AMC vs Public Interest – VaCAP Advocacy
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
- Bias in Automated Valuation Models - February 28, 2022
Since the beginning, Federal Regulation of the industry was initiated to “protect the public. “ FIRREA, USPAP, HVCC, Dodd Frank and state licensing of appraisers and appraisal management companies were initiated with consumer protection as the goal. Customary and reasonable fees, mandated by Dodd Frank, are also to protect the consumer.
The Virginia Coalition of Appraiser Professionals supports customary and reasonable fees and believes in order to determine a customary and reasonable fee all things associated must be considered and incorporated into the determination. The below practices by AMC’s are not in the interest of protecting public trust and go against the purpose of the Dodd Frank Act and the Commonwealth of Virginia AMC Regulations to protect the public.
- Email Blast of orders with a “first to respond gets the order” approach. Often these email blasts are sent after normal business hours and on weekends with unrealistic fees and turn times.
Many AMC’s have developed their own mobile apps and/ or utilize text messaging for the sole purpose of facilitating a” first to respond gets the order.” Limited information is relayed to the appraiser and only a partial address and a fee is displayed. Relevant information, such as the due date and scope or work are omitted.
Both the email blasts and the text messaging systems do not allow an appraiser ample time to research the property to determine if they are qualified to perform the assignment. The assignments advertised through these systems are usually below customary and reasonable fees and often are sent outside of normal business hours. Often there is no opportunity to counter the offer, a fee or turn time. These systems are not in compliance with the Dodd Frank Legislation and are harmful, not only to the public, but to communities, neighborhoods and the appraisal profession.
The consumer is protected when the most competent and qualified appraiser completes the appraisal. Language should be included in the C& R Fee determination on how to choose the most competent and qualified appraiser. The practice of email blast / text messaging should be strictly prohibited. This business model seeks the lowest fee, the quickest turn time and does nothing to ensure the public is protected.
Documentation of the vetting of the appraiser should be kept with each assignment by the AMC and provided to the VREAB upon request and/ or audit.
- Appraisers should be given the opportunity to negotiate a C& R Fee without consequences. Many AMC’s penalize the appraiser if they ask for a higher fee or reassign the appraisal assignment.
Language should be included with the C& R Fee determination that strictly prohibits this practice and documentation of a higher fee request and documentation as to why it was accepted / not accepted by the AMC should be kept for each assignment. This information should be provided to the VREAB upon request or audit. Without proper vetting of the appraiser, the AMC is supporting a low fee / quick turn time model, which is not in compliance with the Dodd Frank Legislation or Virginia statue. Paying an appraiser less than what is needed to provide a quality report does not protect the public in any way.
- Complete engagement letters should be presented to the appraiser before an order can be accepted. How does the appraiser know if the fee is C&R if they don’t know what the engagement letter requires? Generic engagement letters that incorporate numerous lender guidelines should be eliminated. The appraiser should be provided this information without the need to access 3rd party sites, or click links within an email.
Additionally, some AMC’s state on the engagement letter, you cannot accept the assignment if you are on an exclusionary list. Isn’t this the role of the AMC to manage the appraisal process? How does this practice protect the public?
- Ample time for an appraiser to research a property must be given prior to acceptance of an assignment. Some AMC’s allow as little as 2 hours to respond when directly assigned to an appraiser. This is not realistic as often times, the appraiser is not in areas where they can access MLS and other data sources to research the property prior to acceptance.
Language should be included with the C& R Fees determination that strictly prohibits this practice. Accepting an assignment without the proper research is not in the interest of the protecting the public.
- Upload and / or Technology Fees should not be an appraiser expense. These charges range from anywhere from $5 to $35 and are not necessary. Additionally, fees associated with the same 3rd party are not consistent. For example, the technology / upload fee for ABC Portal varies depending on the AMC the report is being sent to.
How can this be a legitament fee? How is this fee in the best interest of the public?
Each appraiser has the ability to deliver an appraisal report in a safe, secure and compliant manor without the use of 3rd.party. The upload of an appraisal report is time consuming, and requires the record keeping and maintenance of user names and passwords. The use of 3rd party sites provides no benefit to the consumer or the appraiser. It only increases the cost to the public.
Any AMC or lender who requires an appraisal to be delivered through a 3rd party should do so at the expense of the AMC or lender, not the appraiser or borrower. This fee should be prohibited from being passed on to the borrower and appraiser as it does not provide any benefit to anyone other than the AMC or lender. Where are the protections and benefits to the public?
- Staff appraisers employed directly by an AMC are completing appraisals locally in direct competition with local fee appraisers. The role of an AMC is different than the role of an appraisal company / fee appraiser. The role of a fee appraiser is to provide an unbiased opinion of value to protect the public. The role of an AMC is to manage the appraisal process, not to perform the appraisal. Allowing an employee of the AMC to perform an appraisal is not in the interest of protecting the public. An AMC is hired by the lender and is not an unbiased participant, thus resulting in a conflict of interest.
In addition to the above AMC practices, VaCAP recommends the VREAB implement the following to protect the public interest:
- A re-evaluation of C& R fees should be done at a minimum of every two years. Appraisal fees were stagnant for many years. Periodic reviews to ensure appraisal fees remain customary and reasonable is necessary to protect the public.
- The definition of an AMC should be expanded to specifically include portals used by lenders directly. Many of these portals perform the same function as an AMC, only in electronic form. The intent of the Dodd Frank Legislation must be consistent to protect the public.
Per Dodd Frank, an AMC is defined as:
‘‘(11) APPRAISAL MANAGEMENT COMPANY.—The term ‘appraisal management company’ means, in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction secured by a consumer’s principal dwelling or by an underwriter or other principal in the secondary mortgage markets, that oversees a network or panel of more than 15 certified or licensed appraisers in a State or 25 or more nationally within a given Year.”
Virginia Statue should be consistent with the Federal Statue which includes 3rd party portals.
- The VREAB should have a system in place to process complaints of non-customary and reasonable fees of unlicensed entities. Those entities conducting business in Virginia in accordance with Virginia Statue that are not licensed directly through DPOR must comply with all state statures. The VREAB should have a system in place to process complaints against those entities that are not required to be licensed by DPOR. The intent of all legislation is to protect the public interest and everyone must obey Virginia Statue to protect public trust.
VaCAP encourages all industry professionals that support the above initiatives to attend the special meeting of the Virginia Real Estate Appraisal Board on January 12, 2016, at 10:00 AM, 9960 Mayland Dr. Richmond, VA 23233. If you are unable to attend, VaCAP encourages the submission of commentary and documentation to the Virginia Real Estate Appraisal Board at the above address.
This press release is a summary of a letter sent to the VREAB on 01/07/2016 in request for commentary on customary and reasonable fees.
Unless the big banks suck as Wells Fargo, Chase & BofA, change their appraisal structure, I do not see this changing. The big banks want nothing to do with the appraisal assignment process and do not want to manage a panel of individual appraiser’s, they are simply TOO BIG! For them, it is far easier to outsource this to an in house AMC and they could care less that Clear Capital AMC e-mail lasts a 5M 10,000 sf ocean front home (which I was asked to give a quote recently, actually it was a drive by w/a $225.00 fee I just shake my head and laugh).
I honestly believe they do not care at all about the appraisal process and for them it is more of a formality for the loan file and they put put more emphasis on the borrower’s income and credit etc, with the appraisal just part of the risk assessment along with their internal AVM’s and if they don’t get the value they want, that appraiser is black listed without ever knowing. My advice, deal with local banks and credit unions who value your local expertise, get Govt work such as VA, RHS & FNMA for REO and expand your private work, you would be surprised how much you can get from Divorce/Estate/Bankruptcy attorney’s in your area. (and no BS 48 turn times!) I have not touched an AMC order in 3 yrs and will never go back! Good luck out there!
OH DEAR GOD. more of this?
NOTHING will change BC.
go to page 63 (of 64 total) of this website and you will see what i mean. since 2011, MANY stories have been written about C&R fees. appraisers were told meetings were being held, discussions were going on, much of the same verbal diarrhea as above.
what has happened since then? NOTHING. five, ten years from now, it will be the same verbal diarrhea – meetings are being held, discussions are going on, blah, blah, blah.
MANY of the problems appraisers and the appraisal community face today can be solved with one quick and simple action that can be done TODAY – totally eliminate C&R fees altogether, and allow appraisers to determine their own fees like any other profession, based on their own expenses. done, over. now, wasnt that easy? everyone has different expenses based on their assignments and their location, etc., and they should be able to charge accordingly! C&R fees, and C&R fees for everyone across the board is complete nonsense.
until this happens, more appraisers will continue to leave, and the profession will continue to quickly implode. meetings are nothing more than a bunch of delusional brain dead suits sitting around cloth-covered tables, thinking they are actually accomplishing something, just because their lips are moving. its just business as usual, and meetings have accomplished nothing in the last 5-10 years.
congrats to VaCAP, but by the time all the other states finally do something and get off all their keisters about this problem too, (i am talking about ACTION, NOT MEETINGS), it will all be over, and the appraiser ship will be resting comfortably on the ocean floor.
keep your life jackets on appraisers. you WILL need them.
the bleeding continues . . . . .
Bubba eliminating C&R fee requirements is no different than eliminating minimum wage laws in America,
Most of what you say is spot on.
I would add that bank boards are kidding themselves that they have done their due diligence. They think as long as they have, or their lawyers can argue plausible deniability that there is no downside to the current AMC system.
That’s the best scenario. In practice, a lot of them are very much aware of the abuses that go on and simply don’t and won’t care until they get slapped with very heavy fines.
Its not enough for ASC to say that they see no air between the lender and their agent AMCs. They need to drive that message home in the only language that lenders seem to pay attention to… huge fines. I wonder if there is one lender in the country that can honestly be said to be in compliance with Dodd Frank AIR or C&R fee regulations.
Go Virginia! Everything you said makes sense to me. I wish you the best. Thank You !
Excellent, these are some of the things I have been saying since AMCs came into existence. After 46 years in the business I feel I am entitled to respect for my knowledge and integrity, and many AMCs could care less, it’s all about the money.
FYI, you already have the respect of your peers that have ever communicated with you directly. Great to see you posting again!
I agree with each and every item cited in their open letter, in principle. In practice, some of the items suggested for being part of C&R considerations have less to do with C&R than they do with general state AMC regulation & practice. but that does not make them any less necessary to be corrected.
In any event I will encourage our Chapter Headquarters in Maryland to insure our Virginia AGA Chapter Leader(s) attend the scheduled meeting.
Bubba/RA unfortunately in a democratic republic form of governance, meetings with governmental officials are a requirement BEFORE anything can change. VaCap is making the effort to do what is necessary to effect changes.
They deserve the active support of ALL of us. The American Guild of Appraisers; Chapter 44, OPEIU/AFL-CIO stands behind and with VaCap in their effort.
Mike Ford, Chairman National Appraiser Peer Review Committee & Director Special Projects; AGA OPEIU/AFL-CIO
Mike, i doubt any appraiser out there isnt supporting any attempts of VaCAP, or anyone else for that matter, to fix any of the problems that plague the appraisal industry right now. the article clearly illustrates that someone KNOWS what problems are, and have been for a very long time. the problems appraisers face did not just happen yesterday or just last year.
i also think everyone has a pretty good understanding of how a “democratic republic form of governance” works and that meetings are necessary. however, after 5 or 10 years of the same meetings and conversations, an “ENOUGH ALREADY” time needs to come, and i think we are way past that. how many appraisers were lost in IL recently? how many appraisers could have been saved if they were allowed the freedom to bill their customers fairly? how many appraisers could have been saved if just half of the problems outlined above had been resolved?
if you or i get a plumbing leak in our basement, we dont sit around and talk about it for years. a pipe in the appraisal industry basement has a BIG leak, and everyone knows it. appraisers are spewing out all over the floor. i say enough already! its time for ACTION, not more meetings.
the bleeding continues . . . . .
Action is EXACTLY what I am calling for now. Nationally and as a unified group. One GIANT shove to get everything on the plate settled once and for all.
I think VA has it right here – go VA go!
I suspect that a great many appraisers become appraisers rather than Realtors because they have no clue about how to take action. They are introverts who are incapable of bonding with others in society. I know that sounds harsh but how else can you explain the fact that appraisers have been sitting with their thumbs up their petunia’s for 7 long years DOING NOTHING to save themselves?
Here is my advice to those who remain in the industry: If you don’t have the balls to boycott AMCs completely do your fellow appraisers and GET OUT OF THE BUSINESS.
I believe that 2016, the 240th anniversary of the founding of our country, is appropriate to finally take a stand against AMCs.
* Form an Appraisers Congress with 1 delegate from each state.
* Issue a Declaration of Independence from bank owned AMCs on July 4, 2016
* Draw up a war plan.
* Find 1 charismatic figure head to rally behind.
* Boycott AMCs for a specific time (your Boston Tea Party)
* Use the media cover to expose the crimes being committed by AMCs and the banks that own them. Let homeowners know that they are being screwed royally by the current reverse auction style appraisal ordering system.
Over Seven Long Years:
Did you lose clients to AMCs?
Have you lost income to AMCs?
Do appraisals consume far more of your time?
Are homeowners being lied to on the HUD-1?
Are you willing to wage war on AMCs?
Our ancestors fought for 8 long years, from 1775 – 1783, for both their and our independence. They risked everything.
Appraisers have chosen to cry about their misery for 7 years without lifting a finger to help themselves. They have steadfastly refused to risk ANYTHING.
Our colonial ancestors were intelligent enough to enlist the aid of France to help them win but they knew that they had to fight themselves in order to obtain and retain assistance from France.
Appraisers once had the full support of mortgage brokers and home builders in fighting for their rights and fees. Once these two groups saw that appraisers wouldn’t lift a finger to help themselves they fled.
Consider this a snapshot of the collective intelligence of the men and women entrusted to value real estate across our nation.
Glad to see you posting constructively again! Sadly, you are right.
Happily you are convincing others.
Here is another amazing comparison:
6,824 Americans were killed in battle while fighting for our independence in the Revolutionary War.
30,000+ appraisers have been killed (professionally) by AMCs since 2009 because they refused to organize and fight back. You can expect another 10,000 to disappear this year.
John Adams said this about Thomas Paine, author of “Common Sense”:
“Without the pen of Paine, the sword of Washington would have been wielded in vain.”
Without this simple man’s inspirational words it is highly doubtful that the American Revolution would have taken place, much less succeeded.
The irony being that a man who previously failed at everything he attempted and with a reputation of being a loose canon would eventually be remembered as as the Father Of The American Revolution.
His booklet is still the most widely sold and circulated book in American history when you take the population of the country at the time into account.
What appraisers need is another Thomas Paine. Would they have enough common sense to understand his writings if he came back from the dead to address their plight, or would they continue to bury their heads in the sands of AMC owned beaches?
If you believe that a revolution needs to take place with regard to the appraisal profession, try your hand at writing. I’ve been preaching to appraisers for nearly 7 years about the power of boycotting AMCs with little success. What I have lacked in eloquence I have more than made up for in persistence. The time has come however for other appraisers (active or retired) to pick up the appraiser rebellion torch and run with it.
Take 3 minutes to watch this video. You may be amazed to learn that a handful of words had as much or more impact on creating this country than eight years of war.
no need to boycott anyone RA. because of all the poor and slow/indecisive decision making that continues to go on and never seems to end, the AMC’s, the states, the feds and the banks, are all forcing appraisers out of their businesses for them.
organizations like VaCAP, have good intentions, but IMO, will only continue to cruise right along and flap their gums behind cloth-covered tables for years to come. in the meantime, appraiser fees remain low, expenses keep going up, and behind all their backs, businesses are closing. i am willing to bet that five to ten years years from now, nothing will have actually CHANGED, and they will all still be sitting around cloth-covered tables, talking about the same kind of things that are written in this article. i mean come on, after (seven you say?) years of this, how can appraisers not expect anything else?
i mean come on, nobody can even seem to get something this simple and something that makes complete sense done around here. say hello to four years ago.
Appraisal and AMC Fees Separated on Revised Settlement Forms
in the meantime and behind all their backs, and in eerie deafening silence, appraisers are re-training themselves, they are finding other work, they are retiring, or just plain getting out. a day will soon come when the people behind cloth-covered tables are shocked to see the appraiser numbers plummeting, and they will say to themselves – “HEY WAIT?! Where did everyone go?! Was it the ridiculous education requirements?!”
absolutely the bleeding continues . . . . .
The problem with these groups are that they are made up of guys who are still making good money from other sources (brokerage, commercial appraisals, property management, etc.) or they have a spouse taking the pressure off of them. More importantly, many of them sit on boards of various agencies so they cannot make waves.
An Appraisal Congress should be made up of guys are are truly fed up with the crap they’ve endured; intelligent but rebellious appraisers. The guys who have watched their client lists evaporate overnight in 2009. They guys who have watched their income drop by well over 50% since 2009. I don’t even care if every signer of the document is retired as long as they were appraisers. They have nothing to lose for sure since banks can’t poke them up the petunia for signing it. The trick would be to get a document out there and a single leader to rally behind. If we have a appraiser reader named George Washington Jones…please step forward.
If you had a document, a website, and a little news about it. Appraisers would surely join in for at least a week to boycott AMCs. 30,000 have already quit, another 5,000 to 10,000 will quit this year. What do they have to lose?
In response to the VaCAP recommendations I would add the following.
(1) If re-evaluating C&R fees means independent fee studies, I would demand the following. We must educate all parties to what is required to develop a USPAP compliant report (in your area) and set a minimum fee based on the federally accepted standards. Although the appraiser coach may disagree with me, we must also establish a la carte what our fees are for the ever increasing scope creep. If my local franchise McDonalds can place a value of 10 cents for that additional dipping sauce I want for my nuggets, than I think we have the ability to place a value on that extra 15, 30 or 120 minutes being asked/demanded of us.
(2) Most AMC’s offer several product options for their lender clients with many choosing to use the firewall protection that the AMC company provides by way of a SAAS platform (software as a system). A large portion of the reported appraisal fee (as indicated to the borrower) is paid directly to the AMC, however without getting the full service, the report indicates No AMC. The system is a loophole for the lenders to steal our fees while technically not having to disclose in those states that require it, the separate AMC fee split. The lenders may also be using this data to establish C & R fees as again technically with NO AMC used; they may be meeting the Dodd Frank requirements.
The system is broken.
Time to dust something off I think C&R fees http://www.mfford.com – just jump to the last page-everything in between is just the boring detail.
Bubba, In addition to being an appraiser forever, am also a Realtor Emeritus (over 40 years) and understand what you mean about appraisers taking the “easy way” out. For years Realtors have had a strong lobby working on their behalf while appraisers have had zilch. For some reason unknown to me, they just can’t get their act together and work as a solid group. There is or was a group in CT that I joined, haven’t heard squat from or about them in years. Realtors don’t care about appraisers as long as the appraiser can get the number to make the sale fly, they are even taking bread & butter out of appraisers mouths with their BPO’s. for foreclosures and private jobs. Someone should let the Attys know a BPO is only as good as the paper it’s written on if it goes to court. I know, been there and beat the hell out of a BPO report. I could go on, but I’m only getting upset and at this point, life is to short. Let’s hope things get better, can’t get much worse.
you are right Diana – appraisers are also at fault for some of this mess. “getting appraisers together is like herding cats” is the best analogy ever, and it will be the perfect epitaph for the appraisal industry tombstone when it gets officially buried in the next few years.
i too was a realtor for about ten years, and the concept of supporting of each other is like a night and day difference with appraisers. i have been a part of other occupations too, and its the same thing. but, anyone in the appraisal business, and i include the regulatory agencies as well, only seem to want to destroy each other. if you dont believe me, have another appraiser do a review on one of your reports. “he didnt do it the way i would have done it so its wrong!” is normally how those work. of course the reviewer is always right because they are the reviewer, right? it doesnt matter if the reviewer lives five states away and knows nothing about your market.
its all very frustrating. appraisers know how gooned up things are, yet all anyone can do is watch it go down the drain. the people in charge continue to talk and hold their little meetings, and portray to the general public they know what they are doing, but they dont. the constant exodus of appraisers every year proves that something aint right somewhere. ask appraisers what aint right, and they will tell you, just like they have for the last 10+ years. almost all appraisers have the right answers because thats what they actually do everyday and they are the one in the trenches. but does anyone listen? no, of course not.
the entire mess is all coming full circle now. the numbers prove it, and its no longer just someones opinion. as long as the decision makers continue to just talk and not listen to appraisers, and not take ACTION, things unfortunately WILL get worse. history has also proven this over the last ten years or so. lets face the facts here – even the simplest matters such as being honest with the consumer, and fully disclosing the appraisal fee on the HUD statement, cant be decided or moved on. its very sad when immediate action cant even be taken on simple, common sense matters!
very sad indeed.
the bleeding continues . . . . .
Diana took action long ago and continues to take it. If anyone else is serious about taking action contact email@example.com
I know, I belong, remember ?
Of course! Hence the comments I made. You have been one of our most consistent supporters since I joined too.
Not to overlook any other members either. I am SO proud of all our members! Always willing to help another appraiser in need.
you guys have said it all. didn’t leave anything for me to write. i guess this will be a reply day off for me. outstanding people with outstanding comments on the reality of it all. opps, sorry, reply day off.
Cute tom..:) and why do I feel like all we’ve been doing is blowing smoke in the wind. We all know the MACHINES are taking over our business. Shades of Orwells’ 1984, but he was a little to early.