AMC Fees Exceeding Appraiser’s Fee
AMC management fees exceeding the appraiser’s fee more frequently
Over the past year, the AMC industry growth model – taken from the backs of residential appraisers – has been broken by a growing number of residential appraisers that won’t accept fees below the custom & reasonable rate. So in order for AMCs to grow revenue, appraisers are seeing their fees surpassed by the AMCs themselves. In other words, hiring the valuation expert – the whole point of getting an appraisal to begin with – to make less than the company that manages them. We hear the GSEs and lending industry complaints that appraisal fees are getting too high so they need to automate, yet the valuation expert doesn’t share in that gain – it’s all due to the wildly bloated institutional middleman.
The AMC is there to order the appraisals, do a simplistic review without local market knowledge, run analytics using tainted AMC feedback loop data, add unnecessary clerical scope, have 19-year olds chewing gum hound the appraiser every day for status and then follow up with addenda requests that have nothing to do with the quality of the valuation.
What other industry pays the paper-pushers more than their actual experts but the experts get blamed for being too costly? It’s bizarre and unfair to any industry and we are vulnerable because we are without any political might.
In order to save the consumer money, the actual valuation expertise is now being pulled out of the process with the introduction of “No Appraisal” waivers through the GSEs. I’m not saying there can’t be situations that it might be pragmatic, but the pattern has been laid out by the last 8 years of AMCs inserting themselves into the mortgage process. Are we over reacting? Of course not. The appraisal industry cannot trust the mortgage system to be self-correcting. If there was not a federal backstop, lenders themselves would take more interest in their respective mortgage process that is ultimately stamped with their name.
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