Increasing use of AMS to replace AMCs
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AMS on fast track to replace AMCs…
Well, it looks like the detritus of HVCC has finally come full circle.
AMS (services vs companies) are on the fast track to replace AMCs. AMCs that foster their use haven’t realized that yet. They have given the lenders the tools needed to avoid costly appraisal management oversight departments while at the same time giving them the ability to use only those appraisers willing to make the deals work.
They mistakenly believe that by delegating to an AMS or AMC they have met their due diligence requirements.Quality control? Sure. Just ignore the FNMA license restrictions on CU as most are already doing, and use that in lieu of meaningful QC. After all, how can a lender using all FNMA’s or Freddie’s, etc. wonder-tools be held accountable if those tools don’t actually work? They mistakenly believe that by delegating to an AMS or AMC they have met their due diligence requirements. An oversight I am sure FDIC will remind them of when the loans go bad when the inevitable claims are made.
Any appraiser whose work has a CU of over 2.5 gets to address ALL the items listed in the SSR (summary of CU). Lenders won’t really care what the answers are as long as they kicked it back for comment.
It’s an insured loan. It’s been processed using FNMAs Day1 Certainty program. Those with a CU score of 2.5 or less are deemed acceptable by default per FNMA.
Coupled with the proliferation of specialty forms, and exceptions to USPAP, we now have services that allow lenders to populate their panels with appraisers especially chosen by the lender for their demonstrated willingness to ‘play ball’.
It’s not even necessary to blacklist appraisers anymore. Simply do not include them in the selection roster submitted by the lender to the AMS for use in their deals.
What could go wrong in such a system using modern technology combined with all that “Big Data” added security?
Is anyone old enough to remember the government’s adoption of food industry studies back in the 1960’s and 1970’s to curb ever increasing obesity? With extremely few dissenting voices, the studies (funded by the sugar industry) determined that fat in foods was the culprit. Government food supply regulators even promoted that fraud.
Hence the proliferation of nonfat, low fat and tastes just like fat, and “I can’t believe it’s not fat” type foods ever since… and the continued rise in heart problems and obesity among the population overall – despite increased exercise and health awareness.
Why even fast food restaurants have to label caloric content… or an approximation of it (say within 20% or so). Heck, that’s actually more accurate than regression analysis is for salient features market characteristics & value contributions!
Despite actual medical science now showing that the real culprit was ever increasing amounts of sugar introduced into almost all processed foods, the legacy of all that past “big Data” and government adopted studies funded by special interests is a useless forty billion dollar a year industry. One that is here to stay.
An industry that has grown around selling folks on the idea that (1) skinny is good, and (2) that the cause was and remains too much fat, and (3) that the solutions can be made painless and with no effort by using cutting edge short cuts. Short cuts that ‘scientific studies’ have proven to be ‘x’ times more effective than common sense and good habits alone.
Not unlike the Big Data Dogma Cult hybrids and short cuts that are the current darling of FNMA, MBA and ABA. There is no need for an appraiser; independent expert opinions or even actual compliance with state or federal laws that can now be more easily sidestepped.
Just look beneath the sugar coating of the growing new service industry available to lenders.
I have no particular ax to grind with the company shown in the screenshot sent to me; except their first descriptive paragraph of what they were designed to do, doesn’t reconcile to the comments contained in their approved appraiser panel section.
If the lender is the one selecting the appraisers anyway, then what exactly is it that they do? Collect a fee from the consumer-borrower that is double what they will grant to the appraiser?
How is a company that offers fantasy FIRREA & Dodd-Frank compliance going to “strengthen my integrity OR independence?” If I felt they actually knew what they were talking about, I’d be insulted.
However, I appreciate that their verbiage was carefully chosen to hit all the warm and fuzzies of their intended clients. It’s marketing gibberish without substance.
Clients that don’t really care about “valuation” quality, integrity or independence of the appraisers hired…as long as they can still chose their own at a cheap price and guarantee to get the results they seek, while maintaining the illusion of appraisal independence & FIRREA /Dodd-Frank compliance.