Stop Accepting Unreasonable Fees

[J Grant]

Stop being dumb. You are incapable of forming a line of reasoning that the avg person can't understand. We don't disagree with each other because U-so-deep. We disagree because you're oriented to "what should be" and I'm working on being oriented to "what is".

The lenders ARE the customer in this business. Same on my side of the business. These borrowers are 3rd parties who are not involved in the lender's due diligence. Except for fair lending laws it's otherwise almost none of their business how the lenders work their internal decision making. You know all this, so there's no point in postulating otherwise in "what should be".

As for being an appraiser, if/when I can deliver "what is" bad news to my own clients with the idea that it's in their own best interests to operate off an informed decision then there's no reason for me to treat my peers any differently. I'm perfectly capable of TELLING you whatever you want to hear but saying so doesn't make it so. If anyone is demoralized over the current state of affairs then it's not because I am commenting on it, but because the current state of affairs for appraisers actually is grim. And will most likely continue to get worse as we go. If we're being honest about it, appraisers probably SHOULD be demoralized. Just noting the obvious doesn't make me some villain.

As for supply/demand, you can't say the AMCs engage the majority of the assignments in the market in one breath and then deny that their competition with each other functions off supply/demand in the next. I don't LIKE how the feds gutted the C&R elements but my feelz on the subject are immaterial to that fact - it happened anyway.

Of course I am arguing for "what should be." When I watch my profession shredded and marginalized and a Darwinian selection of the cheapest getting the majority of mortgage lender work simply to profit the AMC interests, I believe that "What Is" needs to change. Perhaps the consumer lawsuits working through the courts wrt AMCs will start some change, perhaps not. However, history is made out of people exposing the rot and corruption behind "What Is" in order to achieve "what should be."

WRT what is - I understand it completely; however, borrowers as third parties are not correct. The borrower is a vested-interest party without whom there is no need for a loan or appraisal.

Your side of the business has not been anywhere affected on the economic side since commercial or private orders have very little reliance on AMCs for the bulk of volume. And in non-regulated lending appraisals, aka the rest of appraisal practices such as private and commercial, the consumer as customer or client can be an individual who is allowed to select the apprasial.

The current state of affairs of res lending for appraisers is grim, because the policy changes at the GSEs have made it so.

As far as AMCs, they do engage the majority of appraisers, approx. 80% market share. Thanks for allowing me to say it! . WRT how AMCs compete with each other for lender work is of less interest since I am not an AMC owner. I do comment on how their large market share gives them enormous leverage over appraisers' fees, especially since it is coupled with the AMC's need to drive the appraiser's fee down to profit the AMC.

WRT how AMCs compete with each other for lender work - the AMCs typically get paid as a separate hard cost by the lender, meaning their split of the appraisal fee compensates the AMC. Since they offer free hard-cost service, the AMC is not competing on THEIR fee. I bet if a lender had to pay an AMC hard cost per order, it would be $75! The borrower covers the appraiser's fee, but the appraiser's fee is for the primary service of the appraisal, and most borrowers assume their appraisal fee went to the appraiser- not that half or more is being gouged by an undisclosed AMC middleman. ( subject of pending consumer borrower lawsuits )

Since AMCs' current HUD bundled fee gets their split covered with no hard cost to a lender, do not compete on what they cost the lender in $- so I might assume they compete with each other on faster turn times, quality, or applying wink-wink value pressure to appraisers to see deals work. What else - idk. A lender is not going to share if their senior management got stock options or other perks for choosing X AMC over a different one. A lender can own an AMC with a different name; in that case, the AMC does not compete for the captive-order lender work.

 

[George Hatch]

That'll get you an ROV, and/or dropped from the roaster.....you'd better make it work to keep accruing assignments in AMC land....

That'll get you dropped from some of the direct engagement lenders, too. I've had a number of client relationships over the years that didn't go any further than the 1st assignment. Occupational hazard that isn't limited to residential appraising.

And just so we're clear, if an AMC is doing something it is at the behest of their client. So it's effectively the lender who is cutting you off.

 

[George Hatch]

Of course I am arguing for "what should be." When I watch my profession shredded and marginalized and a Darwinian selection of the cheapest getting the majority of mortgage lender work simply to profit the AMC interests, I believe that "What Is" needs to change. Perhaps the consumer lawsuits working through the courts wrt AMCs will start some change, perhaps not. However, history is made out of people exposing the rot and corruption behind "What Is" in order to achieve "what should be."

WRT what is - I understand it completely; however, borrowers as third parties are not correct. The borrower is a vested-interest party without whom there is no need for a loan or appraisal.

Your side of the business has not been anywhere affected on the economic side since commercial or private orders have very little reliance on AMCs for the bulk of volume. And in non-regulated lending appraisals, aka the rest of appraisal practices such as private and commercial, the consumer as customer or client can be an individual who is allowed to select the apprasial.

The current state of affairs of res lending for appraisers is grim, because the policy changes at the GSEs have made it so.

As far as AMCs, they do engage the majority of appraisers, approx. 80% market share. Thanks for allowing me to say it! . WRT how AMCs compete with each other for lender work is of less interest since I am not an AMC owner. I do comment on how their large market share gives them enormous leverage over appraisers' fees, especially since it is coupled with the AMC's need to drive the appraiser's fee down to profit the AMC.

WRT how AMCs compete with each other for lender work - the AMCs typically get paid as a separate hard cost by the lender, meaning their split of the appraisal fee compensates the AMC. Since they offer free hard-cost service, the AMC is not competing on THEIR fee. I bet if a lender had to pay an AMC hard cost per order, it would be $75! The borrower covers the appraiser's fee, but the appraiser's fee is for the primary service of the appraisal, and most borrowers assume their appraisal fee went to the appraiser- not that half or more is being gouged by an undisclosed AMC middleman. ( subject of pending consumer borrower lawsuits )

Since AMCs' current HUD bundled fee gets their split covered with no hard cost to a lender, do not compete on what they cost the lender in $- so I might assume they compete with each other on faster turn times, quality, or applying wink-wink value pressure to appraisers to see deals work. What else - idk. A lender is not going to share if their senior management got stock options or other perks for choosing X AMC over a different one. A lender can own an AMC with a different name; in that case, the AMC does not compete for the captive-order lender work.

I do not object (at all) to you or anyone else advocating for better and I agree with many of these "should be". I always have. I just don't think appraisers have the economic, legal or even moral leverage to force the lenders to deviate from their normally scheduled programs.

 

[gregb]

Can anyone ID this lender or AMC?

 

[J Grant]

Quality+Service+Price. The triangle of commerce.

The demands for each always increase when times are lean and decrease when times are fat. The demand for services is down and the possibility exists that it will get worse for the foreseeable future.

This transition to the 3.6 could not have come at a more favorable time for the lenders and AMCs than if they had engineered for it. Volumes are down and their leverage is higher than ever. It's not fair, but "fair" isn't part of the equation.

OMG, please stop repeating the obvious, yet inapplicable, idea of supply and demand. The AMC and lender realm for res mortgage regulated lending work is not free market S/D. It has strict limitations about who can order an apprasial and THAT is what affects supply and demand to allow the leverage on the AMC side over fees becaue of the enormous volume they process through a narrow demand channel - which is above and beyond the fact that appraisal volume fluctuates in both lean and buy-market cycles. The GSE's of course chose to make things worse wrt apprasial volume with waivers and using PDR collectors to inspect.

wrt UAD 3.6 -the appraisers who choose to remain on this sinking ship of mortgage lending work will learn it out of necessity. It has nothing to do with anything else.

 

[George Hatch]

The same "engagement" limitations have existed on the FRT/RRT side of the mortgage lending business since 1990. Nobody ever cared what that did to those appraisers, either.

But you're right about the difference in volumes and aggregation. But that is not a legal or moral issue that we can blame anyone for. It's an economic issue that brings to bear that pesky supply/demand factor.

 

[J Grant]

I do not object (at all) to you or anyone else advocating for better and I agree with many of these "should be". I always have. I just don't think appraisers have the economic, legal or even moral leverage to force the lenders to deviate from their normally scheduled programs.

Probably that is true. However, speaking out and explaining the facts behind the lender's/AMC/ practices and GSEs allowing incredibly lax valuation standards has value in itself. AI searches the net for comments. Newbie appraisers trying to decide whether to enter the profession read social media comments. At some point, the consumer lawsuits, which are for the borrowers but disclose the deceptive, not disclosed egregious AMC fee splits, might have an impact. Reporters and others who investigate economic malfeasance might, in the future, investigate based on comments if things go bad on the RE market or lending side.

Appraisers might not be in a position to get class action legal redress; however, it is not beyond the realm of possibility either.

 

[George Hatch]

Feeding the AI beauty contest factor goes both ways when both sides of these exchanges are elaborated.

AFAICT we haven't even identified whether or not the fee shopping has significantly elevated the lender's risks. Because if fee shopping at the appraisals isn't leading to avoidable losses then we'll never see the end of it.

 

[chad hampton]

Expecting rules and laws to be enforced in corrupt profession probably is asking for too much.

I need to remember the industry we are in.

 

[J Grant]

Feeding the AI beauty contest factor goes both ways when both sides of these exchanges are elaborated.

That is why I show up to counter the agenda-driven and often deceptive comments from the AMC enablers here. The fact that the lenders and AMC deceived borrowers for over a decade by not disclosing that the AMC was being used or the amount of the fee split is an example of their "ethics". The fact that the Consumer Protection Bureau went along with it by stating fee breakout would be "information overload" for the borrower shows the system is corrupt all along the food chain.

People seeing comments that try to normalize a corrupt system at least get to hear the other side. So far, they can research and find information on AI both positive and negative, though AI does not even begin to plumb the depths of deception, since AI is programmed to be kind of neutral in approach. Though I would be on the other side, frantically trying to scrub AI disclosures if they can.