U.s. Regulators Ready To Ease Check On Property Values

[J Grant]

The marketplace was much more diffused and inefficient prior to the HVCC and cutting the MBs out changed that. Each of those clients didn't have access to a panel of hundreds of appraisers or the means to put them against each other in the Thunderdome.

Those days are over and they're never coming back.

Now you are back in spin mode... Now, today, in this "efficient" market , a number of direct lender clients DO NOT pit appraisers against each other to get a lower fee! Is this true, yes or no. .

Assuming you can recognize the reality there are lenders who pay C and R and do not assign by lower fee, why is that so? Because they are not keep part of borrower paid $ as profit to themselves. It is the profit collection from AMC's that drives fees down, not an "efficient " market place.

We don't' need "those days" of engagement from commission loan officer/MB to return, we need the banks/lenders who use an AMC to pay for the AMC service apart from appraiser fees, which means the AMC is no longer collecting their profit/overhead from the appraiser. .

 

[Michigan CG]

... Now, today, in this "efficient" market , a number of direct lender clients DO NOT pit appraisers against each other to get a lower fee! Is this true, yes or no. .

Assuming you can recognize the reality there are lenders who pay C and R and do not assign by lower fee, why is that so? Because they are not keep part of borrower paid $ as profit to themselves. It is the profit collection from AMC's that drives fees down, not an "efficient " market place.

First of all, after all of these years you still don't understand supply and demand. COW states have forced AMCs to pay higher fees, that is supply and demand. Atlanta appraisers are competing for $250 fees, that is supply and demand.

Most direct lenders who do not use an AMC and do not pressure based on fee have a panel they like and maintain. Most direct lenders who do not use an AMC are smaller lenders. Two lenders I work for were persuaded not to use the AMC model by local appraisers. Two lenders I work for directly have a niche market with one specializing in farms and houses on acreages. The other one caters to the wealthy where they are very picky about their appraisers.

Other lenders who don't use AMCs are ones burned by the AMC model or who never wanted that model.

Flagstar Bank is now direct order and some more regional banks might follow; the big banks will never go to that model but as their AMCs compete for appraisers they will have to adapt which gets back to the basic premise of supply and demand.

 

[J Grant]

Michigan CG, post: 2828346, member: 99171"]First of all, after all of these years you still don't understand supply and demand. COW states have forced AMCs to pay higher fees, that is supply and demand. Atlanta appraisers are competing for $250 fees, that is supply and demand.

Please stop lying and saying I do not understand supply and demand. That is beyond insulting and absurd. I do of course understand supply and demand. I have commented that the problem is AMC's are EXPLOITING supply and demand in a rigged market (since comission loan officers are prohibited from ordering) The fact that the severe under supply of appraisers in the COW states is what it takes to get an AMC to pay a higher fee is part of the problem. It should not take a severe under supply to finally get fees up, because the under supply of appraisers means delays in turn time and fulfillment, and the lenders to counteract that are demanding waivers, hybrid products etc.

Most direct lenders who do not use an AMC and do not pressure based on fee have a panel they like and maintain. Most direct lenders who do not use an AMC are smaller lenders. Two lenders I work for were persuaded not to use the AMC model by local appraisers. Two lenders I work for directly have a niche market with one specializing in farms and houses on acreages. The other one caters to the wealthy where they are very picky about their appraisers.

I now work for several mid size lenders who are national in scope who are not using an AMC. Which is encouraging since one dropped their AMC last year to form a panel.

Other lenders who don't use AMCs are ones burned by the AMC model or who never wanted that model.

Yes. In addition to that, we need to recognize the reason AMC;s captured such a large market share of lenders is because the AMC's offer FREE OF COST service to the lenders, aka the AMC makes their profit by gouging fees from their appraiser vendors, rather than the AMC charging their customer ( a bank or lender) for the management service. This flaw in the blended fee provision exempts lenders from the normal business dynamic where a customer pays for a service . If lenders had to pay, as normal businesses do for AMC service , the AMC market share would shrink, (or AMC profits would shrink) which is why AMC's resist cost plus or change to the blended fee . on the HUD .

Flagstar Bank is now direct order and some more regional banks might follow; the big banks will never go to that model but as their AMCs compete for appraisers they will have to adapt which gets back to the basic premise of supply and demand

Again, my issue is that with taxpayer backed work , the AMC's should not be exploting supply and demand of appraisers to cause havoc in a profession. Which I have explained at length in my posts. Good to hear about Flagstar Bank. Imo, if a lender wants to use an AMC, fine, but let the lender pay the AMC for the management service and not have it come out of the appraiser's fee, which would eliminate the problems going on in AMC assigning.

 

[chad hampton]

I worked for a couple bank owned AMCs prior to the HVCC - this was back in 2006 +/-. The fees were only about $25 lower than typical and that was reasonable IMO for the level of work they provided. I once asked their president how that works - he said the bank wants the AMC to break even, not turn a profit. They were there to provide oversite to the appraisal process for the bank, not to make money.

The AMC model today is complete different. They are profit centers today.

I am glad to see the trend of lenders doing to direct engagement. Hopefully it keeps going. I have a few banks that send me orders direct. They pay more than what I consider to be C&R in the my market. Maybe my opinion of C&R is too low - I'll need to rethink my value.

They pay close to double what corelogic offers for the same property. The system is horribly manipulated. Eventually, the parasites will die off. Just takes time.

 

[J Grant]

chad hampton,I worked for a couple bank owned AMCs prior to the HVCC - this was back in 2006 +/-. The fees were only about $25 lower than typical and that was reasonable IMO for the level of work they provided. I once asked their president how that works - he said the bank wants the AMC to break even, not turn a profit. They were there to provide oversite to the appraisal process for the bank, not to make money.

I also did some work for an AMC prior to HVCC...their fee to appraiser was marginally lower, reduced by about 10%- now the fee paid by an AMC to appraiser can be as low as 50%. Back in those days, AMC's were often title companies that also would manage appraisals for a bank, they were a servicing arm of the bank and not a profit center, or their profit came from title work.

The AMC model today is complete different. They are profit centers today.

After HVCC, AMC's immediately gained a huge market share 1) fear about compliance from lenders 2) The AMC came up with the business model of NOT CHARGING a lender for their service. With the lure of "free" service, why would a lender refuse? Of course the service is not "free"," it is paid for by the gouging of fees paid to the appraiser vendors. It is fine for an AMC to be a profit center, but they should be a profit center operating as other businesses do, charging their customer ( bank or lender) for their service, a charge apart from appraisal fees.

I am glad to see the trend of lenders doing to direct engagement. Hopefully it keeps going. I have a few banks that send me orders direct. They pay more than what I consider to be C&R in the my market. Maybe my opinion of C&R is too low - I'll need to rethink my value.
They pay close to double what corelogic offers for the same property. The system is horribly manipulated. Eventually, the parasites will die off. Just takes time.

It is a rigged, manipulated system , appraisers need to understand that instead of accusing other appraisers of not understanding supply and demand. The effective demand has been reduced to a small number of channels (AMC) for a segment of lenders volume. With the AMC as gatekeeper for that volume, the price of admission to get their work is charging a low fee because in many regions, an appraiser who does not charge a low fee gets nothing or a trickle (outside the trouble plagued COW states ). In the COW states, an under supply of appraisers did result in better fees, however it ushered in a host of other problems, which is why starving appraisers out by attrition to get an under supply of appraisers as the way to force AMC's to pay better is a terrible idea.

The HUD blended fee provision allows AMC's to offer free of cost services to the lender, putting them at an enormous market advantage. If the AMC had to charge their customer for their service the way normal businesses do, I bet their market share would shrink overnight, which is why they resist any change to the present business model. Let them compete as other businesses do, let them make as much profit as they can get, just stop the profit from being at expense of appraiser fees., The AMC profit should be earned as other profit is earned in the market, by them providing a service their customers are willing to pay for, vs the customer getting it free of cost as they do now.

 

[Michigan CG]

Please stop lying and saying I do not understand supply and demand. That is beyond insulting and absurd. I do of course understand supply and demand. I have commented that the problem is AMC's are EXPLOITING supply and demand in a rigged market..............

If you understood supply and demand then you would quit posting this clueless stuff about rigged markets.

A user of a service cannot "rig" supply and demand; it is NOT POSSIBLE.

 

[J Grant]

Rather than keep saying it is simple supply and demand as the cause of the huge drop in appraisal fees for AMC work . acknowledge it is HUD blended fee and regulated market conditions that allow AMC's to exploit supply and demand,

This can be seen in 2 comparisons in present market. We see non AMC lender work assigned at much higher fees ( C and R not based on AMC surveys, for the same kind of ordersk in in the same region with same supply of appraisers. In addition , private parties in these areas typically pay a higher fee than AMC's , and they have access to choosing appraisers however they want. The reason for this is, because while they may shop for a reasonable fee, they are not hiring an appraiser with the goal of getting profit back to themselves from the fee ..

This is an aberration that never should have been allowed for res GSE lending work. I assume regulators naively expected the AMC's to be fair in the fees they paid and thus thought C and R regulation was all that was needed, obviously that is not the case.

There is nothing free market about a blended fee provision that allows an AMC a huge market advantage by offering their services at no cost to their customers, ( a lender "paying" an AMC is a pass through $ of what borrower paid, rather than a cost ). The AMC thus gets paid from their vendors, with a correlation of the lower $ they can pay an appraiser, the more profit they can make. .

 

[George Hatch]

I worked for a couple bank owned AMCs prior to the HVCC - this was back in 2006 +/-. The fees were only about $25 lower than typical and that was reasonable IMO for the level of work they provided. I once asked their president how that works - he said the bank wants the AMC to break even, not turn a profit. They were there to provide oversite to the appraisal process for the bank, not to make money.

The AMC model today is complete different. They are profit centers today.

I am glad to see the trend of lenders doing to direct engagement. Hopefully it keeps going. I have a few banks that send me orders direct. They pay more than what I consider to be C&R in the my market. Maybe my opinion of C&R is too low - I'll need to rethink my value.

They pay close to double what corelogic offers for the same property. The system is horribly manipulated. Eventually, the parasites will die off. Just takes time.

Banks weren't allowed to make a profit off of their appraisal departments. That's one reason they outsourced - it was all overhead for them, no upside. Then when volumes dropped that overhead all ran at a loss.

Outsourcing to an AMC means the banks don't even have to do any of the "managing" and they don't have to carry any of the everhead even when there's no volume. That's how the the bulk of the MB-select business (banks had no appraisal management overhead) went to the AMCs (banks still have no management overhead) instead of direct engagement. You guys got beat based on a business decision.

Yeah, it was a tough break when the regulators allowed the lenders to use AMCs, and we did try to talk them out of it at the time, but obviously they decided otherwise.

 

[J Grant]

If you understood supply and demand then you would quit posting this clueless stuff about rigged markets.

A user of a service cannot "rig" supply and demand; it is NOT POSSIBLE.

It is possible, how can you not understand that? Do you not understand that the AMC offers FREE OF COST service to lenders, allowing them a rigged large market share they might not get otherwise? Please read the last few pages of posts and follow what happened with AMC's pre HVCC and after HVCC with their market share, fees, and their no cost to lender market advantage.

 

[J Grant]

Banks weren't allowed to make a profit off of their appraisal departments. That's one reason they outsourced - it was all overhead for them, no upside. Then when volumes dropped that overhead all ran at a loss.

Outsourcing to an AMC means the banks don't even have to do any of the "managing" and they don't have to carry any of the everhead even when there's no volume. That's how the the bulk of the MB-select business (banks had no appraisal management overhead) went to the AMCs (banks still have no management overhead) instead of direct engagement. You guys got beat based on a business decision.

We got beat based on a RIGGED business decision. The AMC's just don'r offer the relief of carrying overhead to a lender, they this relief service FREE OF COST ( typically) to the lender!

That is accomplished by the AMC gouging appraiser fees for their profit, rather than earning their profit as every other business does by charging their customers ( banks and lenders) for their service.

Correct the blended fee provision that allows it and have AMCs charge the customer as a cost like every otehr business operates as. See if we get "beat" then. What do you think would happen to the AMC market share if the banks had to pay as a cost for their service?

BTW it should not be a war about who gets "beat", let a lender use an AMC, just get the payment and profit to AMC's be divorced from appraiser's fees. Tax payer backed work should be free of this fallout of ongoing wars about fees -AMC's have created in large part an adversarial relationship with appraisers because of this, which is not healthy for the profession or for parties relying on results.