Who should profit from appraisals?

[Katalin Farkas]

TAVMA Blog:

AMC appraisal fees come under fire in today's Wall Street Journal
Friday, May 2, 2008

A must-read story in today's Wall Street Journal offers a primer on what is likely to become another talking point in the debate over the proposed Home Valuation Code of Conduct: Who should profit from appraisals? (You'll need as subscription to WSJ Online to view the article). The Journal reports that a threat by the NYAG to sue Fannie Mae and Freddie Mac for allegedly failing to make sure appraisers were protected from inappropriate client pressure resulted in an agreement with the GSEs to abide by an appraisal code of conduct. The HVCC, as it widely known, has become the hottest appraisal issue in years. (Editors Note: Good for TAVMA membership; quite bad for the rest of you). Yet the main theme is the growing resentment among appraisers and appraisal trade groups that appraisal-management companies (AMCs) are, well, earning a fee for their services.

Points...

According to the WSJ article, appraisers and appraisal trades offered this assessment of the AMC industry:

• AMCs earn their money off the backs of appraisers.
• Some AMCs are owned by title insurers, lenders, among others.
• The AMCs keep a big share of the fees consumers pay... 30% and sometimes more than 50%.
• AMCs don't pay enough to get quality work.
• AMCs use mainly less-experienced appraisers.

... and Counter Points

• Jeff Schurman, executive director of the Title/Appraisal Vendor Management Association, a trade group commented that AMCs provide a valuable service by maintaining networks of local appraisers and controlling quality (among a laundry list of other services), and said that "The AMCs pay market rate" to local appraisers
• Roy DeLoach, executive vice president of the National Association of Mortgage Brokers said the appraisal industry should "drum out" appraisers who "turn in falsified work."

Perhaps the most troubling take-away comes at the end of the article, where it is noted that Attorney General Cuomo, "...who would have to endorse any changes, has promised to consider the suggestions." Consider the suggestions? That our "suggestions" will be merely "considered" doesn't sound all that encouraging for the 15,000 souls who've staked their careers in the AMC business.

Read this story at:
http://online.wsj.com/article/SB120969130202961543.html?mod=todays_us_page_one

 

[panappr]

Sorry but we have no representation at this time. So we must let them do what ever it is they are going to do to us.

 

[Frederick]

Its good to see that the public and the government are finally being made aware of what has been going on. The greed of the AMCs may spell their ruin.

If they had put their focus on drafting the cream of appraisal talent and compensating them fairly they would be emerging from all of this in a very different light.

Publicity is beginning to taint them in the eyes of regulators, the public and the appraisal community at large. Until recently the major appraisal organizations had been silent about them and the fact that many movers and shakers within those organizations gained employment at the upper echelons of their management suggested approval. HVCC made the appraisal organizations finally take a stand.

Influencing RESPA changes that require AMC fees to be noted as mortgage processing fees apart from appraisal fees is another factor that will serve to illuminate their impact on the process.

 

[Mark K]

Sorry but we have no representation at this time. So we must let them do what ever it is they are going to do to us.

I disagree. They will do whatever YOU allow them to do.

And if you think "representation" would help, you might look at the UAW union. In 1979 there were approximately 480,000 members in the US. Today that number is approximately 80,000. Those 400,000 people that lost their jobs were "represented" by one of the strongest unions in the country.

The market will dictate the number of appraisers and their compensation, not some union or Fed.

 

[Offshore]

Thanks for the link. Before I read the entire article, I have to wonder if the subject of bully software vendors and their AMC relationships will be mentioned? I can think of at least one. :icon_idea:

 

[Mike Kennedy]

http://www.tavma.org/index.php?option=com_content&task=view&id=121&Itemid=32


TAVMA SPRING 2008 NEWSLETTER......... SEE PAGE 6 ARTICLE RE # APPRAISERS WHO WORK FOR AMCs.

estimates 38,000 out of estimated 60,000 residential appraisers; estimates conservative 11,000/ more realistic 22,000 appraisers are Org. Designees.

http://issuu.com/nyrickgrant/docs/t...-3a575bbaf1bf43eda2a358e9f0a9bb0d&layout=grey