Law firms begin addressing AMC fraud

[Mejappz]

Wonder which AMC Rocket uses?


View attachment 96754

Let me take a stab at it

1. Class
2. Clear Capital
3. Solidfi

To add insult to injury, it was probably a hybrid.

 

[Non Sequitur]

Let me take a stab at it

1. Class
2. Clear Capital
3. Solidfi

To add insult to injury, it was probably a hybrid.

Or a waiver and still charged the borrower.

 

[Mejappz]

REVVA has no knowledge

A top law firm is investigating the role of appraisal management companies(AMCs) in driving up appraisal costs. The firm is asking homebuyers to contact them if they feel they’ve been overcharged or misled about how much of the appraisal fee goes to an AMC versus how much goes to the appraiser.

In a blog post on its website, law firm Morgan & Morgan said that AMC involvement in the appraisal process is potentially concerning because of a perceived lack of transparency, inflated costs and limited additional value to the consumer.

The appraisal fee has been top of mind for appraisers since the financial crisis of 2008, when AMCs began taking on a larger role in the home valuation process. The Dodd-Frank Act of 2010 called for a buffer between lenders and appraisers in the hopes of preventing collusion between the two parties.


But appraisers say AMCs have engaged in unfair practices that result in a larger share of the appraisal fee going to firms instead of the individual appraiser. They point to how the appraisal fee is presented on closing documents as a lump sum, as opposed to showing how much of the fee goes to an AMC.

Appraisers say that the lack of transparency allows AMCs to take a higher share of the fee. They believe this has played a role in the rapid decline of the appraisal profession as it’s gotten more difficult to make a living in the field. As a result, the number of appraisers nationwide has dramatically declined.

While there’s no love lost between the Consumer Financial Protection Bureau (CFPB) and the real estate industry, appraisers who’ve been vocal about AMCs filed a complaint with the CFPB in the hope of getting the appraisal fee broken out on closing documents. They think that additional transparency might cause consumers to question the role of AMCs, which are largely unknown among the general public.

The Real Estate Valuation Advocacy Association (REVAA), a trade group that represents AMCs, said it has never opposed breaking out the fee. But REVAA points to the stagnant housing market as the reason behind the decline of the appraiser profession, citing home sales that are at record lows. REVAA told HousingWire it had no comment on the investigation, citing a lack of knowledge.

This effort with the CFPB looks all but dead now that the Trump administration has appointed Project 2025 architect Russell Vought as the bureau’s acting head after Trump fired Rohit Chopra, Joe Biden’s pick to lead CFPB.

In his first day on the job, Vought ordered the bureau to cease most of its activities, halt all communications and shut down the building itself for the week. This came a day after Elon Musk gained read-only access to a wide variety of CFPB data.

Democrats and industry experts have questioned whether CFPB and departments like the United States Agency for International Development (USAID) can be unilaterally shut down by the Trump administration, citing the fact that these organizations were created through congressional legislation.

Sen. Elizabeth Warren (D-Mass.) sent a letter last week to U.S. TreasurySecretary Scott Bessent — who was serving as acting CFPB director prior to Vought — urging him to “unfreeze“ the agency. Warren, the ranking Democrat on the Senate Committee for Banking, Housing and Urban Affairs, was instrumental in the creation of the CFPB.

Morgan & Morgan said that homeowners should ask for a breakdown of the appraisal fee, look for the average cost of an appraisal in their area and contact the firm if they believe they’ve been overcharged. The law firm specializes in a number of areas, including personal injury, class action, consumer protection and civil rights.

Class-action law firm opens investigation into appraisal fees, AMCs

The law firm of Morgan & Morgan is investigating the role of appraisal management companies (AMCs) in driving up the cost of appraisals.

www.housingwire.com

 

[Terrel L. Shields]

The Dodd-Frank Act of 2010 called for a buffer between lenders and appraisers in the hopes of preventing collusion between the two parties.

The simple solution is to ban all commission-based mortgage origination. And no mortgage lender should be allowed to pay including bonuses, based upon the gross amount lent nor the number of transactions. If loan originators could be fired for making bad loans, the AMC would serve no purpose whatsoever.

 

[chad hampton]

AMCs behave quite a bit differently today than they did back when they more or less first came into existence.

Even the big ones used to survive and make a good profit on a 20% take of the cut. Then greed took over. That wasn’t good enough for their investors anymore. And don’t even try to dig too deep into the hedge fund that owns class. That AMC is a complete lost cause. They’re not stopping till they get 100%.

There was also oversight from appraisal boards back then. I could tell you firsthand, because I sat in meetings with my appraisal board, and the AMC‘s would fly their representatives in to threaten the board against any sort of oversight. It wasn’t even implied, it was stated. we would consistently get into arguments with the appraisal board about why is it that the only thing you’re concerned with is threat of lawsuit?

And that was 5+ years ago. They’ve pretty much given up on oversight at this point.

Just take a look at the recent use of AMC staff appraisers. That’s something that would’ve been unthinkable a decade ago. It would’ve been stopped in its tracks.
That is a complete violation of the intent of DF. In my state, AMC’s are required to manage a panel of independent fee appraisers. It’s written in black-and-white. But is any small time appraisal board gonna go up against the company that’s backed by a hedge fund? Be nice if they did follow their purpose as defined in their mission statement and bylaws, but they aren’t.

 

[DWiley]

Just take a look at the recent use of AMC staff appraisers. That’s something that would’ve been unthinkable a decade ago. It would’ve been stopped in its tracks.

Actually, many AMCs had staff appraisers a decade ago.

 

[gregb]

Actually, many AMCs had staff appraisers a decade ago.

And they only hire perfect appraisers, as no AMC staff appraiser has ever been reported to a State Appraisal Board by the GSE's.

 

[DWiley]

And they only hire perfect appraisers, as no AMC staff appraiser has ever been reported to a State Appraisal Board by the GSE's.

I would suggest not placing any wagers on that.

 

[chad hampton]

If there was ever a defender of bending rules and regulations and outright violating laws, I knew they would show up.

 

[George Hatch]

AMCs behave quite a bit differently today than they did back when they more or less first came into existence.

Even the big ones used to survive and make a good profit on a 20% take of the cut. Then greed took over. That wasn’t good enough for their investors anymore. And don’t even try to dig too deep into the hedge fund that owns class. That AMC is a complete lost cause. They’re not stopping till they get 100%.

There was also oversight from appraisal boards back then. I could tell you firsthand, because I sat in meetings with my appraisal board, and the AMC‘s would fly their representatives in to threaten the board against any sort of oversight. It wasn’t even implied, it was stated. we would consistently get into arguments with the appraisal board about why is it that the only thing you’re concerned with is threat of lawsuit?

And that was 5+ years ago. They’ve pretty much given up on oversight at this point.

Just take a look at the recent use of AMC staff appraisers. That’s something that would’ve been unthinkable a decade ago. It would’ve been stopped in its tracks.
That is a complete violation of the intent of DF. In my state, AMC’s are required to manage a panel of independent fee appraisers. It’s written in black-and-white. But is any small time appraisal board gonna go up against the company that’s backed by a hedge fund? Be nice if they did follow their purpose as defined in their mission statement and bylaws, but they aren’t.

AMC staffs have been a thing since their inception. TRW staff appraisers even got company cars in addition to all their overhead being paid, and I think there were a couple others doing the same. I taught CE courses to the in-house staffs of several lenders and a couple of the AMCs as late as 1998. To the best of my knowledge, none of those appraisers got paid more than 50% of the invoiced amounts. When I worked at the bank I never got paid more than 35% of my billings.

I never ever heard of an 80% split at any of the big AMCs. A couple of the lenders (I think BofA did it) paid their staff appraisers that much but those programs never lasted for more than 2-3 years before they migrated to a different structure.