Animosity Between Appraisers and AMCs
- Changes from Fannie Mae - February 3, 2022
- AMC Reviews of Appraisals - November 27, 2019
- New CA Law Negative Effect for Appraisers - November 8, 2019
AMCs control the money.
We hear a lot about animosity between appraisers and AMCs and this doesn’t make for a good working relationship. Business relationships work best when it is in the best interest of both parties to be on a level playing field.
Keep in mind that the AMC does nothing for the appraiser. They may provide a service for the Lender. Since this is a service that the lender has contracted with the AMC to provide, then the Lender should pay the AMC a fee based on the value of the service that lender receives (the appraiser is not a party to or has any knowledge of the contents of the agreement). The borrower and certainly not the appraiser, should not have to pay for this service.
The problem in the appraisals environment is that the AMCs have all the power and the appraisers are the pawns. To use an old clique “He who has the money has the power” and the AMCs control the money.
You ask how do we solve this problem, it is easy.
The solutions are easy and could be implemented by the lenders with no new regulations.
The easiest solution would be to have the Lender pay the appraiser directly based on the appraisers invoice and pay the AMC based on their agreement with the AMC. This would eliminate the incentive for the AMC to search for the lowest appraisal fee and they could then look for the appraiser that does good quality work and is locally competent (a requirement of USPAP). Neither one of these are the primary focus of the AMC when they are seeking an appraiser for an assignment. It is all about the appraisers’ fee because that determines the amount the AMC make on the assignment.
This adjustment would be easy to implement. The lenders agreement with the AMC is for a specified fee for the service that the AMC provides to the lender and this is paid by the lender to the AMC. The completed appraisal is sent from the appraiser to the AMC which will review it and/or provide what other services their agreement calls for. The AMCs review along with the completed appraisal and appraisers invoice is then sent to the lender. The lender then reviews the appraisal and the review from the AMC and makes the decision of whether there are any changes that need to be made to the completed appraisal. Change requests can be sent back thru the AMC or directly to the appraiser. The lender pays the appraisers invoice. This takes away the incentive for the AMC to find the lowest fee from the appraiser to benefit the AMCs profit margin. This also gives the appraiser more assurance that his invoice will be paid in a timely manner and that he/she will not be black balled by the AMC.
This way both the appraiser and the AMC receive a reasonable fee for the service they provide and the lender and the borrower know exactly the cost of the appraisal report.
one of the biggest problems appraisers face is – a lot of AMC’s dont act/compete like other businesses. many AMC’s dont compete with each other because they are OWNED by the banks. a lot of AMC’s arent in competition with each other, especially an AMC that is OWNED by the same bank. if “Bank A” OWNS “AMC A”, then “AMC A” doesnt compete with anyone. now “AMC A” can now act in any unaccountable way it wants to, that an AMC who isnt owned by a bank, and is actually in competition with other AMC’s, cant act. i hope this is making sense.
in the never-ending to-do list of things that need fixed in this gooned-up business, add this to the list:
BANKS CAN NOT OWN AMC’s.
APPRAISER FEES ARE STUCK IN 1980, AND THE AMC FEE IS HIDDEN AND CO-MINGLED WITH THE APPRAISERS FEE ON THE CLOSING STATEMENT BECAUSE LOW APPRAISER FEES MAKE THE BANK-OWNED AMC’s MORE MONEY. it isnt about work quality, its about PROFIT. profit off of the appraisers backs.
its deceptive, and “TRUTH IN LENDING” is a LIE.
it shouldnt be allowed to be this way. at all. THIS IS ANOTHER great example why appraisers are leaving, nobody is coming in anymore, and the profession is going down the toilet fast.
and until the states/feds/regulators stop allowing banks to wear two hats in the same transaction, the bleeding WILL continue . . . . .
Jolene Owens Bay Mike Wemhoff Jason Vilches Drew Gill Joe Beatty, Markeeta Collins . There is no professional relationship unless you act professionally, do the job that you have agreed and work with a team like you. So I say bah hum bug to all the complainers. Now I will get a bunch of negative comments but that is ok. I have learned how to deal with that over the 35 years and will continue to do so. Thanks for all you do for me and the profession. And no kids I do not work for bottom feeder fees. I just do what I have agreed to then resolve the problem,with a great team, if there is one. A problem that is and I have very few of those.
Banks don’t have to use AMCs. They did so in a rush out of the last economic fall out. In a post screw up attempt to put distance between themselves & the appraisers. Personally, I think there are some positives working with AMCs. And Bubba Jay – long time no hear from you – though you fell off the face of the earth – has some good points. Unfortunately, there are some bad ones out there too . IF they raise the threshold needed for appraisals then they will fall off like flies too.
i just know that it doesnt take a rocket scientist to know something is totally gooned up somewhere, when an irrate borrower/friend calls, and demands to know why i charged him $700 for an appraisal!
“well, its like this see, the appraiser only gets $250, the rest . . . . .”
the bleeding continues . . . . .
When the powers that be ignore our comments, and letters by the thousands when it comes to a simple request to separate the AMC fee from the stated appraisal fee, I don’t think there interested. Why make the $20 credit report a zero tolerance item, but ignore the 50% split that the AMC takes on that complex FHA 4 unit assignment.
AMCs and AMC owners are simply the lowest form of life on our planet.
The whole reason banks use AMCs is because it is more profitable and less work for the loan processors. Before AMCs banks had to pay loan processors to order the appraisal, then pay a state certified review appraiser to review each appraisal, then if the borrower had complaints they would have to deal with it, which took time away from making more loans. Now they have an AMC who does all this with a computerized E&O check and desk clerks who often have no qualifications reviewing appraisals. It isn’t designed to help the consumer in any way. It’s all for the convenience of not having to deal with the busy work so they have more time to make more loans….making them more money. I love the idea of separating these fees and having two invoices, but banks won’t simply agree to this. There needs to be government regulation that isn’t written by someone with their hands in Big Banking pockets. Someone who has no conflict of interest needs to be in charge of regulation of the banking industry to affect real change.
please sir. may i have some butter on this slice of bread from the loaf that you stole from me. just another day on this cruise of the damned.
Question: How can an unlicensed individual whom essentially is a process clerk without any relevant experience, make quality judgements about appraisal assignment to the most qualified vendor? Answer is they cannot, which is why in the absence of specific licensing for each specific order assigner, (amc or not), the distribution system will remain largely unaccountable. Unless of course you’re lucky enough to run into an order assigner whom understands what quality appraisal development is, and is not. I’ve long since stopped caring about stats, because tat and fee stats, although primary indicators for distributors, those stats are largely irrelevant pertaining to the appraisers normal duties. I’ve had amc workers and non amc assigner persons confide in me that they’re taking losses in Colorado, because of their contractual agreements with lenders, and sudden attrition in available appraisers with associated sudden jump in appraisal fees. Or should I say, a sudden return to reasonable fee scales… The point being is that an unqualified inexperienced telecom process clerk makes a poor substitute for a licensed and accountable person like a mortgage broker, or senior appraiser type, for order assignment duties. This industry will eventually have to face the music, and license ALL order assignment persons, regardless of amc definition or not. It’s officially come full circle, that there are easy work arounds to circumvent amc licensing, even if the order distributor behaves exactly like an amc. Amc licensing was a misdirected effort. Corporations are not people, and subsequently; business licensing really does nothing regarding distributor behavior, amc or not, so long as there is no individual accountability with the order assigner themselves.