More AMC and PDC Bull$hit

[J Grant]

The joke is... it's our own doing. As long as there are appraisers who will accept lower fee assignments and/or do additional work for free, there will be Clients who will choose them.

Its not a joke and it is not soley our own doing. Blaming AMC fee predation ( allowed by lenders since it offers them free of cost service or $ profit return) - blaming it all on appraisers is gaslighting. I say that as a person who, for the last 6 years, did no AMC work, with the exception of one order, lender-owned AMC, which is cost plus - I mainly did complex, high-value orders for them.

It took me years after the HVCC to find enough direct pay clients, and I had to spend a big chunk of personal savings to make it - not all appraisers can do that, and furthermore, they should not have to. While technically it is true that if appraisers do not accept the low fees, they would get paid more, the extreme imbalance between supply and demand due to the AMC structure of a small number of them controlling a large share of the volume makes normal supply and demand seen elsewhere in business not functional.

The better question is, why aren't the lenders paying the AMC a flat fee for the AMC service that is 100% divorced from the appraisal fee, which should go to the appraiser? ( and does go to the appraiser in direct order work ) At most, if the $ is taken from the appraisal fee to compensate the AMC, it should be capped at a reasonable percent, say 15%. If a lender finds an AMC service is worth more they can pay the AMC over and above that.

 

[George Hatch]

Because appraisers don't matter to them. The main thing that matters to them is that appraisers actually do what they say they're doing. Not whether appraisers go broke doing it. They don't care about whether their own employees go broke, either.

 

[J Grant]

Because appraisers don't matter to them. The main thing that matters to them is that appraisers actually do what they say they're doing. Not whether appraisers go broke doing it. They don't care about whether their own employees go broke, either.

IMO it says a lot about the so-called public trust mission statement that they don't care if appraisers go broke. Imo, in some cases, they want appraisers to go broke or be so desperate that they have no real independence left . Then they can proceed with capturing most of the market with a form of waiver/value acceptance. Note states that value is not reprsented to be the market value of the property. Pretty scary imo considering that to the average American their biggest, or only asset might be their house.

The better lending clients and responsible investors do not want to see appraisers go broke, which is why they do not use an AMC, or if they own one, operate it on cost plus paying reasonable fees.

As for your comment that the main thing that matters to them is that appraisers actually do what they say they do, I doubt that if they are willing to see appraisers go broke- we already see here posts referencing AMC reviewers asking appraisers to do things that violate that.

 

[chad hampton]

What a shame that’s how so many people view this profession now. 15 years ago, I used to have bank vice presidents calling me up on loans asking for my opinion. To now we’re being told nobody cares about us or any of our problems in the world of lending.

Appraisers used to be one of the more respected professionals in a real estate transaction. But over the last decade plus this is what the effects of marginalizing the profession has done.

It’s crazy to hear people say that nobody cares about the collateral anymore when making lending decisions. I think the issue is when you have GSE/government involved, where profits are privatized and losses are socialized, then you have the luxury of not caring about anything else in the transaction. My hard money clients and the hard money lender that I work for still pick over each appraisal with a fine tooth comb and consider it a very valuable document when making lending decisions. Of course, they don’t get the socialize any any their losses.

Maybe that’s the real issue?

 

[J Grant]

What a shame that’s how so many people view this profession now. 15 years ago, I used to have bank vice presidents calling me up on loans asking for my opinion. To now we’re being told nobody cares about us or any of our problems in the world of lending.

Appraisers used to be one of the more respected professionals in a real estate transaction. But over the last decade plus this is what the effects of marginalizing the profession has done.

It’s crazy to hear people say that nobody cares about the collateral anymore when making lending decisions. I think the issue is when you have GSE/government involved, where profits are privatized and losses are socialized, then you have the luxury of not caring about anything else in the transaction. My hard money clients and the hard money lender that I work for still pick over each appraisal with a fine tooth comb and consider it a very valuable document when making lending decisions. Of course, they don’t get the socialize any any their losses.

Maybe that’s the real issue?

See Fannie Mae below - when they are willing to endorse having a lender estimate a value which is based on seeing the deal work instead of a market value for the property, the first step was to marginalize the appraisal profession. I pointed it out years ago when they started talking about how an appraisal is not any better at risk avoidance- an appraisal is about developing an opinion of market value, not risk loss prevention - it is like saying my car does a lousy job of mowing the lawn. Since a car is not designed to mow a lawn, that is true.

There are some loan wholesalers, investors, and lenders who still care about MV and the appraisal profession- the question is how long they can or will operate on that premise.

Fannie Mae, through its "Value Acceptance" (formerly Appraisal Waiver) program, explicitly states that the estimated value accepted from a lender in a waiver scenario might not be the actual current market value of the property.
annie Mae
Here are the key points regarding this statement from Fannie Mae's guidelines:

• Lender-Submitted Value: When an appraisal waiver (value acceptance) is offered, Fannie Mae is accepting the value submitted by the lender, which is typically based on the contract price (purchases) or an estimated value (refinances), rather than an appraiser's in-person valuation.
• No Warranty on Value: Fannie Mae does not warrant that the estimated value provided by the lender is the true, actual value of the subject property.
• Limited Representation: While Fannie Mae provides the lender with representation and warranty relief for the property value and condition, this does not mean the property's actual market value was verified by an independent party.

 

[J Grant]

Because appraisers don't matter to them. The main thing that matters to them is that appraisers actually do what they say they're doing. Not whether appraisers go broke doing it. They don't care about whether their own employees go broke, either.

Why don't lenders and AMC;s have to actually do what they say they do ?

Wrt the so-called public trust - imo borrowers should then be given a choice whether they want a hybrid appraisal with a PDC person coming out or a traditional appraisal - since the cost is probably the same or equivalent. Is it disclosed by the lender to their loan customer upfront, at the time of application? I doubt it.

I would bet $ taht when a PDC person makes an appointment, they say they want to make an appointment to inspect the property- it is hard to imagine them saying to the homeowner or RE agent, I want to come out and do a data collection.

If I call a plumbing company, I assume a licensed plumber is coming out, not a plumbing data person who will send in photos and notes to a plumber in some other locaiton. Not giving the consumer a choice upfront regarding a hybrid or a regular appraisal, or the way an AMC will process their appraisal, is misleading to the public.

Along the lines of the lawsuit with disclosure of the breakdown of AMC and the appraiser fee. I do not see a fee breakdown disclosure as a great solution; however, it could deter the most egregious fee splits and at least hold the AMC and lender accountable and let them know you are being watched.

 

[djd09]

Be ye not unequally yoked together with unbelievers: for what fellowship hath righteousness with unrighteousness? and what communion hath light with darkness?

...

 

[TerryRohrer]

There sure is a lot of revisionist history going on in these pages. Some who were awake will remember as recently as 2007, when residential appraisers were taking three exterior photos of their subject. Then, all of a sudden, the requirements for photos changed to photos of everything. Why? Because lenders foreclosing en masse found that the collateral described in their reports was not the property described in their most recent appraisal. I recall stories of homes that had never been finished on the interior, or were completely gutted on the interior, that had been reported as complete and liveable. None of that is on anyone else but appraisers. And those changes would not have occurred if 1% of appraisers were at fault. In here and in every appraiser's forum online, when any criticism is levied against appraisers for whatever reason, appraisers rally round and shoot the messengers to protect the thin (what color is the appraiser line) line. Appraisal boards are not, as a rule, engaged in policing appraisal practice. They are there to play games and further individuals' careers. Until appraisers start policing their own, I don't expect much to change. Of course, there needs to be more scrutiny of appraisals outside the closed ecosystem in which most are kept hidden, particularly those that rubber-stamp the transactions. Few (almost none) are seen by individuals who have a clue about appraisers, and/or have a clue about the subject market area with access to data, and/or give a tinker's damn about ethics or competence.

 

[J Grant]

Because appraisers don't matter to them. The main thing that matters to them is that appraisers actually do what they say they're doing. Not whether appraisers go broke doing it. They don't care about whether their own employees go broke, either.

It's an odd dichotomy - appraisers don't matter to them, and they do not care if they go broke....yet the GSEs have invested huge $ and years developing UAD 3.6. Then they fund and run review of collateral UW departments that send out letters to flag appraisals for all kinds of minor issues.

It's indicative of something that they invest so much into monitoring appraisals yet are willing to see appraisers become so desperate from the fee predation of AMC's that they either quit or become churn and burn lackeys- how can they expect a high work ethic and comitment to a public trust and high standards from severely underpaid people who must grovel with fee bids to "win" an order that is not complex, just a regular order?

The anemic number of people signing for PAREA reveals how unattractive the field of mortgage lending work has become. They use this of course, to cite a dwindling number of appraisers as a reason for waivers or to automate.

 

[Non Sequitur]

Appraisal boards are not, as a rule, engaged in policing appraisal practice. They are there to play games and further individuals' careers.

Yep. The same with the Appraisal Institute. The same with TAF. The same with the AQB.