Cuomo Opened the AMC Pandora’s Box

Cuomo Opened the AMC Pandora’s Box... 2008 Crisis a Decade LaterOver the past several weeks, there has been a slew of thought-provoking pieces on the financial crisis of ten years ago. There are so many varying views on what happened and what caused it. It was such a systemic event that ten years later, there are strong opinions on the cause and the lessons learned and not learned. I’ve always looked at it from a valuation/mortgage/credit standpoint since that has been my business orientation. I saw the events roll out from my perspective, but I only saw a sliver of what the crisis represented.

Mortgage brokers I knew that thrived back then, are either gone or generic loan reps at large institutions, never to be heard from again. Appraisers I knew who succeeded on the massive volume thrown to them by star mortgage brokers collapsed and lost their licenses or their businesses. Those appraisers never lost their self-respect because they didn’t have any, to begin with.

It was a confusing and stressful time as I wondered what math class I missed in high school and what ethics class I missed in college as our business suffered and my competitors made deals with mortgage brokers from the back of limos. In 2005, I was sure I would be out of business by 2008. Fortunately, it worked out in the long run but the period from 2005 to 2008 felt like an eternity.

Late in the crisis, I provided numerous consultations to the office of NYC Attorney (then Andrew Cuomo) to understand the problems appraisers faced from enormous economic pressure by mortgage brokers to hit the “number” but being disappointed when Cuomo opened the AMC pandora’s box with HVCC. A deputy told me they pushed the envelope as far as their authority reached, but it enabled AMCs, the institutional middleman that has mostly served to destroy quality valuation practices in the U.S. Cuomo’s office wanted names of the perpetrators and I basically said it was systemic and there were no names to give because it would be almost all the names in the mortgage broker industry. After all, why did a mortgage broker get to pick the appraiser they used when the mortgage broker only got paid if the deal closed. At one point I was literally on the phone with Cuomo’s office and at the same time got an email from a mortgage broker in Florida who was looking for an appraisal to be completed in New York that needed to be at least $1,200,000 so the borrower could draw down money to buy a boat. At that moment I could have forwarded that email to the AG, but because nearly all mortgage brokers spoke like that, it confirmed to me that it was systemic and not a few rotten eggs. If only that mortgage broker knew how close she came to losing her license.

Although the Lehman moment didn’t cause the financial crisis, it was a symbol of the beginning of true consumer awareness of the problem. Sales contracts collapsed 75% in my market from September to December. However, I saw the rumblings begin in the prior summer when the two Bear Stearns mortgage hedge funds and American Home Mortgage collapsed. I experienced this first hand when the head of those funds join a company that was going to acquire our company. I disconnected from the relationship shortly after that.

My wife and sister, who are my business partners, sat down and reinvented our business, jettisoning appraisal management companies and most retail mortgage work, inverting our practice away from mortgage rate dependent work. In many ways, the experience was a gift, because our firm became more profitable and we focused on good clients. We avoided clients represented by a 19-year-old chewing gum demanding to know where our report was ordered 24 hours ago.

Jonathan Miller

Jonathan Miller

President & CEO at Miller Samuel Inc.
Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.
Jonathan Miller

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Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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4 Responses

  1. EJ says:

    Cuomo, what an idiot. Who died and put him in charge?

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  2. Mike Ford on Facebook Mike Ford on Facebook says:

    There were contentions that aside from CW and WAMU issues that his law firm or former partners major clients were title companies and this was an accommodation to them. Wonder to this day if there is truth to that.

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  3. Baggins Baggins says:

    This new workingre article on anti trust is an embarrassment. Claiming appraisers should not have influence in regulation regarding amc’s, when we were instrumental in forcing them to become regulated in the hopes they would stop engaging in anti trust anti competitive practices and forcing us into a pay to play working environment. You mention chewing gum… Apparently the new ‘appraisal panel manager’ at this major lender out of CA, also doubles as a part time club singer. Complete with the expected punk rock haircut. Why do lenders continue to place young people with no actual real estate experience in management jobs over licensed appraisers? That is a serious question and I would like answers.

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  4. Retired Appraiser Retired Appraiser says:

    And in the end Cuomo raised millions from banks for his election campaign for his success in destroying the competition of banks. A very nice arrangement (for him). Unfortunately for appraisers this horses ask will one day be a major competitor for the White House.

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Cuomo Opened the AMC Pandora’s Box

by Jonathan Miller time to read: 3 min
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