Appraisal Fees Back in the Spot Light

Baggins says:

Oh boy, this again? Well, why not, there are a lot of new appraisers whom just don’t understand what happened and why it’s a problem. Let’s go at this again I suppose./ FTC appears to be more interested in protecting amc and lender corporations than individual consumers.

Amc: Appraiser, we are excited to work with you on the order below. Please provide your best fee and turn time.

Please allow me to adjust the language to be more truthful, detailed, and revealing to outsiders looking into the appraisal process; Appraiser, we are excited to have charged this consumer $X amount which is recognized as a customary and reasonable full market fee for appraisal services. Now that we have the consumers promise of payment in hand, we’re moving on to assigning this appraisal order. Please provide your greatest thing of value in the form of your lowest possible fee, to financially incentivize our amc company to assign you this order ahead of other more experienced and possibly more competent appraisers. Cost savings from reduced cost of appraisal service will not be returned to borrowing consumers, but rather held as a financial incentive for the amc to prefer assigning this order to your company ahead of other appraisers with higher fees. Co mingling of amc and appraiser service charges into one combined appraisal services bill makes this fee rake possible. Although this practice would be illegal and commonly identified as junk fee billing for anyone else in the mortgage process, because the amc fee is not individually itemized on lender consumer costs disclosures, the amc industry has carved out a special niche to make this otherwise illegal billing activity to be legal and permissible. Please remember the appraiser is not privy to the amount the consumer was charged for appraisal services & combined amc processing fees ($X). Please also remember that the appraiser is prohibited from being transparent with borrowing consumers regarding what the appraisers fee actually was, after the amc incentive is raked from the whole fee. The consumer disclosure statement only reads appraisal services costs, so consumers remain unaware this fee is actually split among competing company interests. Consumer fee disclosure forms itemize nearly everything, except the amount paid to the amc. This omission of upfront billing disclosure is what provides the amc the ability to shop appraisal orders for lowest fees, and elevated amc company profits at the expense of the appraiser and consumer alike. This is why our amc, like most other amc’s, shops each order individually, or sets a standard appraisers fee which is far below what the consumer was actually charged, with the intention of maximizing our amc companies billable amount for each and every appraisal order distributed. Failure to provide a positive net return to the amc for managing this order will result in your effective removal from our approved appraiser panel or setting your appraisers business profile to inactive. Appraisers whom do not play ball with our incentives programs will be excluded from participation in their own market place.

We have partnered with major tech organizations like Corelogic whom manages Mercury systems and Scope systems, to assure we have unrestricted complete access to all appraisers nationally, to shop orders. Regardless if the appraisers accepts or rejects the amc business model, these order distribution systems continue to guarantee amc’s unfettered access to every appraiser in the country. These tech companies have a good understanding of the aggressive nature of the amc business model and motivation to expand alongside us, Corelogic had also been an amc company itself until it stepped up the ladder and bought the appraisal distribution software portals, expanding all amc companies effective reach in the process. This expansion of applicable communications reach has allowed amc’s to rake even larger billable amounts as we now successfully play more appraisers against each other in a race to the bottom for absolutely lowest possible service fees and maximized amc profit.

Meanwhile competent and honest lenders whom assign appraisal requests direct to appraisers without the amc third party involvement continue to post consistent fees for every order, distributing them fairly throughout their approved appraiser panels. The amc business model which rose from HVCC was only initially supported by appraisers under the premise of the proposed final rules for Dodd Frank Reg Z on Appraiser Independence, to contain the C&R customary and reasonable fee rule, which rests at the heart of this legal challenge. The spirit of the C&R rule was there to prohibit the predatory nature of amc’s and their ongoing billing and order distribution malfeasance. C&R was there ultimately to protect consumers, that ‘the amc shall compensate appraisers at a rate that is reasonable and customary, as if there was no amc involved’. CFPB stepped in and after intensive lobbying from amc trade groups and lenders themselves like rels and wells, tavma, then did a safe harbor rule come into play. The language changed from customary and reasonable to customary or reasonable, with a caveat that if the appraiser accepted a discounted fee, the standard of ‘or reasonable’, even if not a customary fee, brought amc’s back into compliance with law pertaining to fair billing practices. Otherwise they would have all gone out of business overnight. If the C&R safe harbor rule was ever successfully disputed, appraisers would have the largest class action lawsuit in world history, as the amc industry has raked billions in this illegal manner and in defiance of the original spirit of the C&R rule for a decade now.

‘Or reasonable’ is another logical fallacy, as consumers never benefit from reduced cost of appraisers services. As a consequence when an amc is involved the consumers fee is artificially high, the appraisers fee artificially low. It is a form of imposed parity pricing which is controlled strictly by private industry, the control sanctioned by the federal government. As appraisers struggle to just keep their doors open while operating under the yolk of an oppressive and predatory group of amc appraisal workflow managers whom have captured what is reported to be 85% of all mortgage lending based appraisal assignment requests. Whips constantly at the appraisers backs.

Now the only state in the union with enough courage and wherewithal to go against these predatory amc corporations and predatory lenders whom prefer to use amc’s, is getting pressured by the FTC to force a continuation of egregious consumer harm which only benefits these oftentimes international corporations. Amc’s primarily serve as a vector for additional company profit and to assure higher quantity of closed loans through a series of collusive pressure based practices, which is why detailed research on their true ownership inevitably leads back to big lender or title companies.

For appraisers still hanging on the ledge and holding their breath as if this case will have an effect on our industry, keep dreaming. It is the appraisers own willingness to continue service for amc’s which propagates their continued dominant market presence. You will never have a fair negotiating position because of the improperly co mingled billing. It is the untenable aspect of amc engagement. The allure of unrestricted junk fee billing is a very strong motivational force. Ethics and fair business dealings be damned, amc’s are all about that paper.