More AMC and PDC Bull

[J Grant]

If we are to believe in the possibility of AI eventually being used extensively by the AMCs to more efficiently manage and expedite their own internal workloads the outcome for that might look like this instead:

$79 - AMC fee​

$350 - Appraiser's actual fee​

---------------------------------​

$429 - "Appraisal related fees"​

Hooray for the borrower.

How do you know the appraiser's fee would be $350 if the AMC charge cost was not in any way related to it or bundled with it?

The appraisers C and R fee is mandated by comparison to VA and appraisers fees when no AMC is used and avg res appraiser fee for res lender work without an AMC is $550 range in many places. The Appraisers have no trouble geting it when there is no AMC involved . Even a cost plus AMC owned by a lender typically pays $425 and up for the appraisers fee.

Why are you above listing an AMC fee along with an "appraiser's actual fee", if the whole ideas is that the two would no longer be related?

 

[George Hatch]

AMCs are literally in the business of refining and optimizing the entire appraisal loop. That loop is their priority. Their only job. The only thing they sell. That loop is not some minor tangent to their profit center of making loans as is the case for the direct engagement lenders.

Those are objectively observable facts. I don't know know what it is that makes you assume the AMCs will ever stop [shopping by fee via the principle of substitution]. The direct engagement lenders do things differently than the AMCs precisely because they're in a completely different business.

Whether the AMCs end is the residual of what they pay to the appraiser or is separately negotiated with the lender they're still competing with the other AMCs for that lender's business. And when it comes to the total of what the lenders pay they understand the math:
$650 < $675.


We have a couple people in this thread who are working for or have worked for AMCs. You should feel free to ask them if the lender's disclosures to the borrowers will have any effect on their selection of appraisers.

 

[J Grant]

AMCs are literally in the business of refining and optimizing the appraisal loop. That loop is not a tangent to their profit center of making loans as is the case for the direct engagement lenders.

Those are objectively observable facts. I don't know know what it is that makes you assume the AMCs will stop shopping by fee. The direct engagement lenders do things differently than the AMCs because they're in a completely different business.

Whether the AMCs end is the residual of what they pay to the appraiser or is separately negotiated with the lender they're still competing with the other AMCs for that lender's business.

We have a couple people in this thread who are working for or have worked for AMCs. You should feel free to ask them if the lender's disclosures to the borrowers will have any effect on their selection of appraisers.

IDK who you are addressing, but I, for one, have not advocated for the disclosure as the answer, though it might help prevent egregious splits if the lawsuits bring attention to it.
I argue for 100% separation, with the AMC cost charge not bundled into the appraiser's fee.

The AMC is in a different business- an admin and management of the appraisal for a lender business Thus, the AMC should not get compensated from a split of the appraisal fee. The AMC should get compensated for its management services as a standalone charge. - e

If the AMC no longer bundles their compensation as a split from an appraisal fee, the AMC has no interest in what the appraisal fee is, as long as the lender covers the appraiser's fee (usually from the borrower paid )

Why would the AMC keep shopping by appraisals by fee, if the AMC can not keep a dime out of the appraisal fee??

 

[George Hatch]

Asked and answered 100x over the years. You simply operate in complete denial of the fundamental and inexorable nature of the AMC/Lender relationship.

Why would they keep shopping by fee? Because the AMCs compete with each other for the lender's account, and because lenders know that
$650 < $675. Or with capped AMC fees in an AI-enabled model, that $426.50 < $450

 

[J Grant]

Asked and answered 100x over the years. You simply operate in complete denial of the fundamental and inexorable nature of the AMC/Lender relationship.

Why would they keep shopping by fee? Because the AMCs compete with each other for the lender's account, and because lenders know that
$650 < $675. Or with capped AMC fees in an AI-enabled model, that $426.50 < $450

You still do not comprehend that if the AMC fee were no longer bundled with the appraiser's fee as an appraisal fee, the relationship the AMC would have with the lender is administration for Appraisal processing only, with AMC 100% out of any $ amount regarding the appraiser's fee.

A cap of the AMC split out of the appraisal fee is a second option - if the cap is 10%, and the appraisal fee is $500, then the AMC split is $50.

 

[George Hatch]

You still do not comprehend that if the AMC fee were no longer bundled with the appraiser's fee as an appraisal fee, the relationship the AMC would have with the lender is administration for Appraisal processing only, with AMC 100% out of any $ amount regarding the appraiser's fee.

You are incapable of posting an idea that I or anyone else cannot understand. You should stop suggesting otherwise. The issue here and going back many years is that I challenge the "no-incentive" assumption you're making.

I've heard for 25+ years from various AMC employees how the lenders interact with them. And the fantasy of a lender telling an AMC "cost is no object" has never come up. Not once.

Fun fact: one of the other participants in the Dodd-Crowley IVPI clique was the chief appraiser at one of the AMCs. We spent hours on the phone and email swaps taking about all the different elements and some of that touched upon how little discretion the AMCs actually had under the bundled fee.

She didn't last long at that job after the proposal came out. But that's another story for another day.

 

[J Grant]

I challenge that assumption.

I've heard for 25+ years from various AMC employees how the lenders interact with them. And the fantasy of a lender telling an AMC "cost is no object" has never come up. Not once.

Fun fact: one of the other participants in the Dodd-Crowley IVPI clique was the chief appraiser at one of the AMCs. We spent hours on the phone and email swaps taking about all the different elements and some of that touched upon how little discretion the AMCs actually had under the bundled fee.

She didn't last long at that job after the proposal came out. But that's another story for another day.

I did not present a fantasy where cost is no object to a lender.

I presented that if the AMC charge for their service to a lender were 100% divorced from the appraiser's fee (no longer together in a bundled appraisal fee), then the AMC would not have any interest in , or association with, the appraiser's fee.

 

[George Hatch]

Yeah, I understood that assumption the first 150x you ran it. I just don't agree with it.

Even with Cost-Plus they're going to allow panel members to choose a base fee or a fee schedule and will include consideration of the amount of that fee when selecting appraisers. What they're not going to do is some arbitrary rotation that is completely fee-blind.

 

[Surf Cat]

It's like Darth Vader of the Sith said:
"Search your feelings, Luke. You know it to be true."

I think it's more like this......

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[J Grant]

Yeah, I understood that assumption the first 150x you ran it. I just don't agree with it.

Even with Cost-Plus they're still going to allow panel members to choose a fee and will include consideration of the amount of that fee when selecting appraisers. Can't help that.

Jesus. Cost plus is STILL not the same thing as the AMC fee to a alender 100% separate from the appraiser's fee.

The AMC fee is still bundled with the appraiser's fee as the appraisal fee charged to the borrower in a cost-plus.

When an IT professional comes in and services a computer for a lender, does the IT fee impact the appraiser's fee ? No.

Okay, apply that concept to an AMC management charge as a line item cost to the lender. The difference is, that the lender might be able to pass the AMC cost charge on to the borrower as a line item fee on the HUD if it was disclosed in a good faith estimate. Does the fee for title work, a separate line item charge covered by the borrower, affect the appraiser's fee?
No.
That is how a completely separate AMC charge would function.