When Customary Fees Become Unreasonable

[J Grant]

Lot's of good posts...though I support the idea, on a practical level it would be a tough sell, for many reasons , though I would support those who put it forward if they do.

Imo, it makes more sense to commission a study of the primary fee (appraisal) and secondary contributory fee ( AMC or servicing) proportionately to each of their value toward the blended fee ( there is language in the HUD that the secondary fee amount should be proportionate to its contributory value)...the verbiage may vary as I am not reading from a HUD statement but it's in there.

Establish a range mandated fro contributory fees paid out to an AMC or ordering division and the rest goes to the appraiser, with C and R still in place for appraisals.

Actually, the C and R law would have worked out just fine, if the original version had been left intact (based on VA fees/govt surveys) Once lenders lobbied and got their way with a second version of acceptable C and R (surveys done by AMC's or lenders, it devolved because they could point to their own crappy fee they backed desperate appraisers into accepting as the C and R fee.

Of course, the obvious answer is appraisers don't' accept low fees...which many already practice but too many can't/won't and it's very hard to expect someone with low savings and little reserves and no other work option available to hold out too long...a nasty situation all around that is slowly improving in some segments, but not fast enough to compensate .

 

[SpartanAG]

How Appraisers claim to produce USPAP compliant GSE lending reports,

while being ignorant of the laws pertinent to those reports,

then make up their own silly stories for how the world works,

is beyond my comprehension.

CE that covers the laws applicable to GSE lending work is what appraisers need more than anything else.

There is a USPAP minefield out there too many are dancing through, and not to gingerly I might add.

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I would say the most appraisers don't produce USPAP compliant GSE lending reports. And many more are probably accepting less than C & R fees. I wish you the best of luck in your mission to prosecute each and every one of those evil skippy law breakers. Instead of wasting your time arguing with an idiot, why don't you put that time an energy into getting the authorities to enforce the law and punish all those evil AMC's and law breaking appraisers? If all the law is clear and the violations are obvious and blatant, you should have no trouble getting the authorities to jump into action. If the case against the evil AMC's and skippys is so open and shut, the authorities would be salivating at all the easy revenue that would be generated from the fines and fees of prosecuting most of the AMC's and probably 80% of appraisers. It should be easy. Go get'em girl!

 

[SpartanAG]

The laws are in place to regulate those fees.

Mortgaging is not a "free market" activity.

We are required to follow the laws in place.

If you chose not to follow the law in place, and make up your own stories of how the world works,

you do so at your own peril.

Not mine.

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Based on my clear explanation of how the process works, where do you see a violation of the law? As I said before, if the violation of the law is so clear and blatant, just turn them into the proper authorties and they will drop the hammer and the law breaker. AMC's have been around for a while now and the current business practices of the AMC's have been going on since the law has been enacted. That raises the question: If AMC's are obviously and blatantly violating the law, why aren't they being prosecuted by now?

 

[Meandering]

. Instead of wasting your time arguing with an idiot, why don't you put that time an energy into getting the authorities to enforce the law and punish all those evil AMC's and law breaking appraisers?

Some days it's same exact thing.

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[SpartanAG]

Some days it's same exact thing.

Isn't that the truth. Although, arguing with the authorities would be more productive.

 

[Terrel L. Shields]

I do not know what drove banks to decide that an AMC was cheaper. I am not sure the AMC is cheaper, but I am convinced they are hired in part as a firewall between themselves and D-F, TILA, et al. They don't want staff appraisers. They want rid of the liability. And the banks have the money and the lobby to stop appraisers dead in their tracks. We are not large enough. And we certainly cannot depend upon NAR to come to our rescue no matter how many of us are NAR members or not.

 

[Meandering]

Isn't that the truth. Although, arguing with the authorities would be more productive.

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[Meandering]

I do not know what drove banks to decide that an AMC was cheaper. I am not sure the AMC is cheaper, but I am convinced they are hired in part as a firewall between themselves and D-F, TILA, et al. They don't want staff appraisers. They want rid of the liability. And the banks have the money and the lobby to stop appraisers dead in their tracks. We are not large enough. And we certainly cannot depend upon NAR to come to our rescue no matter how many of us are NAR members or not.

The new next scape goat.

Plausible deniability.

Too many fines issued to them because of appraisals in the last crash.

This time, they'll hang out the AMCs as operating outside of their mandate to follow all the rules.

the public will demand a beheading this time, and it's the AMCs that are disposable.

.

 

[J Grant]

I do not know what drove banks to decide that an AMC was cheaper

Cheaper to whom? It is not cheaper for a borrower when an AMC is involved, but in virtually all cases it is cheaper for lender to use them since the AMC charges NOTHING to the lender. That is why so many lenders flock to AMC;s...their service is free to the lender. Of course nothing is free...appraisers subsdivize the service by having part of the borrower paid fee diverted to pay the AMC, end result is lender pays NOTHING. No wonder so many of them closed their ordering depts...but then something happened. The lenders saw the big profit potential with AMC's when they were able to drive appraiser fees down while collecting high amounts from borrower. So lenders decided to cut the AMC out, re open an ordering dept under a different name, and run it like an AMC (pay the appraisers as little as possible, keep as much as possible from the borrower paid fee for themselves)

The unintended consequence of HVCC / later DF was to change appraisals on res lending end from a service provided for evaluation, to a cash cow for the lenders, or if they outsource to AM, a subsidy for them to receive free service and enjoy the savings of cutting out an appraisal ordering dept.

How nice for them to get free service. I wish I could free services...such as my house cleaned, my car repaired and my lawn mowed for free...subsidized by the workers.

 

[Meandering]

Yup,

And the game is to keep those cash cows, until just before they will represent a giant liability, and then spin them off to being their own entities, thusly relieving the lenders of potential liabilities.

As the push to increase risky loans happen, and down payment requirements drop, expect to see more lender owned AMCs spun out. then it's full steam ahead toward 100% financing, and when it crashes, oh by golly, it's the fault of those AMCs and their AVMs and their low fee appraisal panel that consorted to bring in high values to the detriment of the lenders and borrowers.

The game plan is already in progress. Look at what has already got spun off a month ahead of GSE 97% LTV lending.

When it crashes this time, lenders will also sue the AMCs for breech of fiduciary responsibility in an agency position. And maybe this time, the self serving "compliance" companies will get tangled in the mess too.

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