Bobby Bucks]

I did sign up with all 3 AMCs that Fannie will be using. I just got a VM from Clear Capital saying they are not adding appraisers to their panel at this time due to lack of work.

I wouldn't lose sleep over not getting on CC's "elite" panel. *LOL* During COVID I did quite a few for them and their fees were decent, but when things slowed down so did their fees. I rarely respond or quote unless it's super rural and can get a higher fee. I recall seeing some cookie cutter 1004s for less than $200 that were immediately snatched up by someone. I can't imagine what their REO fees will be. CC is as bad or worse than Servicelink.

 

[Sadie]

I wouldn't lose sleep over not getting on CC's "elite" panel. *LOL* During COVID I did quite a few for them and their fees were decent, but when things slowed down so did their fees. I rarely respond or quote unless it's super rural and can get a higher fee. I recall seeing some cookie cutter 1004s for less than $200 that were immediately snatched up by someone. I can't imagine what their REO fees will be. CC is as bad or worse than Servicelink.

I think I am just bummed about Fannie ditching direct assignments. My only knowledge of CC is what other people have said about them, which was not good.

 

[Non Sequitur]

Posted to Facebook this morning. This is what one of the AMC‘s are offering for the Fannie Mae REO‘s. Shameful.

 

[Sadie]

Posted to Facebook this morning. This is what one of the AMC‘s are offering for the Fannie Mae REO‘s. Shameful.


View attachment 107633

Jump on it!