The AMC Dog and Pony Show
From the HVCC to today, can we really say the mortgage lending system has improved due to AMCs?
The AMC dog and pony show has been going on for the better part of a decade. Appraisers have been called out for every problem associated with a real estate closing. Ever silent is any talk of better educating Realtors®. They are the ones with the most power in the pricing process, and the majority of so-called “appraisal problems” are because they say it’s a problem. That’s a LOT of power. But somehow, they manage to stay under the radar and no one seems to be challenging their integrity, as they constantly do with appraisers. Realtors® are the least educated people in the entire home buying process. It seems everyone, their brother, and their cousin has a real estate license. How many times do we hear about how easy it is to get a license and sell houses. “Oh, we love making a little part time money and it’s so easy.” Of course selling homes is not so easy, but getting a real estate license – that’s much easier. The Association of Real Estate License Law Officials (ARELLO) estimates that there are about 2 million active real estate licensees in the United States. According to the Appraisal Institute, as of December 31, 2017, the number of active real estate appraisers in the U.S. stood at 82,208. Let’s see – 2,000,000 vs 82,208?? Must be a little easier and that’s two million opinions based on the least required education in the entire home buying system.
Realtors® have always seemed to have some unwritten power. When it comes to home prices, it’s always assumed a “low appraisal” rather than an “over-priced listing.” Realtors® have a magical credibility that appraisers have not been afforded. AMCs and their underwriters seem to question every comment and adjustment appraisers make. But, no one questions how a Realtor® comes up with a listing price. There’s something wrong with that picture, but it seems to get lost in the smoke and mirrors of the cheaper and faster appraisal rush, a rush that no one except the AMCs have ever demanded. And, no one appears to have any interest in protecting consumers, only making money from the appraisal process. The entire “faster and cheaper” appraisal argument remains all about potential profits and consumer protection is totally lost.
AMCs were given their power overnight which was unearned and undeserved, and have now grown into billion dollar businesses (on the back of every appraiser). They are also playing hardball with their new-found wealth by promoting every policy that benefits only them, such as Hybrid Appraisals. These products benefit only the AMC. They are bad for the appraisal industry and especially for consumers. The AMC decade will leave a lasting impression on the appraisal industry that will not soon be forgotten. The appraisal industry has lost over 10% of the entire workforce with those who flat out refused to work for AMCs. That’s a large chunk of appraisers who did not need to be lost. And, what about fees? I won’t get into that too much here, but I still find it amazing that consumers are not allowed to see the breakdown of the fees paid for an appraisal. Whose rule is that? Exactly, the AMCs. They seem to have lots of power these days.
…overnight AMCs were handed the keys to the world of mortgage lending and appraisal ordering.Appraiser voices are being heard more and more often and the true value of an appraisal management companies is coming to light, but it may be too little too late. AMCs are touting record sales volumes and more power than ever, as they continue to drive the best appraisers out of the industry. They don’t want or need good appraisers. That’s not their goal. Only cheap, fill out the form to meet minimum requirements, and run to the bank with their profits. Appraisers were chartered to protect consumers and mortgage investors. That’s the exact opposite of an AMCs charter. It is a business model that only grew with the force feeding of a government agency, not of the free market. Appraisers were not offered a choice the same as lenders were not offered a choice. Basically, overnight AMCs were handed the keys to the world of mortgage lending and appraisal ordering. Perhaps justice would also come with the stroke of a government pen, signing AMCs out of business just as quickly as they entered.
Of course, there are some very good management companies. But, the model that dictates any one service over another, without free choice in the market, is over-government control at a time in history when less government is the objective. AMCs have been offered a long and fair test in the market. They have failed miserably and can only blame delays caused by them on appraisers. Surprisingly, when lenders order directly from appraisers, with truly qualified underwriters reviewing the work, the speed rises dramatically. Faster appraisers would come with the total removal of the AMC system. The question is, will the powers that be, and all the talk of big data and big money, take control over reason and logic – and of course consumer protection.
I think in an open market the best AMCs would survive. They have changed and grown to work with appraisers, not as dictators but as partners. However, the majority survive because they are mandatory or the least expensive option under current government rules. From the HVCC to today, can we really say the mortgage lending system has improved due to AMCs? The short answer is NO, not even a little bit. A wasted decade with lots of evidence if anyone really wants to see the truth.
AMCs need to be removed from the mortgage lending system…AMCs need to be removed from the mortgage lending system just like the 1004 MCA. AMCs failed miserably and it’s time to move back to sanity and move forward to focusing up Realtor® education about pricing real estate. Then we can talk of “low appraisals” vs “over-priced listings” and mortgage loans.
- No Appraisals Required. The End of Appraisers? - March 9, 2023
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- Statistically Supported Appraisal - June 9, 2021
I rarely received orders from AMC owners that qualified as dogs or ponies. We would have welcomed those calls. Most of our phone calls came from individuals who fell into the slug and single cell organism categories.
Unfortunately my business relies 100% on AMCs for work. I have unsuccessfully tried to get out from under their thumb. I have been forced to work for all the AMCs which are associated with REVAA. I have been abused, lied to, cheated and intimidated. How are these AMCs not charged with racketeering? The hybrid products that I completed for ATI and valunet were 100% flawed and If a prior appraisal was on file they would send endless QCs until my value equaled the prior appraisal. I also would receive countless of non comparable sales to review. All this abuse for a mere $50-$75. I have been blasting my congressman with articles like this one which scream abuse. So far these emails have never been replied to. I have .pdf all the low ball appraisal solicitations so If needed I can present them in court. Clear Capital is the worst abuser of low fees for 1004s. I receive purchase request with a fee of $261? What happened to reasonable and customary? Every inspection I let the borrower know what I was paid for the assignment so they can file a complaint with the lender. I have a strong feeling that nobody cares. The Trump administration does not count field appraisers as being employed. As long as the AMCs keep hiring they can claim they are increasing employment. In reality they are replacing high paying field appraiser positions with low paying staff appraiser positions. Its a sad business we are in! Garbage men are treated with more respect than appraiser’s!
They are not charged with racketeering because banks are reaping billions each year off of appraisers and the banking lobby (who helped to create this mess) is the strong lobby in America.
“We’re from the government, we’re here to help.” Famous last words. This guy shows up first time poster, admits to doing hybrids, and blames the president. Logical fault. Thank you again to the appraisers of the world whom on one hand continue to promote these companies, and on the other, beg the government to save them from their own poor decisions. It’s like Hamp said, the amc model tried, and failed. The appraisers whom still accept their work are exclusively the ones whom keep them in business. We’re all able to get away from them for the majority of our work, but some appraisers, simply not that bright or capable. Get a real job.
I do not do hybrids anymore! I have tried to do marketing and other forms of business solicitations and no luck. Instead of being so ignorant why dont you offer some solutions?
Try reading more. Good luck, you’re going to need it. Appraisers that can’t get a leg up on the worst salesmen of the industry, not much help for them.
Solutions are abundant, but first you must learn to protect the consumer first and foremost. Willfully helping amc’s defraud borrowing consumers is not a good starting point for a professional career as an appraiser.
Cotton, are you prepared to start doing something about it that may actually work? http://appraisersblogs.com/stolen-appraisers-data-class-action .
In addition, there is a law firm right now that is actively seeking appraisers that have been abused or improperly coerced by AMCs. We’d love to have you join us in the AGA (American Guild of Appraisers) where we have not given up the fight. You had the right idea writing a Congressmember, but perhaps more effective methods of doing so would achieve what letters did not.
I can attest that several federal regulators read this blog. We should discuss your experiences in more detail privately, offline to see how we can focus on some of the issues you raised. email me at mike@mfford.com if interested.
Trump said he would like all workers in the country turned into self employed. Guess why ???
I agree 100% with this article.
Unfortunately it comes down to who has the money and who does not.
Thank you for the article!
The appraisers continue to fund the amc machine by agreeing to work with unqualified non licensed middle management persons for reduced fees. The appraiser is individually licensed and has a motivation to promote sound lending practice. There is a severe lack of qualified individually licensed people at all appraisal distribution departments, amc, direct, and otherwise. If these companies are going to continue on in this business realm, we need to license all of the workers on an individual basis so that we can bring accountability back to distribution departments.
Great job.
and don’t forget the amcs that don’t pay at all.
Best article I have ever read! I couldn’t agree more.
I really like the AMC’s I do work with. They are professional, respectful and easy to work with on challenging files and scenarios. I will admit its best to get to know the owners of the firms in case a file needs to be escalated. The staff, account reps, QC and certified reviewers are all very knowledgeable and respectful and I never feel pressured to do anything against my ethical compass. If I even suggest I might be uncomfortable with anyone’s input my thoughts are taken into consideration with no hard feeling. I’ve had more trouble with lead appraisal managers at banks that are too beholding to the sales rep business line. I think we are all on the same team for the most part. I know my opinion may not be popular on this thread but we all have a choice of who we are going to work with. I only work with nice, respectful, intelligent ethical firms and there are a lot of those around. I just have to every one the benefit of the doubt and distance myself from the unprofessional firms.
Said no one ever!
Seek the truth.
Can you name one? I’m sure we’d all like to learn more about such great clients.
Yes, please do tell the name of this awesome amc. I’ll pull out my amc file, and we’ll compare notes. Please. Reminds me of Dr Manhattan on the AF. Always trying to put a positive spin on outright theft. We’re friends to the appraiser. Lies.
Trisha lives in a BizzaroWorld that the rest of us are not familiar. Sorry Trisha but I’ve worked with nearly all of them at one time or another in my rural area in the last 30 years. The AMC business model will NEVER be satisfied until the Independent Appraiser is actually paying THEM to do the work. In this model you are only as good as your last appraisal and more importantly your lowest fee quote, I could take every order you are getting by cutting your fee by $1. And anyone can remove you from the lender at any time, regardless of facts or circumstances. Thanks for a good article Hamp – my thoughts exactly.
I love it when they call me “partner”
I’m like – looking forward to that profit sharing check and those PnL’s. Crickets
I think we should all charge $85 per response when responding to emails, phone calls or input updates to an AMC. After all that is where they are really getting into our pocket books and causing havoc and lag time.
Hamp Thomas, cited; that Realtors had unwritten powers, in the above narrative.
Not stated is the situations created by listing agents listing too low. This is an un-curable situation which occasionally wind down into a litigation problem. A problem for the seller, the agent and an opportunity for the appraiser.
Most of the times agents and appraisers are compatible. When an agent sells the listing to a brother-in-law at a bargain price, realtors typically remain silent, many appraisers also.
This is an internal problem for all sides, airing dirty laundry has problems, which are best served by bright light.
Some appraisers handle these problems with honesty and grace, some loose reputation with in the community.
Honesty and grace are good for business.
don
Last year I was solicited and approached by several AMC’s to work directly for them in my specific market as an employee staff appraiser for considerably less money per year than I was earning through the various clients I serviced. After declining these offers my work volumes went from 28-35 orders / month on average to 5-6 / month on average and in those that were sent over they all had some type of complexity involved such as locational, functional or other non-conforming appeal whereas this would be time prohibitive to have their employee staff appraisers complete. I contacted the Appraisal Foundation, my state licensing agency, among others to find out if AMC’s were indeed allowed to employ staff appraisers that are not independent contractors but they all referred me to each other as not one would provide a definitive answer to this question. But in the past few days I have found laws regarding how AMC’s are to be a third party intermediary between the lender’s and independent third party appraisers in my state law of such and also how this is viewed by the US Treasury Dept. My plan is to move forward in filing with my state and also the Federal level to have these AMC’s cease in using employee staff appraisers if they want to remain AMC’s as in the manner they are doing business they are nothing more than appraisal companies. Has this happened to anyone else??
Now that is against EVERYTHING that was put in place !!! What an industry.
The best AMC is Appraiser Loft! I can’t say enough good things about them!
Sal, unless there is a state-specific rule preventing AMCs to operate as appraisal firms, there is no federal rule prohibiting it.
You have to understand that many appraisal firms were declared AMCs simply because of the number of appraisers they previously employed as IC’s. Others such as those you cite, clearly have potential conflicts.
At best, the cherry-picking of an assignment is a factor. Assign those labor & time intensive reports with clear problems to IC contractors and only keep the apparently ‘clean’ reports in-house.
AS distasteful as it is, there is nothing inherently worse about an AMC also doing appraisals than there would be for an appraisal department in a large lending institution doing their own appraisals. As long as the pretense of a firewall between commission loan production staff and appraisal staff can be maintained.
Not hugely different than Governor Kasich of Ohio appointing William Fall (as in The William Fall Group) to be a member of that states real estate appraisal board. As long as the pretense of impartiality can be maintained, who cares?
This country has literally been taken over!
Yes just try and hold on because everyone is going to find out in the next year that AMc’s lenders and even Fannie Mae are the cause of most of the disfunction, Once they can no longer blame the appraiser for everything then people will realize its the systematic process. Complexities seem to exist so much more often then they use to
And I read today, FHA will have 14 billion in default properties because of over appraisals. Let the second round of appraisers losing their license happen. And I wonder why? Could it possibly be the AMC business model….
And I hope it’s the appraiser that over appraised at half renovated property, by $70,000 on a main traffic atery, by only using the only three settled sales to make the deal, 3 miles south in a beautiful tiny little subdivision. And a renovator flip at that and didn’t even mention the major traffic artery !!! I called a friend, he looked at the report, I asked if anything would be done to the appraiser he said no, just a slap on the wrist, and I said why, he says we see them everyday, and he said they have no idea of how to appraise. The taxpayers will pay the price as usual.
What isn’t being said in all this is that AMC’s and lenders are playing politics to the point that once there are no appraisers left in the field, they will have absolutely ruined the lending process to the point that no one will be borrowing money from lenders. I would like to see the statistics on how many more buyers are just paying cash or using other alternatives to buy homes. and it is not because of the appraisal process but the lending process.
The really big prize for them, when are numbers go down to nothing, is that THEY will then be allowed to use the AVM’s, Hybrids and the like, to make EVEN MORE ! At our expense !
FHA reporting just a 3% over appraisal is enough, and they are keeping tract….How are they keeping track is the question, AVM’s ? lol And we all know an AVM means nothing !!!.
Can you imagine what will happen with Hybrids and the like will be when our numbers go down to nothing ?
Hybrid appraisals are the AMC and lenders way of not only controlling appraisers but also realtors. They took over control of the appraisal world overnight so they want to do the same with the agent side.
test news-from Clearbox….seems like they’ve gone in a new direction.
https://mailchi.mp/clearbox/dj-vu-all-over-again
Not hardly – just heading off the Coester news at The Pass.
Do you know why Amazon is so successful. Because they can do their job without having to update anyone. As a matter of fact your package gets dropped off at your door and the delivery guy may send you a notification that it has arrived. The success being that they do not answer to any middle man. They just simply do their job. Now I remember the day when appraisers were allowed (not micromanaged) in doing their job. Send us an order and we get to work on it. Sounds simple right. The fix is simple as well. Hopefully the problem is starting to fix itself but it also seems that the AMC is full throttle trying to take control of the whole process. So why hasn’t this problem fixed itself already in some cases? Because the lenders who want to be in control of everything are preventing the problem from fixing itself. They are not concerned with the service and how in can be improved but only the ability to take over the process and collect all the fees themselves.