Law firms begin addressing AMC fraud

[George Hatch]

Everyone knows the entire issue is really about appraiser splits, not consumer protection. We've been telling them that it was the lenders making these decisions all along and that is where the leverage is most appropriately applied. But that strategy still appears still a long shot at best, leastwise in terms of the appraiser splits.

If there are any damages to the consumers as the result of "non-disclosure" that is on the lenders who are doing the disclosing in their loan docs. Any payments that can be extracted from the lenders would ostensibly go to the consumers. Not to the appraisers. The appraisers were never defrauded or lied to by either the lenders or the AMCs. The appraisers all knew in advance of accepting the assignment what the payment would be. No fraud or deception involved.

Maybe a successful lawsuit prompts the lenders to cut off the AMCs altogether. But if that happens what comes next is not a return to selling appraisals door-to-door to the loan origination brokers. What happens next is engagement goes straight to the lenders; the same ones who were directing their AMCs to shop appraisers by price. And who wield complete control over their respective "do not use" lists.

Meet the new clerk in charge of handing out assignments, same as the old clerk.

 

[glenn walker]

The problem is the ship sailed it's final voyage in about 2012 and it never came back. Dodd Frank sealed the fate of residential apprasers being able to market and sell their sevuces to lenders.

Unless they were or are employed as a bank or direct lender employee they have few option's but to be the AMC vendors.

 

[chad hampton]

Public trust has been the center of thr argument every appraisal organization has ever made over the last 10+ years. The organizations that are tasked with protecting the public trust have failed. Many of them have that exact term in their mission statement. It’s been ignored.

 

[George Hatch]

None of those orgs have any influence on the lenders who make their purchasing decisions.

Whether they're right or wrong about appraisers, when a lender won't pay you any more than they'll pay the lowest priced vendors they're telling you what they think you're worth.

 

[Mejappz]

Fraud, deception, and corruption are being exposed. The bankers and unethical stakeholders are unhappy.

Dallas, TX – A class-action lawsuit filed on November 1 in the Superior Court of California, County of Stanislaus, accuses ClearCapital.com, Inc., Core Valuation Management, Inc., and Rocket Mortgage, LLC of deceptive business practices related to home appraisal fees. The case, Timmins v. Clear Capital, et al., alleges that the defendants charged borrowers inflated appraisal fees that far exceeded the actual cost of the services, enriching appraisal management companies (AMCs) at consumers' expense.

The lawsuit contends that AMC middlemen misrepresent appraisal costs by charging fees that were in reality much higher than what appraisers received. The suit further alleges that Clear Capital and Core Valuation Management typically retained more than 60%—and in some cases as much as 84%—of borrowers' appraisal fees without providing equivalent value.

"Borrowers have been misled into thinking they're paying for an appraisal, when in fact a large portion of that fee is being siphoned off by middlemen with no added benefit to the consumer," said Josh Tucker, co-founder of the Appraisal Regulation Compliance Council (ARCC). "The research ARCC submitted to the Consumer Financial Protection Bureau (CFPB) shows that this is not an isolated issue—it is an industry-wide practice that has gone unchecked for too long."

The lawsuit cites ARCC's research, submitted to the CFPB in August 2024, which detailed the practice of siphoning a significant portion of appraisal fees across multiple states, including California. The complaint also highlights how AMCs prevent appraisers from disclosing their actual fees, keeping borrowers unaware of the extent of the overcharges.

Lori Noble, a board member of ARCC, emphasized the need for transparency: "Borrowers deserve to know where their money is going. AMCs charged borrowers more than $12 billion in hidden fees using deceptive practices which not only drove up costs for homebuyers but also distorted licensing and regulations."

The lawsuit seeks restitution for affected borrowers, as well as injunctive relief to prevent AMCs and mortgage lenders from continuing these practices.

For further information or media inquiries, please contact:
ARCC
The Appraisal Regulation Compliance Council (ARCC) is a non-profit academic research group dedicated to advance knowledge to recognize that fraud poses a grave challenge on conventional theories of bank regulation. A coherence theory of appraisal control fraud is the first acknowledgement to reach accurate and logical conclusions.

Sharing Knowledge. Empowering Communities. Changing Lives.

California Class Action Challenges Inflated Appraisal Fees

FOR IMMEDIATE RELEASE 2/24/2025

arcc-usa.org

 

[Mile High Trout]

My dream is unrealistic, but it is a dream. A class action law suit on a grand scale dating back 25 years. As a slovenly type who accepts AMC work more than most, I will agree to a letter of apology from every AMC and a golden parachute of $150 for every report that required a revision. Payable in Bitcoin of course,

No. Appraisers whom raked from AMC's are complicit in defrauding consumers. They violated the management rule to not accept a thing of value to be the preferred selectee.

By looking the other way and participating in the system, the AMC appraisers simultaneously exercised restraint of trade upon the there out of four other appraisers whom boycotted the AMC's for ethical reasons, as well as causing consumer harm.

Maybe at first this was tenable but over a decade and a half? AMC appraisers know how the game is played. They know the tiered grading and ranking lists are flimsy covers for outright blacklisting and preferential assignment to the cheapest appraisers or the appraisers whom advocated for lenders interests.

I've been there and done that. You don't stay on many AMC approval lists if you're independent and charge C&R rates.

The true litmus test of compliance with fair billing principals; Does the appraiser gross twice as much with non AMC work? If an appraiser takes ten orders from a direct assignment at lets say $500 each. Then takes twenty orders at lets say $300 each from AMC's. And the work is equivalent. The volume based discount is also not tenable, as the cost savings from reduced cost of appraisers services is not returned to the borrowing consumer.

Per George's steadfast position of lenders will always select the lowest cost appraiser provider... Sure, under the current system of passing risk back to the taxpayer. That may be coming to an end. Mises.

https://mises.org/mises-wire/fed-no-earnings-taking-us-magic-carpet-trip

 

[Dale Floyd]

I’m unsure what the debate is. Disclosures have been made that a certain dollar amount was for the appraisal, and it wasn’t. That’s misleading, and violates Truth In Lending disclosure requirements. That’s been the argument for years and years, but there hasn’t been anybody with enough guts who had damages to file suit.

Will it help the appraiser if this is corrected? No idea, but it will be corrected by disclosure because it is misleading. I’m guessing the appraisal notice signed at the application will start including something about the fee division or the glossary of terms will be altered to define a new definition of “Appraisal Fees” or something.

There is no debate to have. The borrower deserves the truth about their closing fees, regardless of our benefit or not.

 

[Zoe]

I’m unsure what the debate is. Disclosures have been made that a certain dollar amount was for the appraisal, and it wasn’t. That’s misleading, and violates Truth In Lending disclosure requirements. That’s been the argument for years and years, but there hasn’t been anybody with enough guts who had damages to file suit.

Will it help the appraiser if this is corrected? No idea, but it will be corrected by disclosure because it is misleading. I’m guessing the appraisal notice signed at the application will start including something about the fee division or the glossary of terms will be altered to define a new definition of “Appraisal Fees” or something.

There is no debate to have. The borrower deserves the truth about their closing fees, regardless of our benefit or not.

The original regulation was written with it disclosed.

Lobbyist got it changed. Our friend Mike Orman fought hard with NAIFA to separate fees on TIL.

It would have had many impacts on the market.

Number 1, the borrower would have known what they were paying the appraiser and the AMC separately on truth in lending disclosures.

Number 2, it would have created intense competition between AMCs.

Number 3, it would have complied with transparency in truth in lending disclosures.

Number 4, it would have almost forced the bank to pay the AMC directly.

Number 5, it would have made things more independent for the appraiser.

 

[Zoe]

Appraisal institute at the time was like silent at the time. We didn't have much political voice. We didn't have the political lobbyist money like someone like NAR has.

In my humble opinion, it hurt the American consumer the most. Created fraud city.