I'm not surprised..

[George Hatch]

I think it's fair to say that what they have done in the past is a good indicator of what they will continue to do. Regardless of what anyone other than Congress thinks they should do.

 

[J Grant]

If the appraisal waiver offer is declined 5an appraisal must be performed. If an appraisalwaiver is accepted, Fannie Mae accepts the lender’s property value estimate as the marketvalue of the property and provides relief from enforcement of representation and warranty ofvalue, condition, and marketability of the property.6

Above from Fannie/freddie (internet search ), Unless something has changed recently, the value acceptance/appraisal waiver does not hold the lender accountable for the value - they do not have to repurchase the loan wrt the collateral value - I assume the loss is dumped on the taxpayers

 

[Zoe]

I think it's fair to say that what they have done in the past is a good indicator of what they will continue to do. Regardless of what anyone other than Congress thinks they should do.

If somebody like CFPB and/or FTC were to jump in, they would not need Congress approval.

They don't ask Congress to do what they do every day.

Congress would be forced to make changes by CFPB or FTC. Like separation of fees on truth in lending disclosures.

Those two entities have more power over trade than anybody in the Nation. More power than Congress. Half of Congress don't know what CFPB and FTC know.

More than half (probably 95%of congress) don't know.

 

[Zoe]

Either FTC or CFPB can get any records they want from any bank in the nation. That includes any lender. They don't have to go to Congress to get what they want.

If they were to get Fed Reserve Bank to jump in, it would get worse. They don't need them either to get what they want.

If you just go to CFPB website and look at constant violations they uncover, it will shock you. FTC is same way. Go to their websites.

 

[DWiley]

AMCs should be competing with others AMCs for business...

Assuming the OP letter is accurate,

If true market competition is at play between the AMCs, how can an AMC make so much money on an order?

Something does not add up.

It does not add up because, as is typical with forums and blogs, you are only seeing part of the story. Go back to the example I posted with the fixed fee of $650. What the AMC grosses depends on what the appraiser charges, and there are times when the appraiser charges more than $650, and the gross to the AMC is a gross loss. The AMCs accept that because the agreed upon fixed price is designed to produce an average gross of $X. Appraisers are not posting examples where the appraisal fee exceeded the total fee paid to the AMC, but that happens more often than most appraiser would believe.

As you note, if an AMC made an excessive gross on every order, they would not stay in business - because the lender would just seek a lower cost option. The reality is that on most deals they make around $150-$200, on some they make more, and on some they make less, or even take a gross loss, because the losses will be offset by other orders where they make more.

By the way, most appraisers operate in a similar fashion. Most have a set fee that covers 80% to 90% of assignments. Some of those take longer than others, so what we make on each assignment is highly variable. And, sometimes we do something at a lower fee than it really deserves, because the client is a good one that provides us a lot of work.

 

[alebrewer]

Above from Fannie/freddie (internet search ), Unless something has changed recently, the value acceptance/appraisal waiver does not hold the lender accountable for the value - they do not have to repurchase the loan wrt the collateral value - I assume the loss is dumped on the taxpayers

That is correct. Rep and warrant relief - for the collateral - is provided with value acceptance.

 

[J Grant]

.

The GSEs even get cagey with their usage of their AVM in their Waiver program. They refer to their usage as "validating" the lender's value estimate. In that manner the "value" of the property is still plausibly on the lender, not on them; so Fannie can still force the lender to buy back the loan if there's a value-related problem. Of course, if that value estimate is out of line with their AVM their "validation" protocol clues them into that point and enables t

The lender gets relief from warranty and reps regarding the value in the WAIVER/value acceptance- meaning Fannie would not force the lender to buy back the loan in a value-related problem with a waiver granted.

 

[Tom D]

I wouldn't use us if i got safe harbour and no appraisal fee to borrower.
And you expect what from them in that case.

 

[NC Appraising]

It does not add up because, as is typical with forums and blogs, you are only seeing part of the story. Go back to the example I posted with the fixed fee of $650. What the AMC grosses depends on what the appraiser charges, and there are times when the appraiser charges more than $650, and the gross to the AMC is a gross loss. The AMCs accept that because the agreed upon fixed price is designed to produce an average gross of $X. Appraisers are not posting examples where the appraisal fee exceeded the total fee paid to the AMC, but that happens more often than most appraiser would believe.

As you note, if an AMC made an excessive gross on every order, they would not stay in business - because the lender would just seek a lower cost option. The reality is that on most deals they make around $150-$200, on some they make more, and on some they make less, or even take a gross loss, because the losses will be offset by other orders where they make more.

By the way, most appraisers operate in a similar fashion. Most have a set fee that covers 80% to 90% of assignments. Some of those take longer than others, so what we make on each assignment is highly variable. And, sometimes we do something at a lower fee than it really deserves, because the client is a good one that provides us a lot of work.

Thanks. I agree. My good clients pay very well, and as I said in a prior post it equals out. This is not the case with AMCs though.

I agree with most, but doesn't market conditions play a role in this also?

For example, in 2021-2022 I could see the AMCs losing on some orders due to the high level of volume.

Currently, it appears that it has flipped.

Most lenders have a set fee with an AMC.
Say, $600. Now with the volume being so low, the AMCs can find appraisers to work for much less, which increases the AMCs profit margin.

This allows for the AMCs to have excessive profit margins eventhough true market competition is at play.

Why? The AMCs are not going back to the lender for a price increase. So the lender does not care. They probably have a contract for $600 per appraisal, so the typical fee of $150 is irrelevant. If they can find an appraiser at $300, that $150 fee becomes $300.

Let's be honest here. Per the GSEs, all of these new products were suppose to be about saving borrowers money. Something doesn't add up.

This is were I have a problem. The borrowers are being taken advantage of and they need to sue. Why does the AMC get to keep the overage and not the borrower.....if it is really about saving borrowers money...ie reducing the borrowers cost?

 

[NC Appraising]

Fwiw, dwiley gave the best advice...get the disclosures changed where a Cost plus model would work.

I do find it comical that they have appraisal fees on the disclosure of $600-$800 and cannot exceed it. But.... if the appraisal fees are much less the borrower still has to pay $600-$800. Something doesn't add up??

Axx backwards.