The New Appraisal Industry

[George Hatch]

The AMCs are selling, the lenders are buying. The fact that payment is being passed through the lender instead of out of their own pockets only means the AMC and appraiser are getting paid. Just like with the title report and the termite inspection and the well report and the environmental assessment.

 

[Surf Cat]

Submitting ROVs is explicitly allowed. As it should be. The concept of "appraiser independence" was never intended to shield appraisers from all subsequent questions and challenges.

Where in my post did I mentioned that ROV's or answering questions were not allowed?

As for what appraisers want vs what the lenders prefer and are allowed by the govt to do, there is only limited overlap. So far, anyway. TBH, I don't see any legal or regulatory barrier to them eventually going to all-AVMs.

They have to change the laws in the books then.... they have to go through Congress just like you say appraisers do.

I've been doing 100% direct engagement for over 30 years now.

So why are you so passionate about fighting for the AMCs and lenders positions? Because you worked for a couple shady fee shops decades ago?

Look, I'm glad your hard work and perseverance about getting independent paid off. For how much you gave to the profession, you deserve it. Good for you.

My personal interests in these discussions is to strip some of you of your misunderstandings, to bring some objectivity and clarity to your reasoning.

You've had direct engagement clients for the last 30 years....Non-AMC.... sorry, if there's any misunderstandings, it's on your end. You have no idea of the rape and pillage that's going on in the AMC world. Yes, it is the lenders, they're letting it happen..... lobbying to let it to continue to happen. AMC appraisers are the 14 and under girls on Epstein island.

I'm not going to tell you that I know what's happening on the streets for the police, when I've never been a cop. I for one am vexed on your position taking of AMC's/lenders.

 

[J Grant]

The AMCs are selling, the lenders are buying. The fact that payment is being passed through the lender instead of out of their own pockets only means the AMC and appraiser are getting paid. Just like with the title report and the termite inspection and the well report and the environmental assessment.

How can the AMC 's be SELLING, when the AMC does not charge their lender customer a cost for the AMC service?

It is not like the title report or termite inspection. The borrower covers those costs, but those termite or inspection costs are CLEAR to the borrower as a separate, stand alone charge. Where is the separate stand-alone charge to the borrower for AMC service? ( nowhere, it does not exist)
The borrower covers the AMC cost unknown to them, as a secret hidden charge in the bundled fee.
The history of the bundled fee was to include MINOR, very small miscellaneous charges, such as messenger fees, to the primary service ( title or appraisal fee ).

The damage to the borrower is less than the AMC charge, which is hidden from them, then it is about HOW the conflict of interest of profiting off the appraiser vendor makes the AMC want to choose the cheapest bid or cheapest fee from an appraiser and bypass more experienced and competent appraisers.
Do you honestly believe if the lender had to pay a cost of $200 to an AMC to manage an appraisal, this would be happening? The AMC can gouge $200 from the appraiser, though.

Please name any other business that operates this way- where the business offers a free X product or service to their customers.

 

[George Hatch]

So why are you so passionate about fighting for the AMCs and lenders positions? Because you worked for a couple shady fee shops decades ago?

Look, I'm glad your hard work and perseverance about getting independent paid off. For how much you gave to the profession, you deserve it. Good for you.

You've had direct engagement clients for the last 30 years....Non-AMC.... sorry, if there's any misunderstandings, it's on your end. You have no idea of the rape and pillage that's going on in the AMC world. Yes, it is the lenders, they're letting it happen..... lobbying to let it to continue to happen. AMC appraisers are the 14 and under girls on Epstein island.

I'm not going to tell you that I know what's happening on the streets for the police, when I've never been a cop. I for one am vexed on your position taking of AMC's/lenders.

You are using the argument to motive. Attributing hostile intent to my motivations instead of engaging with the reasoning I'm using. The SJWs call it "tone policing".


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I know, I know. If I really loved you I would just STFU and allow the untruths being used to prevail because it's important to "be nice".

I keep saying it and some of you keep disbelieving it; I might understand how we got here but I don't endorse all of these elements. I disagree with some of them and commonly say so directly.

None of that detracts from the idea that the first step in any analysis is problem identification. The moral judgement is supposed to come AFTER the objective analysis, not in lieu of it.

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As for (what the kids call) your "lived experience" I have never denied that. However, I will challenge you to point out some aspect of the problem that you think I somehow don't understand.

 

[George Hatch]

How can the AMC 's be SELLING, when the AMC does not charge their lender customer a cost for the AMC service?

It is not like the title report or termite inspection. The borrower covers those costs, but those termite or inspection costs are CLEAR to the borrower as a separate, stand alone charge. Where is the separate stand-alone charge to the borrower for AMC service? ( nowhere, it does not exist)
The borrower covers the AMC cost unknown to them, as a secret hidden charge in the bundled fee.
The history of the bundled fee was to include MINOR, very small miscellaneous charges, such as messenger fees, to the primary service ( title or appraisal fee ).

The damage to the borrower is less than the AMC charge, which is hidden from them, then it is about HOW the conflict of interest of profiting off the appraiser vendor makes the AMC want to choose the cheapest bid or cheapest fee from an appraiser and bypass more experienced and competent appraisers.
Do you honestly believe if the lender had to pay a cost of $200 to an AMC to manage an appraisal, this would be happening? The AMC can gouge $200 from the appraiser, though.

Please name any other business that operates this way- where the business offers a free X product or service to their customers.

None of that matters. The lenders are the client and the AMCs are the vendors, not the other way around. The lenders decide what they will and won't accept and that includes the lower fees the appraisers are getting paid. There's nothing the AMCs are doing that the lenders are unaware of, are not enabling or are not actively encouraging. The lenders know how much the appraisers are getting paid. They clearly don't care if the appraisers like it or not.

The lenders who outsource to the AMCs are your real adversary. They always have been. Every one of those lenders could demand the AMCs pay whatever minimum fee you think appraisers are worth. The lenders could do it today and every one of those AMCs would either proceed as directed or quit; to be replaced the same afternoon by a competing AMC. The price of the bundle would almost certainly increase but at least the appraisers would get their fee.

TBH, if I WAS running an AMC it would be to my benefit to see a reasonable hard floor for appraisal fees that were equally applicable to every AMC. That would take the fee monkey off my back and mitigate some of the bad blood between the appraisers and the AMC. I could focus on other aspects of my competition with other AMCs like turn times and rejections and such. But in the meantime if one of my competitors is allowed to shop by fee then my choices are limited to either competing with them in similar fashion or to otherwise give up and cede that business to that competitor - at my expense.

 

[Surf Cat]

You are using the argument to motive. Attributing hostile intent to my motivations instead of engaging with the reasoning I'm using.

I'm dismissing your reasoning because you haven't lived it (working with AMCs). As you said, you've been independent, and non-AMC for 30 years.

I am "not" saying that you don't understand working with scumbag fee shop owners, unscrupulous, pressure pushing mortgage brokers, or predetermined value pushing, borrowers. These ilk are a walk in the park compared to the AMC's though.

The HVCC clamped down on the wrong segment of the valuation process. The heavy hand should have came down on the mortgage brokers.....not the appraisers who called attention to the problem and were getting the red hot poker to come in at the value...

It's not that I don't think you understand, it's that you're completely okay with the appraisal profession being decimated by the lenders handing off their responsibility to the AMCs and turning a blind eye to it. Your "the market will pay what the market will bear" is a farce in regards to gse, residential appraisals. It should be criminal, but for you it's perfectly okay.

 

[George Hatch]

By definition, "what should be" usually...isn't.

As for

It's not that I don't think you understand, it's that you're completely okay with the appraisal profession being decimated by the lenders handing off their responsibility to the AMCs and turning a blind eye to it. Your "the market will pay what the market will bear" is a farce in regards to gse, residential appraisals. It should be criminal, but for you it's perfectly okay.

See, where you and I disagree here is the idea that the lenders are turning a blind eye to what the AMCs are doing. IMO those lenders not only know exactly how the AMCs treat the appraisers but are enabling, encouraging and demanding it.

If appraisers really thought that - after 15+ years of this - the AMCs were being sneaky about their fee splits or were doing anything behind the back of their lender clients then all it would take is a whistleblower to bring those lenders up to speed. Same applies to the banking regulators and the GSEs. Rat the AMCs off for their mendacity and sic the regulators and the GSEs on them. Put the AMCs into Dar al-Harb.

Speaking of, one of the GSEs just reoriented their internal process with REO valuations to cut the direct engagement off in favor of AMC engagement.

What do you think it means when even Fannie is choosing AMC engagement - and by extension the splits they pay? That wasn't a nice thing to do to the fee appraisers they were previously dealing with.

So by all means, let me know what part of that you think I don't understand.

 

[John Hassler]

Why do you even give a damn who orders the appraisal? If it were up to me, borrowers would order appraisals and then the lender could decide if they want to accept it or not. Appraisals were being done just the same and the business youre in is a hell of a lot worse now than it was back then. If the lenders wanted all appraisals to be ordered through them to get business 20 years ago they could’ve requested it. I have no clue why your opinion is so strong on this.

The only thing that would make sense is if you profited by it like the breakfast club members and others do. At least there’s a legitimate reason why they try screwing over the profession so bad. I bet they’ve made a pretty good life for themselves by doing so.

Before (about) 1990 borrowers could order their own appraisals. Definitely had its pitfalls. One that is still struck in my craw was a construction loan for an addition in the late 1980s where the borrower submitted a different set of plan to a great local lender than he had to me. Caused me a lot of grief with that lender since the plans the lender had didn’t jive with my sketch. Lesson learned, though, as all of my future appraisals that included plans included a laundry list of the architect’s page numbers and dates. I also had plans shrunk to legal size for my files. Fool me once ….

 

[J Grant]

None of that matters. The lenders are the client and the AMCs are the vendors, not the other way around. The lenders decide what they will and won't accept and that includes the lower fees the appraisers are getting paid. There's nothing the AMCs are doing that the lenders are unaware of, are not enabling or are not actively encouraging. The lenders know how much the appraisers are getting paid. They clearly don't care if the appraisers like it or not.

The lenders who outsource to the AMCs are your real adversary. They always have been. Every one of those lenders could demand the AMCs pay whatever minimum fee you think appraisers are worth. The lenders could do it today and every one of those AMCs would either proceed as directed or quit; to be replaced the same afternoon by a competing AMC. The price of the bundle would almost certainly increase but at least the appraisers would get their fee.

TBH, if I WAS running an AMC it would be to my benefit to see a reasonable hard floor for appraisal fees that were equally applicable to every AMC. That would take the fee monkey off my back and mitigate some of the bad blood between the appraisers and the AMC. I could focus on other aspects of my competition with other AMCs like turn times and rejections and such. But in the meantime if one of my competitors is allowed to shop by fee then my choices are limited to either competing with them in similar fashion or to otherwise give up and cede that business to that competitor - at my expense.

We are fully aware that the lenders are aware of it !!

It is not about the lender requiring the AMC to pay a minimum fee to the appraiser; it is about the lender paying the AMC a separate cost or fee to the AMC for the AMC service. Prohibit the fee split from the bundled appraisal fee going to the AMC.
Do you think lenders, or Fannie for that matter, would be using the AMCs if THEY ( the lender or Fannie ) had to pay the cost of the AMCs?

What people are trying to say is to stop treating us like children as if we are naive about the lender part . .

 

[J Grant]

The AMCs are selling, the lenders are buying. The fact that payment is being passed through the lender instead of out of their own pockets only means the AMC and appraiser are getting paid. Just like with the title report and the termite inspection and the well report and the environmental assessment.

Is the borrower /private individual allowed to choose the provider of the termite inspection, the well report, and the environmental assessment? YES
We know the borrower or other individual is not allowed to choose the appraiser. Which makes the comparison incorrect.

Does the title report, termite inspection, and well report have a third-party involved, keeping a big chunk $ of the total charge? NO. Which further makes the comparison incorrect.i

You: The fact that payment is being passed through the lender instead of out of their own pockets only means the AMC and appraiser are getting paid.

It does not ONLY mean the AMC and appraiser are getting paid. It means the lender customer of the AMC incurs NO COST for using the AMC service. That is not an "only". That is everything. That is what drives the lender's decision to use an AMC - a no-brainer. It costs the lender nothing.

But an AMC can not work for free. They get compensated for taking as much of a split as they can gouge from the borrower's covered appraisal fee. It is kept secret from the borrower exactly HOW the appraiser gets selected: ( a flea market reverse auction to get the cheapest bid) - often bypassing a more qualified appraiser. Is the consumer who wrote out a check for the appraisal made aware of this upfront? NO

Does any of the above remotely resemble the free market economy? NO.