More AMC and PDC Bull

[J Grant]

Current lender/AMC payment model for outsourcing due diligence on the elnde end with the AMC getting compensated from a split fee is corrupt.

It is corrupt because the AMC 's do not function as intended, as a firewall. The AMC';s have a built-in conflict of interest to keep their lender customer "happy" with as few "low" values as possible and enact their power to do so. The AMC's getting compensated from an unlimited fee split, leading to flea market-style bidding to get an order, amounts to which appraiser offering the biggest kickback from the fee split wins the order, often by passing more competent appraisers. The process is not disclosed to borrowers.

GH invented a scenario where he figured, if 80-90% of work is through AMC's, he imagines 90% of experienced appraisers work for AMC's . However, it might be that only 20% of the total number of appraisers who signed up get the bulk of the AMC volume if they bid the lowest.

Either the lender should pay the appraiser the borrower fee, with the lender paying the AMC a separate cost charge, whether annual or yearly retainer. The AMC should have nothing to do with what the appraiser is paid. That would eliminate bidding for regular work and put the panel of appraisers on a region on even footing, making selection about quality or geo competence rather than mainly fee-driven. Capping the AMC split at 15% would accomplish similar - with a lender opting to pay above that ( as if, lol ) an option.

 

[George Hatch]

GH invented a scenario where he figured, if 80-90% of work is through AMC's, he imagines 90% of experienced appraisers work for AMC's . However, it might be that only 20% of the total number of appraisers who signed up get the bulk of the AMC volume if they bid the lowest.

It's other appraisers who think 80+% appraisals go through AMCs. I'm just following that allegation to its logical conclusion. If your conclusion is that 20% of the appraisers are performing those assignments and the other 80% aren't participating at them then that's quite something.

In what world would 80% of appraisers cede almost all the business to the low cost bidders? Because it isn't in this world. I strongly doubt if even half of the SFR appraisers here on AF who claim to be AMC-free are doing so honestly. Easier to believe that of the CGs just because of their broader scope of practice. Not because they have more spine.

You never did respond to my question about what you consider "unqualified" to appraise SFRs. That's probably a good decision on your part. You should stick to dodging it because you're going to get run into the ground again if you attempt it.

 

[J Grant]

The lenders decide what they will and won't accept. Not the AMCs. Even if you wanted to blame the AMCs that doesn't change anything because the lenders decide which AMCs they do/don't engage.

We already know that. Must we repeat every fact about the system in every post? Who knows what can work to change things - a media expose? Lenders hate bad publicity. That might be the only thing they respond to, since they are not offering to fix the fee issue of their own accord.

The lenders who use the AMC's that fee bid/shop for low fees, where the lender benefits from free hard cost service or get a form of profit sharing, these lenders also benefit from the corrupt system.

 

[George Hatch]

We already know that. Must we repeat every fact about the system in every post? Who knows what can work to change things - a media expose? Lenders hate bad publicity. That might be the only thing they respond to, since they are not offering to fix the fee issue of their own accord.

The lenders who use the AMC's that fee bid/shop for low fees, where the lender benefits from free hard cost service or get a form of profit sharing, these lenders also benefit from the corrupt system.

I strongly doubt fee appraisers can publicly shame the lenders into submission. Especially when it comes to proposing a solution to a "threat to the economy" problem they can't even quantify. Their allegations consisting of sheer guesswork and wishful thinking.

Problem identification comes first. The moral judgment and solutions are supposed to occur AFTER the objective analyses of the data, not in lieu of those analyses.

 

[J Grant]

I strongly doubt fee appraisers can publicly shame the lenders into submission. There are too many bankers who will just say "no".

It has never been done -media esposes on it. Shame just from posting here on a board or from the appraisal magazines writing articles on it has not worked. However, lenders are very sensitive about public perception because it could affect their business with consumers.

Such as an article alerting borrowers to ask upfront if the lender is using an AMC, and if so, does a fee bid war get their appraisal order assigned?

 

[DWiley]

Cost plus is the lender requires the AMC to pay the same X amount to all of its panel in a region, and agrees to only charge the lender Y amount - so that the AMC does not have to solicit bids.

That is NOT how cost plus works.

It works just as described in the post you disputed. And lenders do not like it because they do not know the cost in advance and they have to create new disclosure docs if the appraisal cost is not what they originally disclosed. That is why the try to pay the AMC a flat fee and then let/make the AMC deal with the variable fees among appraisers

 

[J Grant]

That is NOT how cost plus works.

It works just as described in the post you disputed. And lenders do not like it because they do not know the cost in advance and they have to create new disclosure docs if the appraisal cost is not what they originally disclosed. That is why the try to pay the AMC a flat fee and then let/make the AMC deal with the variable fees among appraisers

The lender could determine the cost in advance. The lender tellss the AMC we want you to pay each appraiser in region X $400 per regular order ( for example ) and we will pay you the AMC, $150 an order.

Wrt describing it as the let the AMC deal with the variable fees among appraisers - that is not what happens. The AMC fee bids for the lowest or lower fee each time out. That is not "dealing with the variable fees" among appraisers. If it were just a matter of "fee variables," then appraisers quoting higher fees would be getting as much work as appraisers quoting lower fees.

In practice, as surely you are aware, lenders assigning direct orcer and the VA panel typically pay the same fees to all their appraisers who agree to it in a regional area, a C and R that is the amount the borrower paid or close to it. They do not have to deal with "fee variables" on regular orders. That is pure BS from the AMC's to rationalize their fee bid auction on orders.

 

[George Hatch]

It has never been done -media esposes on it. Shame just from posting here on a board or from the appraisal magazines writing articles on it has not worked. However, lenders are very sensitive about public perception because it could affect their business with consumers.

Such as an article alerting borrowers to ask upfront if the lender is using an AMC, and if so, does a fee bid war get their appraisal order assigned?

So go ahead and approach a consumer advocate writer. See if you can find some way to add "systemic racism" to the writeup so that it will attract more clicks. That'll work.

 

[George Hatch]

The lender could determine the cost in advance. The lender tellss the AMC we want you to pay each appraiser in region X $400 per regular order ( for example ) and we will pay you the AMC, $150 an order.

Wrt describing it as the let the AMC deal with the variable fees among appraisers - that is not what happens. The AMC fee bids for the lowest or lower fee each time out. That is not "dealing with the variable fees" among appraisers. If it were just a matter of "fee variables," then appraisers quoting higher fees would be getting as much work as appraisers quoting lower fees.

In practice, as surely you are aware, lenders assigning direct orcer and the VA panel typically pay the same fees to all their appraisers who agree to it in a regional area, a C and R that is the amount the borrower paid or close to it. They do not have to deal with "fee variables" on regular orders. That is pure BS from the AMC's to rationalize their fee bid auction on orders.

In other news, Oracle just laid off 30,000 workers - equivalent to about 1/2 the population of SFR appraisers. Maybe they'll reverse their decision if we publicly shame them for it.

Heck, those workers weren't even given the opportunity to compete for work with each other. They were just cut off.

 

[J Grant]

In other news, Oracle just laid off 30,000 workers - equivalent to about 1/2 the population of SFR appraisers. Maybe they'll reverse their decision if we publicly shame them for it.

Heck, those workers weren't even given the opportunity to compete for work with each other. They were just cut off.

A lot of people are pushing back about AI ( their reason for doing it ) I was on a bulletin board the other day where consumers are planning to boycott that company. Consumers let companies know through their purchasing choices and laws have changed from "shaming" ( more humane treatment of chickens wrt eggs for example )