You might want to read this article. Notice what it says about an AMC allegedly ‘influencing’ appraisers to report incorrect or high values in disregard to federal law about appraiser independence.
This brings up a salient point:
When AMCs hire and employ W-2 “staff appraisers“, is there a potential for AMCs to direct appraisal value outcomes based on how reports are reviewed and suggested ‘better’ comps provided as a requested correction to a submitted report?
But to be fair, this can also happen with lender-based internal appraisal servicing departments, which my first-hand experience proves.
It seems that no matter how we slice and dice this aspect, there can be covert and sometimes apparent attempts to influence property values – typically upward.
Steven L. Garcia, a 45-year-old Schaumburg resident, and his 43-year-old brother, Michael R. Garcia of Streamwood, operated American Financial Mortgage Services Inc., a Schaumburg-based licensed mortgage brokerage, according to the U.S. attorney’s office.
The duo fraudulently caused lenders to make mortgage loans brokered by their company by falsely representing that the supporting property appraisals were performed by independent appraisers, the U.S. attorney’s office said. Instead, the brothers and their employees were selecting and paying the appraisers, managing the appraisal process and influencing property valuation.
Mortgage brokers are prohibited by Federal Housing Administration regulations from having substantive communications with appraisers about property valuations, according to the U.S. attorney’s office. The regulations also prohibit mortgage brokers from ordering or managing and appraisal assignment and paying appraisers.
The Garcia brothers allegedly bypassed these regulations by controlling Residential Appraisal Management Company Inc. through a nominee, according to the U.S. attorney’s office. They used the company to steer appraisals to hand-picked appraisers.
One of the hand-picked appraisers was a relative who gave an appraised value sufficient to support a proposed loan, while falsely representing to lenders that Residential Appraisal Management Company Inc. selected appraisers based on experience and skill, the U.S. attorney’s office said.<