The New Appraisal Industry

[George Hatch]

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.

Call it whatever you want. What's "legally permissible" is as much an element of "capitalism" as it is of HBU analysis.

IRL that which is not prohibited by law, rule or regulation is otherwise permissible. And that's exactly what we're complaining about: how the lenders are permitted to act. How that bundled fee is not prohibited. How they are exercising their discretion and their choices within the constraints of the prevailing regulations.

 

[TerryRohrer]

I typically don't respond to persons I think particularly nasty, but in your and Terry's case, I assented. In your case - simply to thank you for the cool new title. I think I may have a plaque made for my desk - 'Banker Boy'. Love it!

I am sorry you are so tender! It must be hell in a grown-up world.

 

[djd09]

maybe you weren't around for the financial crisis which explains the ignorance...well just dont melt down buttercup

 

[George Hatch]

Let's ask AI since it's all the rage shall we?

How can any licensed appraiser be on their side? I mean.... with the exception of needing to pay the rent or put food on the table.

Why do appraisal management companies get away with taking a big portion of the appraisal fee?

Appraisal Management Companies (AMCs) are able to retain a large portion of appraisal fees—often 60% to 80% or more—due to a combination of regulatory loopholes, lack of transparency, and systemic industry practices.

Regulatory Gaps: The Customary and Reasonable (C&R) fee rule, designed to ensure fair compensation, was weakened by a "safe harbor" provision that allows AMCs to bill based on either customary or reasonable fees, rather than both. This change, pushed by lenders and AMCs, eliminated the threat of $10,000–$20,000 daily fines for overcharging, effectively legalizing inflated fees.

Fee Secrecy: AMCs prohibit appraisers from disclosing their actual fee to borrowers or including invoices in the appraisal report. This hides the true cost, allowing AMCs to charge borrowers significantly more than what the appraiser receives—e.g., a $695 fee where the appraiser gets only $301.

Power Imbalance: AMCs are often wholly owned by banks or large lenders, undermining the intended independence of appraisals. They control access to appraisal assignments, blacklisting appraisers who speak out, and rewarding those who accept lower fees and silence their clients.

Industry Consolidation: Since the 2008 crisis, AMCs have driven over 150,000 appraisers out of mortgage lending, shrinking the pool of independent professionals. This gives AMCs near-monopoly control over assignment distribution, enabling them to set low pay rates and high markups.

Lack of Oversight: Despite evidence of deceptive practices, such as those exposed in the Timmins v. Clear Capital lawsuit (2025), AMCs operate with minimal state-level regulation. The Consumer Financial Protection Bureau (CFPB) has received complaints, but enforcement remains weak.

In short, AMCs exploit opaque billing, regulatory loopholes, and monopolistic control to extract massive profits—often at the expense of both appraisers and borrowers—while facing little legal or financial consequence.

The vomitron is regurgitating the top responses. It's a beauty contest, often moderated by the "be nice" types. At least this one touched upon the topic of enforcement. But it apparently missed the point that the disclosure responsibility to consumers is on the lender. And if the lender hasn't been required to report the splits to the consumer then that "loophole" is the result of the decisions made by the govt.

All businesses exploit whatever opportunities they can identify. That includes the appraisers.

 

[djd09]

the ivpi endorsed the hvcc.. so hip hip hooray unethical stakeholders

 

[George Hatch]

Well yeah. Duh. MB-select presents an inherent and unavoidable conflict of interest. Your MB clients had no legitimate business even touching an appraisal report prior to its submission to it's actual users.

 

[djd09]

oh look...the AMC model is working

 

[Surf Cat]

You forgot to point out the benefit to the borrower of the MB's bullying the appraisers into hitting whatever value made their loan work. That was HUGE for the borrower. Not so much for the taxpayer...

Some of the borrowers were no picnic either.... getting poked and prodded for a predetermined value or subtle hints about the sale across the street.... it really is an art to shut them down while remaining professional, without telling them to STFU.

I was stunned when the hvcc was enacted that mortgage brokers wrists weren't slapped for their misconduct. All that needed to transpire was for them to stop poking appraisers for value, stop spamming out comp checks, and to provide homeowners looking for a mortgage and/or refi a three-tiered system. Depending on the borrower's income, creditworthiness and value of their home, your APR and payment will be A, B, or C. End of story, no need to bother the appraiser.

But with the one number system....it alllll rested on the value of the home. "Your value has to be *this* so I get my commission, the borrower gets the loan and their cash out refi, plus their low APR. If you can't do that, I can't use you". Why wouldn't that system be changed?

 

[gregb]

oh look...the AMC model is working

Supply and Demand

 

[alebrewer]

I was stunned when the hvcc was enacted that mortgage brokers wrists weren't slapped for their misconduct. All that needed to transpire was for them to stop poking appraisers for value, stop spamming out comp checks, and to provide homeowners looking for a mortgage and/or refi a three-tiered system. Depending on the borrower's income, creditworthiness and value of their home, your APR and payment will be A, B, or C. End of story, no need to bother the appraiser.

But they physically couldn't stop. There's a reason certain folks are drawn to certain professions (MB, used car salesman, insurance rep, etc.). Asking MB's nicely to play fair would have been akin to asking an *$$ to not be an *$$. They just can't help themselves.

But with the one number system....it alllll rested on the value of the home. "Your value has to be *this* so I get my commission, the borrower gets the loan and their cash out refi, plus their low APR. If you can't do that, I can't use you". Why wouldn't that system be changed?

Fully agreed. Much could have been alleviated WAY in the past had appraisers been allowed to provide the 'real' value - which is a range, not a point.