Hidden home appraisal middlemen have cost homebuyers $12 billion

[J Grant]

How many believe borrowers would be fine with the below, TRUE DISCLOSURE, upfront from the lender in the loan application? (of course, they are not required to disclose for fear of borrower backlash -


Disclosure A) The lender did ( checkbox ) or the lender did not (checkbox) use an AMC

Disclosure B) If the lender used an AMC, the compensation from the AMC (checkbox) came from a portion of the borrower's paid appraisal fee, even if the lender cut a check or payment to the AMC .

Disclosure C) Since the AMD is compensated from a portion of the borrower-paid appraisal fee, the AMC typically shops your appraisal order to the lowest or lower appraiser fee/bid. The borrower is aware that other more experienced and competent appraisers may not be selected because their fee, even if covered by what the borrower paid, means less profit to the AMC.

The borrower, deliberately, is not made aware of the above when they apply for a loan

In fact, after the fact, it is too late to do anything by the borrower, but at least it is there; a breakout of AMC fee and fee to the appraiser on the appraisal was struck down as "information overload," - which shows the regulations are corrupt and work on the side of stakeholders. Only a few states require it.

 

[alebrewer]

One solution, at least, seems pretty simple: Require lenders to make AMCs' fees clear to consumers.

Another option is for lenders to force AMC's to utilize a 'flat fee' model, which is to say - force AMC's to maintain a fixed margin above the appraiser's fee. When I was in the AMC world, we set our margin at $125. When this type of model is employed, there is no incentive to source to the 'low cost' provider, there is no incentive to go outside the market to get the order to the cut rate guys, etc. The appraisers agree to the fee schedule (for TRID reporting purposes), and the AMC maintains a fixed margin. Easy peasy.

This would also eliminate the accusation of price gouging - which is absolutely a legitimate accusation when the AMC's take is at or near the appraiser's fee.

 

[J Grant]

Another option is for lenders to force AMC's to utilize a 'flat fee' model, which is to say - force AMC's to maintain a fixed margin above the appraiser's fee. When I was in the AMC world, we set our margin at $125. When this type of model is employed, there is no incentive to source to the 'low cost' provider, there is no incentive to go outside the market to get the order to the cut rate guys, etc. The appraisers agree to the fee schedule (for TRID reporting purposes), and the AMC maintains a fixed margin. Easy peasy.

This would also eliminate the accusation of price gouging - which is absolutely a legitimate accusation when the AMC's take is at or near the appraiser's fee.

I believe that is also known as cost plus ?I agree that it is a better option than the current nightmare.

 

[bluechip]

If the homeowners / the consumers were screwed out of a lot of money how much were the appraisers screwed out of money too?

 

[J Grant]

If the homeowners / the consumers were screwed out of a lot of money how much were the appraisers screwed out of money too?

The homeowners and consumers, imo are not typically screwed out of a lot of money wrt the AMCs; only the appraisers who accept work for AMCs get screwed out of money.

The consumers are screwed out of choice of appraiser providers and misled wrt to not being disclosure about how an appraiser is elected when an AMC is used.

 

[Terrel L. Shields]

the pesky fees, like title insurance

The insurance provided is valuable unlike the AMC. It provides no benefit to the homeowner, nor the bank in many cases.

AMCs have three strict requirements to become a vendor/partner. One must have a license, an E & O policy and a pulse.

Pulse is not a requirement but it does cut the turn time down.

 

[alebrewer]

If the homeowners / the consumers were screwed out of a lot of money how much were the appraisers screwed out of money too?

Depends on what you're talking about. If you're talking about fees paid - appraisers weren't screwed out of a penny, as the fees paid by the AMC's were the fees agreed by the appraisers. If you're talking about AMC's that went under while still owing appraisers $ - then I agree fully.

 

[J Grant]

Depends on what you're talking about. If you're talking about fees paid - appraisers weren't screwed out of a penny, as the fees paid by the AMC's were the fees agreed by the appraisers. If you're talking about AMC's that went under while still owing appraisers $ - then I agree fully.

The appriasers were screwed, because even though the appraiser agreed to the fee, the AMC control over a large volume and the artificial supply-demand dynamic of the work, which puts the appraiser at an extreme dsitatvange is teh problem.

An appraiser sends in their fee but if it not bottom basement low they get no orders - so it is BS to say it is fine because the appraiser "agreed to the fee"

 

[chad hampton]

The more transparency the better, that’s always true for ethical people. Pretty much everything many of us said 15 years ago about this AMC model has come true. At this point, it requires a total and complete overhaul. The country is waking up to middle men and their exorbitant costs.

 

[Terrel L. Shields]

fees agreed by the appraisers.

As Shakespeare would say, therein lies the rub. If you take the low-ball fee, the onus is on you. I understand the cruel pinch of need but there comes a time when you have to stop taking it. Life is like a **** sandwich, the more bread you have the less **** you have to take. And if you continue to take crap fees from AMCs then all you are going to get is more crap fees...and giving the AMC leverage against every other appraiser on their roster.