Open Letter to AMCs

VaCAP Board

VaCAP Board

Coalition of Appraisers in Virginia at Virginia Coalition of Appraiser Professionals
Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.
VaCAP Board

Latest posts by VaCAP Board (see all)

Appraisal Profession: Open Letter to AMCs

AMCs have failed the appraisal profession, the financial industry and the consumer

Dear AMC,

Thank you for your interest in our profession. The trial period we have conducted is over and the appraisal profession has determined your services are not needed. The reasons for our decision are as follows:

  • The use of an AMC is not required by any federal or state law.
  • The use of an AMC does not provide any benefit to the appraiser.
  • The use of an AMC does not provide any benefit to the consumer.
  • The use of an AMC has not protected the consumer.
  • The use of an AMC has failed to protect public trust.
  • The use of an AMC has increased the cost of the appraisal to the consumer.
  • The use of an AMC has decreased the income of the appraiser, thereby harming local economies.
  • The use of an AMC has increased the turn time for the delivery of the appraisal.
  • AMCs operate on a fast and cheap model which has deteriorated the quality of appraisals.
  • AMCs have caused undue stress on the appraiser by demanding constant updates.
  • AMCs hire unqualified employees that lack comprehension of the appraisal process.
  • AMCs have caused a great number of experienced appraisers to discontinue completing appraisals for financial lending purposes.
  • AMCs have failed to provide any benefit to the appraisal profession, the financial industry, or to the consumer.

Again, we thank you for your interest in our profession and wish you luck in future endeavors. Your services are no longer needed.
Sincerely,
 
The Appraisal Profession

Postcript 10/3/2016

The letter can now be signed by individual appraiser here.
 

Image credit flickr - Jukka Zitting
VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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76 Responses

  1. Mr Raymond says:

    I’ve been an appraiser for 36 years and I completely agree with this letter. Multiple copies and emails of this letter should be sent to all appraisal groups, lending groups and government agencies. The AMC business model is the “biggest sham” placed on appraisers, the appraisal process and all in the spirit of improving loan risk and improving appraisal quality.

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    • While I agree with the sentiment expressed in the letter (and would of course sign it) there is one glaring omission…what do we propose to replace it with?

      Do we leave the solution to finding an acceptable replacement up to the same folks that passed HVCC in the first place?  Make no mistake, a REPLACEMENT system will need to be found  BY US and supported BY US or what we get will be some hybrid developed by the national appraiser-sweat-shop franchises, or NAC if it survived or becomes reincarnated in some new seemingly more palatable version?

      Banks don’t lend their own money anymore. Virtually all (or nearly all) comes from third parties that are either insured; or as we already know are ‘considered to be preferred creditors of the U.S.A. Taxpayer’. As such no serious due diligence is necessary to protect the lenders direct investors. (THINK  about that for a moment!)

      So ALL the bank requires is a system in which the order is processed at little or no cost to them. Even if they have no intention to fiddle with the appraisal process itself. Being banks, they’d also like one that allows them to skim unnecessary junk fees as well.

      Optimally it would be one with a barn door size loophole that permits interested parties to “massage” appraisals from real estate sales agent; to builder, to “loan officer” (by the way, lets do an entire article on what a so called loan officer is someday, ok?); anyway- to banks investment portfolio manager and all their related sales representatives.

      Friends, we have collectively defined nearly all the problems we faced as appraisers over the years…what we seem to be falling short on are the KNOWN viable solutions! We cannot just keep blaming AMCs for that part. It was, and still is  up to us.

      Virginia did well with it’s VA minimum fee and enforcement mechanisms-but it is not enough.

      (1) We still need to get full consensus by that state’s AMCs that they DO have to follow the law and stop side stepping it.

      (2) We still need to RAISE the Virginia amount along with all other states up to a range of from around five-hundred-eighty (for a trainee inspected property) to close to $1,100 for a certified required inspection and analysis; rising to a floating hourly based scale above that, based on specific complexity. THAT solution has been on the table for over a year now with scant support from my fellow appraisers!

      I don’t think any automated ordering systems work for the simple reason that they are operated / administered by low paid and low level clerks with no appraisal expertise and insufficient internal organizational authority to get fee and time exceptions approved. In some cases they are an IT function-not an appraisal department function.

      My own thoughts are that no ‘bank’, mortgage company or ‘correspondent lender’ has enough skill and financial stability to qualify for access to GSE bulk security outlets or Wall Street investors for money if they cant also pay for professional internal appraisal ordering and screening.

      They SHOULD be financially capable of having an appraiser operated ordering system staffed by salaried in house employees to oversee the process. Employees that are at least residential certified for residential lending and general certified for C&I lending. A wisely operated system would also include review competency oversight.

      PS the crookedly operated  Wells Fargo System would NOT qualify! (Go ahead WF SUE me! Lets go public with all your RELS / Corelogic procedural shenanigans – you NEED more integrity related negative news exposure!)

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  2. steve says:

    WOW what a thoughtful waste of time

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  3. Lauren R Moschette says:

    How about sending this letter for appraisers to sign? Enough signatures could actually change something.

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    • Deplorable Baggins Deplorable Baggins says:

      That’s what the last guy said. LOL. Biggers went to the hill with a monster stack of anti hvcc petitions. They asked him how much cash he could generate to sway the lobbyists and the subsequent voting.

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      • Bill Johnson says:

        Biggers also sold off the Mercury Network where in the press release it was stated that they do 20,000 transactions A DAY. With 20,000 transactions a day multiplied by $10 a pop multiplied by the number of years in operation, the amount of money processed was staggering. I’m still waiting for their additional data to reflect fees by AMC clients versus non-AMC clients as so much was accomplished the first time it was offered.

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      • Deplorable Baggins Deplorable Baggins says:

        You will be waiting for ever. The mercury system still offers some sort of fee survey, but the details regarding separation of amc or not, remain a mystery. The only way to track C&R, is to have separation on hud disclosure if amc fees were present or not. In their aggressive position to conceal those fees, they inadvertently untied many appraisers hands. Nobody knows where the fees go, and there is more variance in what is a standard fee or not, than ever before. So go ahead, raise your fees. They’ve only so much as begged you to do it through irresponsible regulatory oversight. These days, we quarterback and manage the whole thing, especially the quote unquote amc managers. More responsibilities result in a straight line consideration towards higher fees.

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      • Bill says:

        You guys put on a tough front on here but in reality, many appraiser’s next click on the computer screen will be to accept a $200-$300 order or whatever it may be below R & C. Until we stop taking these we loose. I understand that is 10-15 hours of working at Walmart when you could just do a $200 report to feed your family but enough is enough and by the way, Biggers sold Mercury off to his brother…

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      • Deplorable Baggins Deplorable Baggins says:

        Bill accused us of putting up ‘a tough front’! Dude, the world is what you make it. You may not believe it, but I’ve stayed in front of this for 3 years straight now. The numbers keep climbing.  My last batch was a 20 something set which I kept around 16 of them. All $650. I’m actually only half way through that a month later, but the second half should result in more efficiency. Did the tough ones first. I’ve been smoking low fee requests for a decade, nothing new here. Move along. If you’re dealing with those tough issues though, just keep marketing. I used to market 3 a week, and did so for a decade off and on whenever things were short. If we’re replaceable, so are they. Distribution is their game, we just play it. In the lean times when the audacity of 200/300 requests was more common, I still maintained a 350 min for hud reo, or a 400 min all origination. In the worst times, try to land the hud client, that is easy work. They’re still paying a static 350, 20 years later. When I started in family biz over 15 yrs ago, I remember automatic by scale, and we’d get 550/750/1250,2500. They trusted us, because we were trust worthy. We took two months on everything unless it came with 200 rush fee.

        Bill my tag line for a long time was this; I’m not interested in competing with discount appraisers or their turn times. I never have been, and never will be, the cheapest or fastest appraiser.

        The whole deal with competition is it can ramp up only as much as you allow it. Either the appraisers can make this gig work and work well, or they’re just spinning wheels on their downward flush into the inevitable fail point where they are forced to leave. So either way any appraiser is headed whom may be so kind as to read my posts; Please pick up the pace.

        Star Wars Move Along

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  4. Carl says:

    Great letter by Vacap and great idea by Lauren. I would sign this letter!

    And don’t pay attention to steve. He’s probably an AMC troll.

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  5. vicki says:

    I will sign also

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  6. Diana N. says:

    Very well written. I’ve been appraising for 40 +years and you sure would get my signature.

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  7. Thanks for the great suggestion for individual signatures. VaCAP will discuss and consider it. In the mean time, please feel free to redistribute the letter and forward it to everyone.  We need every consumers, lenders, appraiser and legislator to comprehend the impact the AMCs have had on this profession. Thanks for supporting VaCAP!

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  8. koma says:

    We need to send this to the lenders who use these AMC’s to get any results. I think putting pressure on the money is the way to solve this. AMC’s as long as they are getting the money they don’t care what we think or say!

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  9. Dan says:

    I agree with every single point in this letter and you bet I will put my john hancock on it!

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  10. Pat says:

    Should we do a petition?

    to FNMA fhlmc FDIC CFPB ?

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    • Jeanie says:

      Pat, yes! I will sign the petition.

      I forwarded this letter to all my clients…past and present. Appraisers need to send this letter to lenders, not AMCs!

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      • Deplorable Baggins Deplorable Baggins says:

        You’d make more intellectual headway by forwarding them various appraisers blogs article links. Hearts and minds. The petition deal is obviously not working. If you want the corrections sought after; sign the audit the fed petition instead. Have you guys thought about how negative interest rates will influence distribution process? Food for thought.

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    • Lauren R Moschette says:

      I’ll sign

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  11. B says:

    Wow you forgot to give them the next profession in which they can suck out a living of and live off of the hard work we do for what, their outstanding management skills and 30% fees for what they do?

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  12. Ralph says:

    I think AMC’s are finally feeling the pressure, since they now want to AQB to lower the standards  for licensing and are now screaming to let Trainees sign reports. (these are the largest & worst ones calling for this) You reap what you sow and enough appraisers have finally said NO to $225 fees w/6 comps & 48 Hr Turn Times. Keep declining those orders and they will go out of business!

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    • DianaN says:

      Ralph, I wish it were true that those $225 jobs are being turned down, all I know is when I click on the site to turn it down or re-negotiate the fee I get the message that it’s already been accepted. Must be the trolls under the bridge. 🙂

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  13. Matt says:

    Come on guys. I get it – the AMC model is not ideal in its current form, but to say they didn’t accomplish their goal is naive. We’re all better shielded from value pressure. I’m sure none of us would have succumbed to such pressure, but there are appraisers out there who did, and therefore, they are to blame for the current system.

    That to be said, I really don’t mind AMCs all that much. Once I learned how to interact with them I found I could focus solely on appraising rather than marketing and bill collecting. I also like the fact they carry bonds so they are bound to pay us, which was not the case with lenders. I don’t know about you all, but we had to write off a ton of fees when lenders started to go under a decade ago.

    Of course I wish fees were higher, but I think that’s starting to normalize as well.

    My two cents is that if a petition is to be signed, it should be better crafted to focus on the true issues. To say AMCs don’t provide any value for the industry is not exactly right (in my opinion), and I think making that statement weakens the overall argument. Focus on the cost to the consumer and turn times if you want to create change.

    Or do what I did and find the best 3 or 4 to work for. Then just focus on appraising rather than all the other stuff that used to come along with it.

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  14. Ralph says:

    Matt, I think you are being naive. AMC’s still provide value pressure, disguised as value reconsideration, expect you to analyze another 10+ comps for free, do not allow you to attach an invoice to the appraisal, (since they don’t want you to know how much you are being screwed) and do not want the fee to the appraiser disclosed on the closing settlement in a separate line item. There is no transparency. All my clients are non AMC, and it takes me all of 2 minutes to create and track my invoice. You may be happy giving up 50% of your fee in order to not run your own business, but all AMC’s have succeeded in doing is driving good appraisers out of the industry.

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  15. Mr Raymond says:

    Sorry Matt but i think you are missing the mark. Obviously there are exceptions most anything and everything. No doubt there are a few good AMC out there. I work for one very small AMC only and they are tolerable. However, the great majority of AMCs especially the larger one like CC and SL are just seeking “fast and cheap” appraisals. Fast and Cheap is the goal and its masked behind USPAP plus other unreasonable appraisal demands that add nothing to appraisal quality.

    How can a lending appraiser provide impartial, objective and unbias appraisal reports and opinions, when the AMCs and lenders,(lender interest groups) dictate all the terms of the appraisal process???? They dictate the fee, the turn time, when to call for an inspection, comp selection, comp parameter, comp adjustments and comments, the # of comps needed, etc, etc. If the appraiser does not comply they are blacklisted. pretty amazing…Again working for the majority of AMCs is the closest thing to professional slavery.

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  16. pat says:

    Mr. Raymond,

    That response of yours is one of the best I have ever read.  Thanks!!!

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  17. Nick says:

    Mr. Ramond,

    You are 100% correct. The unbiased appraiser is no longer free of influences. This is why true appraisers will not work with appraisal management companies, among the obvious fee and turn time issues.

    The AMC’s are running out of appraisers to abuse, which is why they are saying there are not enough Appraiser to support demand. This is total BS!

    If they paid C&R and developed relationships with appraisers the industry may have stabilized. However, we are now past to point of no return and the AMC model needs to be prohibited due to the abuses to public trust and lack of Appraiser support.

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  18. Mr. Raymond says:

    Pat and Nick, thanks, as i have stated this AMC business model is NO friend of the appraiser. We have gone pass the issue of C/R fee. Appraisers under the AMC model, are no longer in control of the appraisal process. There is little impartial, objective and/or unbias reports or opinions being rendered. pretty amazing to me that one reason for adopting AMC model was to shield appraisers from undue influence. quite laughable now…..the amc (via lenders) control the entire appraisal process, even IF, the AMC pays a C/R fee they still are making demands or requirement, we as appraisers, understand has little or nothing to do with improving appraisal quality or loan risk. Case in point last year I did a basic URAR and the amc called me that they needed a side yard photo before they could approve the appraisal and close the loan. I asked how does the side yard photo improve or make the appraisal estimate more reliable. U/W replies, we don’t have an issue with the value estimate but need a side yard photo. My reply, will the loan go bad because the side yard photo is not included in the appraisal report? U/W, No but we need a side yard photo. Yikes. The APPRAISAL profession should be in control of the appraisal process not our LOAN clients. The big issue is how does the appraisal regain control and influence of the appraisal process, to say nothing about basic professional respect.

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  19. Bill Johnson says:

    Where to begin? I Just received a Mercury Network order (declined $325 – $14.25) with the following statement.
    “Special instructions from your client:”
    “EFFECTIVE IMMEDIATELY, APPRAISERS NEED TO SUPPLY PICTURES OF INTERIORS OF ALL IMPROVEMENTS PERSONAL OR REAL PROPERTY, INCLUDING SHEDS, OUTBUILDING, GARAGES, ETC. WHEN SETTING APPT. MAKE SURE CONTACT KNOWS THEY NEED A CO DETECTOR PRIOR TO INSPECTION. address the requirement for carbon monoxide (CO) detectors for the local jurisdiction and explicitly state in all appraisals whether (a) by local requirements a CO detector is required and (b) whether the current appraised home complies with the local CO laws. For jurisdictions which do not require CO in any homes a statement substantially similar to “Local law does not require CO detectors” is adequate. If local laws require CO detectors on new construction and the current appraised home is not included in the local ordinance or state law, a statement substantially similar to “Local law only requires CO detectors on new construction. Appraised proper ty does not require CO detectors under local law.” APPRAISER MUST INCLUDE “AIR INDEPENDENCE STATEMENT” IN THE BODY OF THE REPORT. ALL APPRAISALS MUST BE SENT IN AS PDF, XML and ENV FILES. ON PURCHASES ALL BORROWERS NAMES MUST MATCH NAMES ON CONTRACT EXACTLY. ALL APPRAISAL MUST STATE THE INTENDED USE IS ‘FOR MORTGAGE TRANSACTION FOR (LENDER NAME AND LOAN NUMBER). ALL APPRAISALS MUST BE SENT IN AS PDF AND XML FILES. ALL APPRAISALS MUST BE COMPLETED BY A “CERTIFIED” APPRAISER. IF REQUIRED PER THE LOCAL AND STATE REGULATIONS WHERE YOU ARE PLEASE ADDRESS: CO DETECTORS, SMOKE DETECTORS AND STRAPPED WATER HEATERS MUST BE ADDRESSED AND PHOTOS MUST BE INCLUDED. IF NOT PRESENT MAKE IT “subject to”. ALL APPRAISALS MUST INCLUDE STATEMENT THAT UTILITIES WERE ON AND IN WORKING ORDER. ALL APPRAISALS MUST INCLUDED APPRAISERS LICENSE AND E/O INSURANCE. ALL APPRAISALS MUST BE UAD COMPLIANT. IF YOUR REPORT DOES NOT PASS THE UCDP YOU WILL BE REQUIRED TO CORRECT ANY DISCREPANCY WITHIN 24 HOURS. YOU MUST DELIVER THIS REPORT BACK THROUGH THE MERC.”

    This lender and AMC now want interior pictures of improved PERSONAL PROPERTY items? Does this mean I now need to explain to the borrower that your newly purchased refrigerator must be photographed from the inside?

    After I’ve already agreed to a due date, you now want me to postpone my inspection several days so the borrower can install carbon monoxide or smoke detector that you didn’t tell them they need?
    On this conventional loan you want me to check things are in working order?

    You want me to agree in advance to a 24 hour window if the report does not pass the UCDP. What a joke.

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    • Koma says:

      Bill you are correct WHAT A JOKE!

      I received an order where if the subject property is in a PUD, they want me to physically inspect ALL of the amenities included, i.e., pool, weight room, tot lots, basket ball courts, etc and photograph and comment on the condition of all these items. Also, if any of the comparables are located outside the subject subdivision the same actions are to be performed on the common areas of the comparable subdivisions.

      Order was denied! A week went by and they sent it over again and again order was denied! This time they called me and asked if I could help them out with this order and I told them NO. When asked why I pointed right to that “requirement” and they were not surprised stating it’s not the first time they are hearing complaints about this from appraisers.

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      • koma says:

        AMC cold call today; we have a non-complex drive-by (not a county I cover) for $550. Man in area where I see C&R fees at $325-$350 2055 these guys must be really hurting. Informed them too busy and do not take cold calls from AMC’s.

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    • Bill somewhere in previous articles I think I have a template reply (LRES and Blast Orders, I think) that could be well suited for this.

      I would add the following; Dodd Frank prohibits you from telling me what I must do to appraise a property. You are telling me to cross over into becoming a code compliance officer which I have not been certified or licensed for.

      My counter offer to your offer is: (1) Fee to be $1,500 paid in advance or charged by credit card at time of inspection payable to my firm.

      (2) ten to fifteen day turn time AND AN ADDIITONAL $500 fee if you want ME to verify the APPARENT AND ASSUMED local municipal code compliance status (my suggestion is you hire an ASHI Certified Home Inspector instead).

      In fact, do it anyway! Because MY appraisal report WILL be subject to that level of inspection by a disinterested third party whose professional inspection credentials I respect. I’d feel bad charging you for my research time for what I am going to condition anyway! (An acceptable alternative would be your borrower attorney’s letter confirming that the home meets all local codes). I am going to ASSUME CODE compliance in the absence of readily apparent visual discrepancies.

      (3) I deliver ALL COPYRIGHTED appraisals in pdf or other format acceptable to me by email. ANY other system is subject to special handling charges and will cost you an additional $500 (also paid in advance) to cover the costs of my hiring a processing compliance clerk.

      (4) I believe the above eliminates issue about timely uploads to the UCDP system.

      YOU and FNMA can decide an alternative data collection service system that does not involve my involuntary servitude, nor use of my professional work product for unapproved purposes.

      This approach should completely eliminate any future issues with this AMC service.

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  20. Mr. Raymond says:

    Bill Johnson you provide just another example of how appraisers have lost control of the lending appraisal process. We are the appraisers. Thus we, as professional appraisers, should be dictating many or most the the appraisal requirements. That is NOT happening. We are mere pawns on a amc/lender’s chess board. Appraisers need to face reality that this AMC business model needs to changed.

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  21. Pat says:

    These are Urban Legends and B S from ill informed form monkeys.  I got a call today from a service that said they had buyers for my business.  I asked do you know what y business is??

    answer was uh uh huh.  I said have a great day and do your research.  Hell I might have sold out for the right amount

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  22. Tony says:

    So glad after 30 years I let my state certification go, and left the fee world for mass appraisal. How could I convince anyone that I was an expert on valuation, when by remaining in my old profession it was obvious that I did not value myself? If I am to be paid like an employee, I might as well be an employee with good benefits and paid vacation. Even with the very unambiguous language written into Frank-Dodd regarding customary and reasonable fees, we as appraisers are so little valued that we could not even get any traction in getting a federal law enforced! How is it that I am not entitled to compensation from CoreLogic (FirstAmerican EAppraiseit’s most recent name) for f*cking  over my business by their blatant appraisal fraud scheme with WaMu that ended in loss of 50% of my business revenue due to their settlement with Andrew Cuomo? I was not a party to that illicit business deal yet I and thousands of other appraisers ended up paying for it while CoreLogic raked in even more money. I truly pity those of you left in the business, and really think you should truly evaluate why you are still hacking away at this devalued career path.

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    • DianaN. says:

      Lets not forget ES Appraisal Services and their prime client J.P. Morgan Chase. They also screwed hundreds of appraisers across the country when they shut their doors and Chase never made good for any of the appraisals they received and made their loans and mucho money on.

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  23. Retired Appraiser Retired Appraiser says:

    OPEN LETTER FROM AMCS TO APPRAISERS

    F.O. YOU HELPLESS DRONES

    P.S. YOUR MONTHLY EXTORTION BILL IS OVERDUE

    Just saying: AMC are laughing at you appraisers because you are too lazy or stupid to organize and boycott AMCs.

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    • Appraiser Advocate says:

      Retired Appraiser,  On what facts are you relying on for your insulting comments to appraisers?  Appraisers are standing up to the lenders and AMCs more and more each day. The perceived “appraisal shortage” is a direct result of appraisers not working for AMC’s. Appraisers are joining the coalitions in record numbers. VaCAP  alone has increased its membership by 40% in the last 12 months. Nationwide the number of appraisers increasing their certification is going up, meaning the appraisers are moving forward in their education and opportunities, leaving the AMCs behind.

      I have a great deal of respect for anyone in this industry, retired or not, but perhaps your efforts would be better served to support our industry. Rather than insult those who remain, join your local coalition, get involved, meet with your state and federal legislator, talk with Realtors, communicate your concerns with NAR, talk with lenders, be a PRODUCTIVE voice for our industry.

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      • Retired Appraiser Retired Appraiser says:

        I’ll touch base with you in the year 2036 to see how your war against AMCs is coming along.

        The perceived appraiser shortage that you speak of has nothing to do with appraisers standing up to AMCs but rather an increase demand in mortgages due to low interest rates. Once rates increase it’s back to crying the blues again for appraisers.

        As for supporting “your industry”, I must inquire:  What industry? It’s not an industry and it’s certainly not a profession. Professions fight for their rights and their fees…appraisers have been sitting with their thumbs up their asses for 7 years….crying….crying…CRYING. For for unknown reason they are celebrating this year because they are almost making the same fees they earned SEVEN YEARS AGO…although they are now doing twice the work per report.

        I spent more time fighting AMCs, organizing petitions, writing to Congressmen, and getting stories into the national media (CNBC & Ken Harney’s stories) than anyone form 2009 through 2012. Don’t lecture me on participation. You’re living on borrowed time in a dead end JOB (not profession). That’s been obvious since 2012 when I gave up my worthless license.

        Yes my friend. AMCs have been laughing at appraisers for 7 years and for good reason. They sit and watch as 90,000 appraisers still argue over how to change a flat tire.

        Best of luck!

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      • Baggins Baggins says:

        For one, I’m looking forward to a rate increase. REO is so much easier than origination.

        Don’t make me post a full sized Chuck Norris meme in here, because I will. I most certainly will.

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    • steve says:

      Appraisers should listen, because you are right on here. If anything, it’s been more like 20 years instead of 7.

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  24. Bill Johnson says:

    Sorry to the author to change topics, but I have a moral question that could possibly spawn a future article. I measure a house at 1,817 sf, while public tax records reflect 1,621 (typical area residence 1,200 sf). The borrower offers two past appraisals one done a year ago (divorce), while the one from two years ago was via a refinance. Each reflect within 5 sf around 1,621 sf. A quick 3 minute call to the cities records department, resulted in proof of a 621 sf addition completed in 1992 (e-mailed to me) in addition to a reflection of the original 1,200 sf structure. The actual records reflect within 4 feet of what I measured, however the reported sf was incorrectly reflected as 1,621 sf.

    The as measured and improved property (1,817 sf and not 1,621), pushes the subject to the next premium level where the existence of the additional rooms and sf is very significant (tens of thousands – Overall near $600,000).

    What if anything is the current legal responsibility of the appraiser, versus the moral responsibility?

    The reflected market value from two years ago versus the loan amount reflected an LTV of slightly greater than 80%. Who loses and who wins when if valued correctly, the LTV would have been lower than 80%?

    If during the divorce the assets were split and the market value was off by tens of thousands of dollars, who wins, who loses, and what options will the current party have now?

    What should be done about the two previous appraisers mistakes unknown to anyone but me and now the borrower?

    Lastly, via the original refinance appraisal from two years ago, the collateral underwriter will flag ME for having varying property characteristics than what was previously on file.

    What say you?

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  25. DianaN. says:

    If you are certain of your measurements and you also have supporting data for the additional SF. that is what you use. I have found many errors between the GLA in assessment data and the actual living area and also amenities. You report what you see and what you can prove and don’t worry about the other appraisers.  I just appraised a property where the owner was being assessed for a non-existant in-ground pool and shed and had been since she purchased the property. Most homeowners never check assessment information unless they feel their taxes are to high. This poor woman had overpaid by $3000 since purchase 10 years ago. I contacted the City Assessor, told her the problem and she said they would immediately remove the amount of the pool and shed and could only refund for the last 5 years, but would do so. In a case like that, any appraiser with a conscious should say something, the prior appraiser who looked at the property before I did, never did.  I would let the borrower decide what they want to do about the prior appraisals.  You did your job and did it well.

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    • Koma says:

      Diana you are spot on. As to Bill when the borrower offers up to show me previous appraisal(s) I say NO Thank You. If your ever pulled into court over your appraisal and an attorney asks you if a previous appraisal was offered to you by the borrower. When you say yes he will jump on that saying the borrower gave them to you to influence your opinion of value. Trying to explain that away will be a hard mess. Also, when I perform an appraisal for a divorce typically both parties provide an appraisal. Now your talking about possibly 3 appraisers missing out on the correct GLA. Not saying it’s not possible. How do you know the borrower gave you the complete appraisal in both cases. Maybe an addendum explaining the GLA difference was missing.

      Now that the lender/borrower will have your correct measurements it’s up to one of them to move forward if they know about/have the previous appraisals.

      Just my thoughts and thanks for listening!

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      • Bill Johnson says:

        Koma, in todays world and in my example the previous refinance appraisal from two years ago WILL be used against me as my data will be unfairly compared to it (CU platform). Forget the fact that its been two years and things can change, but I will always use what ever data source is available. Although the CU system will not read my comments, in the name of defensive appraising, I have provided a general comment to explain my findings verses what I will be compared to. If we are to be uninfluenced by seeing a purchase price, I think that same thought should go into a review of past appraisals.

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      • Deplorable Baggins Deplorable Baggins says:

        Bill, want to bet two beaver pelts that the CU system will eventually be identified as having tracked unique writing volume, and also identified use of boilerplate information or not? Possibly also elevating potential risk for appraisals which the developing appraiser has short cutted boilerplate and used generic typing services? Appraisers sit back thinking how great they manage their businesses, utilizing any of the typist services advertised every other page in workingre and the likes. No fault of workingre of course, they’re just taking the advertisers money, as orourke says you know. But wouldn’t it be something if such a development method eventually resulted in this widespread forced exodus of remaining appraisers? I say go your own way, write reports uniquely. Learn to talk and type the language of real estate in a specific manner for each specific assignment. So what if I only do 2 a week, sometimes 3. It’s a nice steady pace and I have to date, never had to undercut to get assignments.

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      • koma says:

        Bill,  First I just want to say I’m not wanting to argue with you just giving my opinion and appreciate the exchange. Second I don’t care what another appraiser has as info in their report as long as mine is rock solid like I always do. If they, by following the CU (crap), want to have my license more power to them. I’ll just go back to my previous profession and believe me I won’t lose a wink of sleep at night! And last knowing the purchase price in my opinion is completely different then knowing another appraisers opinion of value on the same property. If you have a chance listen to Phil Crawford he breaks down my last point (way better than I can) on one of his podcasts at Voice of Appraisal.

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      • Bill Johnson says:

        Kona, how can we argue if I’m always correct (ha)? As it relates to obtaining and reviewing past appraisals I’m sure I could come up with a list of reasons not to do it, but for the most part I consider it part of the information gathering stage and always ask for it. If in my example my measured GLA is different than public tax record files and a conversation is started with the borrower to explain the variance, if other documentation is available and offered (past appraisals), then I will review it. My sketch reflected a wall that was 50 feet long and within a few seconds of looking at the previous appraisers sketch, the same wall was indicated to be 43 feet. Upon a 2nd trip to the property (4 miles away) to confirm my data, the borrower saw firsthand the original appraisers error (50’ not 43) and will use my sketch along with the attached permits to correct the information on public file. The past appraisal was not assumed to be correct, end of story, but rather was used as a second opinion (a wrong one) that ultimately had no bearing on my opinion. I have other thoughts on reviewing past appraisals that should probably be saved for a different time, but think of older houses (refinance) where you have recent photos to observe, sketches, characteristics that don’t show up in public record files, and past sales in 36 months that we must analyze and explain.

        I have learned more from people who disagree with me, than who agree with me.

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    • Bill Johnson says:

      I absolutely used my measured sf (I went back to check my work), along with support from the original builder plans and the noted addition in 1992. I can support my findings for the GLA, while it appears others have assumed public records were correct and either altered their measurements to be close to what they thought was the truth, or both just made similar errors. If one appraiser was approved for the divorce and through his error one party was short changed $20,000 dollars (under valued), then knowing the truth can be a difficult pill to swallow. If the current owner should of had a higher value two years ago and as a result has been paying PMI along with a higher mortgage amount, then does the borrower has a case against the original appraiser?

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  26. DianaN says:

    Thanks Koma, we think alike, however in a divorce situation, I do want to review the other appraisal to make sure it’s not biased. In fact many times if I thinks it fair and honest based on my research, I will advise the Atty. to stipulate to the value rather than have their client spend more money for an appraisal that will probably be close in value. However, if the other appraisal is “cooked” in either direction, that appraiser better watch out. I don’t make much $$ that way, but I don’t rip somebody off either.

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  27. Deplorable Baggins Deplorable Baggins says:

    AMCs never more

    Here is an important piece of information. Lenders know how damaging amc’s are. They are unable to use them in some states, and are assigning direct. Meanwhile, they are still assigning through amc’s where possible. Just FYI.

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  28. TOM D says:

    great posts with some good humor. certification flooded the market with new appraisers. we still have too many appraisers. Before certification i estimate that in my state there were under 700 appraisers who the lenders would accept work from. resist any talk of trainees. the current amount of appraisers should be cut in half. then amc’s will finally understand when no one answer their phone call, that amc’s like satan should burn in h.ll.

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    • Deplorable Baggins Deplorable Baggins says:

      Good ones. I stopped answering the phone for anyone outside of my 303 or 720 area codes. Every day, more bid requests. Every day, more panel invites. Every day, more direct orders capture my attention. The direct wholesaler I’m working with just raised fees permanently in CO. 550/600 I think. It’s a start. We excercize our consumer decisions (so to speak), by carefully selecting whom we work with, and selecting them for long term decisions and ethical reasons, not because the company merely called and/or invited us, or may coincidentally need some pickups today. 

      My first qualification question for any and all amc’s for years has been this; What is your standard minimum fee in Adams county? If they do not have standard minimums, that is code word for a business model where they entice appraisers to undercut each other. The second question is this; What is your maximum fee you can assign this to me right now? If they have to ask permission from the lender, that’s basically toothless management. I’ve never seen such a large bunch of managers whom are effectively unable to manage anything except the appraiser without permission. They seemed to have missed the point of their intended positions as a safeguard to lender influence, and instead have readily pandered to lenders as being managers of appraisers, rather than stewards of ethical appraisal distribution process. When someone with 15 years less experience than me, has never held a professional license or no longer holds one, punches in and out with no lingering responsibility, etc.  ell, you take what you can get, but one day you will also have the opportunity to put the shoe on the other foot. There are articles floating around that these marked increases in appraisal fees is tantamount to extortion or price gouging. Well, the free market principals apply or they don’t. That sword swings both directions. All appraisers are doing is operating within the confines of the distribution systems the amcs’ and lenders themselves created.

      For Tom’s comment; It’s vital to include mention of debt based consumerism driving this whole thing, because that irresponsible self positioning of regular consumers is what continues to drive the market. Enter the wild card; My order up now is an FHA 15 w/ cash out. That will certainly feed the beast for a while longer. The perfect storm has already built up, and is likely cycling with maximum potential energy, or close to it.

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  29. Bill Johnson says:

    My apologies again to post this as it does not apply to the original topic nor my offered up secondary topic, however in the past few minutes the following was brought to my attention.

    “Beginning October 1st, 2016, those working towards getting a Trainee License (AT) no longer need to complete the examination to be issued a license. Going forward from this date, an applicant will only need to complete the one hundred and fifty (150) hours of Basic Education, the four (4) hour Trainee/Supervisor course, and pass the background check required for the AT level license.”

    Why would the sate of California or who ever was involved in this decision eliminate the independently given trainee test before a license is given? This may be the beginning of the end (lowering standards) where over a single weekend one may be able to get an appraisers license. Wow.

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    • Deplorable Baggins Deplorable Baggins says:

      Think they already did that in CO, although I do not look at that often. Promulgated from asb guidance? The trainee license was important. It seems though, that’s been substituted with a different web of rules regarding applicable shelf life of earned experience hours, and other correlative qualification points. The point of the trainee license was you had to at least pass entry testing to begin earning hours. Hopefully there is also some cross correlation regarding having to take that trainee mentor class, at a minimum before you can start earning hours.

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      • Bill Johnson says:

        In my opinion, the point of the independently given trainee test was to confirm that the stated individual (ID was shown) in fact has the knowledge for the job. What’s the going rate in India or your country of choice to outsource the 150 hours of basic education and a single 4 hour course (joke). If its taken on line who really knows who is doing the work. Although my state doesn’t allow it, is it the goal to have trainees (not confirmed to have the knowledge/no test) conduct more in the field inspections to speed up the process?

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      • Raymond says:

        FYI: i recieve this email from CA appraiser office:  Beginning October 1st, 2016, those working towards getting a Trainee License (AT) no longer need to complete the examination to be issued a license. Going forward from this date, an applicant will only need to complete the one hundred and fifty (150) hours of Basic Education, the four (4) hour Trainee/Supervisor course, and pass the background check required for the AT level license.
         
        For more information on the Basic Education modules required for the AT license level, please refer to the Basic Education Modulesby clicking the link, or by visiting our website: http://www.brea.ca.gov , clicking on Licensing & Registration and then clicking on Basic Education Modules/Subtopics.

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  30. Nick says:

    Maryland requires the course work and no testing to be a trainee.

    However, I would not think of hiring a trainee unless they have all their coursework completed for CR, are geologically competent, have a working knowledge of cost estimation, experience in analysing real estate market dynamics and know their way around the mls. Add a bachelor degree, which we have required for 3 years and then I may have a place for them.

    Now using the AMC model, I can only pay this trainee about 20k per year for them to work 60 hours per week with no insurance. They would need their own E&O, mls and car. After expense they would net around 12k.

    Alternatively, they could get food stamps at $450 per month, housing voucher of $800 per month and social security disability at $1,500 per month. For those who are to lazy to do the math, that is 33k +/- tax free per year.

    It should be noted that if they are smart enough to have the entry level criteria, then they possess sound research and investigation skills to live off the government and net more money or find a career that is more profitable than appraising.

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  31. Mr Raymond says:

    lets get back to the subject: the letter to the AMC. we need to begin to pressure the powers to be, regarding the professional slavery, appraisers are having to work under. emancipation for appraisers.

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  32. Deplorable Baggins Deplorable Baggins says:

    Well Ray, I keep on trying, hitting the wall.  I still to this day take time to respond to most of these emails, although I scarcely actually consider the orders any more. I have not provided ‘a fee and turn time bid’ I think in well over a years time now. Too busy with the sure thing. Here is a portion of the letter I wrote to an amc just today. You know what they say, we’re all in this together.

    _________________

    Remember, the amc is the manager of the appraisal distribution process, they are not the managers of the appraisers. Please charge per diem for the simple act of managing the distribution, separately from the appraisers billing.  At no point what so ever, should the appraisers variable fee, effect the amc’s static fixed fee.

    Amc’s are really struggling, and they’re emailing and calling blind, have been for years now. Many appraisers like myself are still hopeful they’ll finally see the big picture. The free market is the free market, and it’s pretty difficult to deal with when you’re the one on the losing end, when in an overly competitive environment. That is why in the interest of fairness and equitable engagements, the amc, the lender, and the appraiser, should all show mutual respect for each others businesses, and never ask for fee and quotes and play one entity against the other. They should instead strike permanent and lasting deals for longer term working relationships. Amc’s must strike national deals to take care of appraisers nationally, not merely just in locations where demand is in excess. I never wanted to operate in a climate where people were readily replaceable, but in the end, I had to land somewhere. My landing spot looks good at the moment. If I hear of amc’s doing it better, at that point I’ll perhaps get interested again.

    I just checked out your website. I’ve never been able to guarantee a 5 day turn time, not ever, not since day one. That’s definitely too aggressive of a posture to take. You’ve negotiated and advertised a scope of work term which I am absolutely not interested in. You probably should reconsider that approach. Focus on managing the process properly, stop bragging about whipping appraisers around for 5 day turn times.

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  33. Wayne says:

    Some of us are really concerned about C&R and what AMC’s are doing. There are many of us that do not give a damn what an AMC wants or what some silly person thinks C&R should be. Thankfully I fall into the camp that I will not work with an AMC. When they call we NEVER get to the point of what fee or turn time. I ask are you an AMC…they say yes and I say goodbye. That is the end of that! I understand that all of you cannot do that…but I wish you could! LOL

    You are the one with the license/certification…why is it that someone that has no license/certification is telling you what fee you will accept and what time frame you will meet. I have plenty of appraisal work without AMCs….how will they eat or pay their bills unless YOU feed them…I know that I am not going to do that! I am sorry to say this but it is you appraisers working with AMCS that are as harmful to our profession as the AMC’S themselves. Find another career if that is the best you can do!

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    • raymond says:

      Wayne, totally  agree with your comment. Working within the amc business model has gone far beyond just low unfair appraisal fees and ridiculous turn times. Its total professional slavery and if appraisers do not comply they are blacklisted and receive no work. The appraisal profession has lost all control of the lending appraisal process to our very clients, lenders, amc and lender interest groups.

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    • Baggins Baggins says:

      Wayne, funny thing about that. If you take the time to be honest and fair with the amc callers, continually illustrating these untenable business arrangements and requests, also asking for process corrections so you could work together equitably, you’d find many a regular amc phone worker can’t believe they’re being asked to do this. You can hear the frustration and defeat in their voices, as they call down the list hoping for an appraisal miracle. Asking them standard qualification questions often opens the doors to fair conversation. Many of the regular amc workers would seek process corrections if they were able to do so, they can see the deficiency in the processes quite clearly. But as long as that cash cow keeps on paying, and it makes financial sense to continue to grind through replaceable telecom workers, most amc’s will continue to prefer to spend on sourcing discounted appraisals, as opposed to operating a more lean and less involved participatory presence. You can tell they’re against the wall, when the managers and senior people are trying to source the appraisers. They’re publishing articles now, regarding how to solve the problem they themselves created. If they just disappeared, the problem would be solved. I continue to believe that fewer orders should result in fewer participators, not decreased wages.

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      • Wayne says:

        Baggins,

        You and I do seem to see some of this appraisal industry from the same window! I know that Bank of America, Wells Fargo, Chase, etc. continue to make real estate loans whether or not I like it. LOL…personally I will go to hell before I work for these companies or their AMCs. I totally understand that some of my fellow appraisers jump up and down trying to get assignments from this type of company or a Core Logic, Coester, etc.

        Personally I have a problem with my fellow appraisers who accept assignments from companies like this. Check it out…two guys graduate from high school same day. One earns his law degree…the other his general appraisal certification. Which one came back home first? Yep the lawyer came home first and will make the most money.

        Appraisers accepting assignments from AMCs are allowing those companies to exploit our profession and cheat us out of our professional recognition. They are scum and the appraisers who work with them and allow them to earn a living need to reconsider! Really…if after all you have gone thru to earn your license or certification…If an AMC is your only employment….go away, grab the Dairy Queen job! Just my opinion…no respect for you here!

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      • Baggins Baggins says:

        Have any stats on amc employee turnover?  That would be an illuminating figure regarding the supposed professional handling of these orders.  I keep waiting for an amc whistleblower. Still waiting for the tech guy to come clean regarding biased process in violation of this or that. That’s how this thing holds up though, the tech guys are not legal specialists, the legal specialists only focus on liability, and nobody consults the appraiser. These guys are so clueless regarding valuation services, they simply still do not understand that appraisers nationwide have continued to offer free consultation services. Consultation services is one of the three valid services appraisers offer. It all comes down to the mechanisms of management. Amc’s are not in place to manage appraisers, they are in place to manage orders. Appraisers whom do not identify that difference will remain part of the problem, not the solution. Some amc’s are fair to work with, since they have such limited managerial presence. It’s time we all started making simple qualifications and drive this market. In terms of influence, the appraiser is the consumer of amc services. We feed that market. So put your consumer dollars to good use, or boycott, but please distribute wisely in the interest of your own future. The act of forcing a lending client away from one amc to another or to direct is as simple as consumer drive, consumer demand, and consumer acceptance.

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  34. Diana N. says:

    As as long as appraisers are accepting these $225 fees the AMCs will be in control. 5 were in my email today that I was ready to turn down or re-negoiate the fees but they were already accepted. Shame on you appraisers working for slave wages.

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  35. Bill Johnson says:

    Nothing like enjoying a Friday night when Streetlinks sends over an Ocean front property (hello its on Ocean Ln) for $365 with a due date of 5 business days. Maybe this is like one of those times you occasionally read about when lost letters show up 30 years later. In this case the fee is from 1986. God help us.

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  36. I have read most of what everyone has said, I agree to most, However it has always been my thought that if I want to go broke I will do it for myself and not for someone else. Anyone ever heard of telling the AMC’s what “your” fee is! I have no problem. If there is someone else out there who will work for the $250 -300 fee let them have it. But it will take all of us saying no to the low fees to get them up. My local banks pay me $400 why should I take 300 from the AMC. I have sent the VACAP letter to them. They have come back after saying no to my fee and gave it to me. PLEASE Try it a few times. It will work and you will get paid for your work. You must value yourself.

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  37. I have been appraiser for 16 years, I have worked directly for Fannie Mae, Freddie Mac and HUD. In each position I have directly or indirectly had a part in either writing, reviewing or implementing policies and or regulations. I have seen first that AMC’s in the mix between lenders and appraiser has hindered the process and cost more in time and money for all involved. Secondly, AMC’s usually result in a less quality of report. This is because typically appraiser have to complete twice as many reports to make the same amount of money they use to make before AMC’s and the reports are rushed, both resulting in a less quality report.

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  38. George says:

    I appreciate the effort and agree wholeheartedly with the sentiment of the letter and will sign it, but isn’t it addressed to the wrong party. What possible good will it do to direct this toward AMCs?

    It needs to be sent to every lender, mortgage company, correspondent lender, and any other entity using the AMC services. The lenders are the ones who benefit from the AMC. They get the service for FREE. They LOVE amcs, especially the ones who own their AMC and profit from it. The lenders should be the target.

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    • mike ford mike ford says:

      Agree and I have signed already but it is a start. Frankly some federal regulatory agency executives already follow this blog so Id be amazed of lenders are not also getting the message.

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  39. The letter can now be signed by individual appraiser here.

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  40. Raymond says:

    the realtor groups, for a long time, have established the sales commission income at 6% and it has been followed consistently regardless of the sale price or any other feature. This established real estate industry sales commission rate is an example for the real estate appraisal to follow in some form.

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