I'm not surprised..

[DWiley]

Just FYI for those interested in the fee split models employed by AMC's. There are, generally speaking, two models - a flat fee model and a dynamic fee model (although I'm sure there are other monikers for those models). Under a flat fee model, the AMC charges a 'flat fee' to the lender for the provision of the AMC services. There is no set fee has to be negotiated, but I've typically seen it between ~ $100 and $150 depending on the AMC's overhead. It's the dynamic fee model that, it seems to me, causes appraisers the greatest angst. This is a model where the AMC is incentivized to find the 'lowest cost provider' as the AMC is then able to maximize their fee. Per esempio: AMC charges bank $600 for the appraisal. Under the 'flat fee' model, there is no incentive to use low fee appraisal providers as the AMC margin is fixed (at say $150). $450 goes to the appraiser, $150 goes to the AMC. Unlike the dynamic margin model - used by most of the bigger culprits - wherein if the AMC is able to find an appraiser willing to do the service for $200, they pocket $400. Both models are legal - one model is, however, immoral (IMO).

When I worked in AMCland, the great majority of lenders we worked with wanted a fixed price, or at least a fixed price per state. And, who could blame them? Under current disclosure rules, if a lender's GFE indicates the appraisal cost will be $X, and it turns out to be $50 higher, then the lender has to provide new disclosures, and no one wants to do that.

For example, suppose the agreed upon fee in a state is $650, with no change unless the appraiser fee exceeds $1,000 (a very typical arrangement). If appraiser charges $500, the AMC grosses $150. If appraiser charges $650, then the AMC grosses $0. If appraiser charges $750, then the AMC, eats $100. If appraiser charges $250, then the AMC grosses $500. All of those scenarios can and do happen.

If one wants to change how lenders approach AMC fees, then the key change would be to allow changes in appraisal fees without re-disclosure. Unless or until that happens, the fixed-total-price model will be the one that most lenders will seek.

 

[alebrewer]

When I worked in AMCland, the great majority of lenders we worked with wanted a fixed price, or at least a fixed price per state. And, who could blame them? Under current disclosure rules, if a lender's GFE indicates the appraisal cost will be $X, and it turns out to be $50 higher, then the lender has to provide new disclosures, and no one wants to do that.

For example, suppose the agreed upon fee in a state is $650, with no change unless the appraiser fee exceeds $1,000 (a very typical arrangement). If appraiser charges $500, the AMC grosses $150. If appraiser charges $650, then the AMC grosses $0. If appraiser charges $750, then the AMC, eats $100. If appraiser charges $250, then the AMC grosses $500. All of those scenarios can and do happen.

If one wants to change how lenders approach AMC fees, then the key change would be to allow changes in appraisal fees without re-disclosure. Unless or until that happens, the fixed-total-price model will be the one that most lenders will seek.

No doubt. However, it's possible to have a fixed margin model within a 'fixed fee' agreement with the lender. Per esempio: Agreed 1004 fee for TX with Lender XYZ is $650/file (sans upcharges). AMC has a fixed margin model with $150 as the stated margin. Thus, all appraisals ordered for XYZ Lending in TX are ordered at $650, which means that appraisers fulfilling those services for XYZ Lending would make $500. As opposed to the 'dynamic margin' model. AMC still gets the negotiated $650, but shops for the lowest cost provider so they can maximize their margin. I believe there are inherent difficulties in trying to demonstrate that the AMC engaged the appraiser on the basis of qualifications rather than fee for that model...

WRT the disclosures - neither model would adversely affect the lender's disclosure requirements, but one model - again - is immoral IMO.

 

[Zoe]

When I worked in AMCland, the great majority of lenders we worked with wanted a fixed price, or at least a fixed price per state. And, who could blame them? Under current disclosure rules, if a lender's GFE indicates the appraisal cost will be $X, and it turns out to be $50 higher, then the lender has to provide new disclosures, and no one wants to do that.

For example, suppose the agreed upon fee in a state is $650, with no change unless the appraiser fee exceeds $1,000 (a very typical arrangement). If appraiser charges $500, the AMC grosses $150. If appraiser charges $650, then the AMC grosses $0. If appraiser charges $750, then the AMC, eats $100. If appraiser charges $250, then the AMC grosses $500. All of those scenarios can and do happen.

If one wants to change how lenders approach AMC fees, then the key change would be to allow changes in appraisal fees without re-disclosure. Unless or until that happens, the fixed-total-price model will be the one that most lenders will seek.

That is why fees should have been separated on truth in lending disclosures to borrowers. You just keep driving my point home.

 

[DWiley]

No doubt. However, it's possible to have a fixed margin model within a 'fixed fee' agreement with the lender. Per esempio: Agreed 1004 fee for TX with Lender XYZ is $650/file (sans upcharges). AMC has a fixed margin model with $150 as the stated margin. Thus, all appraisals ordered for XYZ Lending in TX are ordered at $650, which means that appraisers fulfilling those services for XYZ Lending would make $500. As opposed to the 'dynamic margin' model. AMC still gets the negotiated $650, but shops for the lowest cost provider so they can maximize their margin. I believe there are inherent difficulties in trying to demonstrate that the AMC engaged the appraiser on the basis of qualifications rather than fee for that model...

For that to work, all appraisers in an area (or state) would have to charge the same, and that is simply not the case.

As for verifying the AMC did or did not not select primarily by price, that is actually pretty easy to audit/verify. I went through such audits countless times.

 

[Zoe]

When we will as appraisers realize how bad we are being taken advantage of. View attachment 90488

Where do I get this link @DWiley ?

 

[Zoe]

For that to work, all appraisers in an area (or state) would have to charge the same, and that is simply not the case.

As for verifying the AMC did or did not not select primarily by price, that is actually pretty easy to audit/verify. I went through such audits countless times.

Okay, tell me where I can find a link to the info that OP posted. That is all I need to email Chopra.

I can fill in the blanks to Chopra if I can get the link.

 

[alebrewer]

For that to work, all appraisers in an area (or state) would have to charge the same, and that is simply not the case.

As for verifying the AMC did or did not not select primarily by price, that is actually pretty easy to audit/verify. I went through such audits countless times.

Huh? I've never had an issue with appraisers agreeing to a set fee schedule. Speaking as an appraiser, I'd MUCH rather know that we're all getting the same fee from the same AMC than know that I'm having to bid against the other folks to see who will go the lowest. Again - immoral.

 

[Zoe]

Your not helping me Danny.

 

[alebrewer]

For that to work, all appraisers in an area (or state) would have to charge the same, and that is simply not the case.

As for verifying the AMC did or did not not select primarily by price, that is actually pretty easy to audit/verify. I went through such audits countless times.

In the direct engagement world, all appraisers agree to the same fee. So yeah, that simply is the case quite often...

 

[Zoe]

For that to work, all appraisers in an area (or state) would have to charge the same, and that is simply not the case.

As for verifying the AMC did or did not not select primarily by price, that is actually pretty easy to audit/verify. I went through such audits countless times.

Okay Sir, thank you for your answer. Sir based on the chart the OP posted, can you provide anymore details as to this chart?