Appraisal Regulation Compliance Council Exposes Disturbing AMC Violations
The Appraisal Regulation Compliance Council (ARCC) is a crucial non-profit organization that specializes in providing fact-based research and expertise on the complex web of appraisal regulations and compliance issues. Driven by a non-partisan mission, ARCC has spent the last two years diligently collecting, vetting, and organizing comprehensive data on lender appraisals conducted by Appraisal Management Companies (AMCs). Their meticulous research has uncovered a disturbing pattern of violations of key regulations intended to protect consumers, including the Appraiser Independence Rules (AIR), the Uniform Standards of Professional Appraisal Practice (USPAP), the Truth in Lending Act (TILA), and Title XIV of the Dodd-Frank Act. Alarmingly, these violations are often disguised under the pretense of a so-called “firewall” that is meant to safeguard appraiser independence.
ARCC’s findings reveal how the existing Integrated Disclosure forms used under TILA and the Real Estate Settlement Procedures Act (RESPA) have created perverse incentives for AMCs to inflate their fees without any corresponding improvement in appraisal quality or timeliness. In fact, many AMCs seem to treat appraisal quality as a low priority, directly violating the provisions of TILA, Section 129E. The hidden fees collected by these AMCs appear to be primarily for the purpose of unjustly enriching themselves, price gouging consumers, and failing to fairly compensate the licensed appraisers who bear the majority of the risk.
To substantiate these concerns, ARCC recently published a detailed breakdown to the Consumer Financial Protection Bureau, which showed the median average AMC fee being charged to borrowers amounted to a staggering 65% of the total appraisal fee, with one AMC extracting as much as 84% in pure profit.
Deeply concerned by these practices, ARCC has called for a comprehensive, in-depth investigation into the rules and regulations governing appraisals, AMCs, and the broader lending industry. As a trusted, non-partisan research organization, ARCC’s work is invaluable in shedding light on these critical issues and empowering both consumers and policymakers to navigate the complex landscape of appraisal regulations. Ensuring transparency in AMC services is a critical matter that directly impacts the safety and soundness of the entire mortgage industry, as appraisals exist to protect the soundness of our banking system and the interests of consumers – a responsibility that ARCC is determined to uphold through its rigorous, fact-based research and advocacy.
Click here to learn more about the Appraisal Regulation Compliance Council.
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AMC’s have been a pure “for profit” industry since they were established. Cheapest appraisers are getting all the work. These places have a department dedicated to finding the appraiser who will do it the cheapest and fastest regardless of quality. I reviewed for one of these companies and witnessed quality so terrible that I recommended not using certain appraisers because they simply didn’t get it. The company wouldn’t stop using them because they were willing to complete appraisals for $200 and turn them in within 48hrs.
This is the kind of thing we need evidence and testimony of regarding dates, names, etc.
Josh I am available to provide evidence from my story also posted here regarding the high costs of cheap appraisals.
https://appraisersblogs.com/uncovering-flaws-in-fha-appraisal-n-loan-review-process/
The old ‘preferred appraiser’ routine and ‘performance grading’ are flimsy pretenses to cover for preferential assignment in order to avoid complying with AIR rules. Independent professionals get graded out of their positions and told to comply with unreasonable performance expectations.
The amc industry circumvented the intention of AIR rules with several key approaches. 1. Never assign orders equally to all panel appraisers. 2. Use grading as an excuse to silently blacklist appraisers whom do not play ball. 3. Never honestly inform appraisers they have been virtually removed from active order participation or were somehow segregated to only complex work other discount appraisers would not accept. The approach is so popular, many direct assignment lenders whom do not use amc’s, now also utilize a similar operational practice of biased disproportionate order assignment.
All that is necessary to form better appraisal independence modeling, are requirements for all approved appraisers on any given lender or amc’s approval panel, to receive an equal amount of work in a rotational assignment que. (faster you turn them, faster you get back in line for another, aka round robin.) And consistent fees to all appraisers receiving assignments. Also separated amc billing, as the amc’s do not provide appraisals, and should be billing for the management service separately. Pressuring appraisers works, and works very well.
If we can’t accept that AMC’s are the enemy, we deserve everything we get. The bidding and accepting these fee’s is a race to our AI and AVM replacements.
Any appraiser that accepts a full 1004 assignments for $125 is pants on head absurd. You’re actively killing the appraisal profession, and running other good appraisers out, full stop. We are our own worst enemy, and until we realize that AMC’s are bottom feeding off starving appraisers they will continue to offer insulting fees.
This isn’t 2005. Like Bags said, don’t give in to the pressure. Know your worth, know what your costs breakdowns are, have some pride, and get yours.
The kick in the pants will be if amc appraisers are rewarded for all these years of complicit knowing participation in consumer fraud and get fee raises for their sub par amc work. I’m with PDM on this one; a total dismantling of the amc industry. Force rotational assignment nationally for all appraiser panels. Re adopt the missing component of HVCC that if an appraiser is to be removed from panel (or active rotation on the panel), the appraiser must be notified of the exact reasons in writing. Consistent fees and volume for all approved appraisers on panel for all routine assignments. If an appraiser is good enough to be placed on an approved appraiser panel, they should be able to expect consistent fees and an equal volume of work. Go back to the old model where there was a fixed billing relationship where 100 % of the exact amount the individual consumer paid for appraisal services, went to that individual appraiser completing the task. No more improper co mingling of fees and funds.
Missing the IVPI proposal yet?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf
It’s frustrating but not surprising to see the ARCC’s report highlighting how some AMCs are taking up to 84% of the appraisal fee. This isn’t just unfair to us as appraisers but also to consumers who are being overcharged without seeing any real benefit. AMCs were supposed to protect our independence, but instead, they’ve turned into profit machines that ignore quality and fairness. We need to push for real changes that ensure fair compensation for appraisers and transparency for everyone involved.
I just realized i spend more time converting appraisals to computer gibberish than on the appraisal.
AMC = “Appraisal Middleman Con”
(Most not all are) AMC= As*shat Micromanaging Cheapskates who harm consumers, appraisers, our banking system and could be harming our economy too.
Anyone else want to move to Connecticut? But seriously, these AMC actions are disgusting.
After billions of consumer dollars in over-charging and loss of income to appraisers, this could have easily been discovered had the appraiser been allowed to include an invoice with the appraisal or disclosed the cost in the context of the report. The AMC industry all said no, you can’t do that Mr. appraiser (otherwise the dirty little secret would get out). This in itself was a huge red flag. This is on the government institutions who have failed in their fiduciary responsibility to protect the general public from such egregious acts of greed. Everyone has been so hell bent on pointing the finger at the hen (appraiser), they forgot, or purposely didn’t look at the fox. The current process has been proven to be riddled with greed and needs to be scrapped. AMC’s need to be dismantled, just like what they are attempting to do the appraisal industry and return to a system of monitored checks and balances. In 40 years as an appraiser the industry is more screwed up than any other time in history and not at the behest of the appraisers themselves, I might add. The system has gotten far too complex leaving the door open for culprits like the AMC’s. Appraisers should not be at the whim of an AMC as to what they are paid, being graded unjustly, being beat-up on price and the list goes on (much of which is illegal as stated in the article). These are the same people who are screwing everyone over for heaven’s sake and have little to no morality of conscious. Yet, someone thinks it’s a good idea to put them in charge of appraisers? BS. This article proves it is simply a cash-cow to them and they are laughing all the way to the bank. Ya know, every day we read of attorneys and doctors doing the unspeakable to their clients, yet they don’t have a middleman to protect everyone’s well-being they report to and negotiate fees with. (Perhaps they should have their own form of AMC tailored just for them also?}. Nope, only the appraisers do. Sound unjust, yes, it is. Again, the AMC’s have squandered their usefulness as they have proven they are not trustworthy and are selfish opportunists. They can’t be trusted with 10 cents let alone an entire mortgage industry. This should be grounds for a complete revamping of the system and elimination of AMC’s.
Yup, one of the ones in oregon I submitted. I clearly relember the shock of that order, especially when I do direct work for the cleint there were apparently “helping” These are the worst offenders of this, clearly. All collusion to get the maximum profit to keep their AMC afload in the downturn of real estate activity.
Ohh and now NFHA and HUD are putting up billboards and signs in airports about “appraiser bias” .
Great job Josh. I think it would be a nice piece of data if somehow you could report what the median fee paid by the consumer was prior to AMC’s in comparison to what the median fee is now. In addition to the ridiculous profits, AMC’s are now charging consumers considerably more pre Dodd Frank and HVCC. Basically AMC’s are not saving consumers money, in fact, consumers are paying more.
As we get more data we will see what we can do here. I do have fees in our records from 2015, 2016 which are higher than they are now for appraisers but not many examples. The more we get the better.
Josh, I think I can get you fees for a couple offenders as I have them in my email archives.
AMC’s screw Appraisers and we are blamed for higher fees. This profession has been a tail wagging the dog for decades. It has and is destroying public trust in our profession. Hello retirement coming very soon. Can’t come soon enough. So sad to end it this way.
Am I understanding that the ARCC is looking to govt individuals to rectify a problem that govt created? If govt cared they wouldn’t have created AMCs in the first place. I guarantee that every AMC can be tied back to someone in govt who voted for this to occur. “I’m from the govt, and I’m here to help.” Same thing, different decade. This story and the data are presented well, but I don’t see the cause being the solution. Good luck.
AN APPRAISAL FAIRYTALE –
The purpose of the AMC was an effort to separate the “bad” appraiser from the lily white mortgage brokers. It was just another situation and as always it was the bad appraisers fault. They believed this was the solution never counting on the AMC’s to become the bad middlemen. With no real oversight on the AMC’s bad players showed up and wanted their fair share. Seeing the AMC’s were ripe for picking, they set-up shop. They found ways to hide their devious plan from everyone. Appraisers were being told, in a suttle way of course, to not complain or they would get the axe. The dutiful appraisers, being afraid of not being able to put food on the table, fell right into shape. Once they got the appraisers in line they came up with this great idea of pitting appraisers against one another by putting assignments out to bid. This was a hugly effective move because they could use the lowest bidder, tack on the addional appraisal cost then jack the whole tidy package total up to 60, 70 80 percent. Oh, they thought, we are so clever. We are not only screwing the appraiser, we are screwing the consumer and no one has a clue. We are protected by the US Government who hasn’t a clue of what we are up to because of course we are the golden boys beyond reproach with no real oversight. HaHaHa, this is brilliant as they were patting themselves on the back. But then, when appraisers finally were fed up and being attacked from all angles, they actually started speaking to one another about how they are made out to be he criminals while all the time it was an industry they knew were the criminals violating the law and overseeing them. But foolish regulators did not want to hear what the front line bad appraisers had to say because they are untrustworthy so they went to the lily white AMC’s for feed back. Unknown to the AMC’s a new Sheriff was in town, Sheriff ARRC. Which leads us to today. It will be interesting to see what the regulators do about this “misunderstanding”. There will be a lot of finger pointing and I’m sorry, didn’t mean any harm, we all know how it goes. Don’t be surprised if in the final outcome somehow the racist, biased bad appraisers are all to blame. The end. I hope you enjoyed this brief fairytale.
In 2007, HVCC rolled out and many mortgage companies (big and small) found a workaround and very profitable solution by creating their own AMC to funnel their mortgages. They discovered that not only could they continue to control the entire loan process start to finish, but could be very profitable and market to other users in need of an AMC.
I can name two here in CO that did exactly that.
A large mortgage company hired a 3-person team to set up an AMC from their mortgage loan production staff. It was constructed as a separate LLC, and on the surface appeared to be completely above board. This was a good client that was on a rotation style panel. Overnight, they then went from paying $375 for a full 1004 to $250. A lot of starving appraisers were forced to take these fees due to the slowing market. Appraisers were told the decrease in fees was for the AMC, shut up and be happy you have work.
Then the phone calls started from the borrowers inquiring why they were getting charged $750+ for their appraisal.
The only real recourse since then was Colorado HB 12-1110, which states the appraiser must disclose in the appraisal report the fee paid to the appraiser for a residential real property appraisal, if the appraiser was engaged by an AMC. All this did was confuse and anger the consumer who didn’t understand who the AMC was, or why they are needed, and why did they get charged more for an appraisal.
Starve the AMC’s, and choose your clients wisely, get paid what your worth.
What we need is to make a separate addendum page called APPRAISAL FEE DISCLOSURE STATEMENT!
Make it a separate and distinct page of the report.
If anyone demands you remove it….. Bingo!!!! Violation of Appraisers Independence!!
And it more accurately illustrates what the hell is going on!!!!
You win best seller of the year. Oh how sad, but oh how TRUE! This fairy tale is Fact not fiction. Good job! ?
PJTC, All true. They got greedy, took too much. As I like to say on this blogs; amc’s don’t want just a cut they want the entire pie. Their lack of oversight allowed workarounds and market capture in more than just the valuation space too, they used the surplus funds taken from the appraisal industry to enter into several other industries related to mortgage lending as well.
Probably not a coincidence that Corelogic bought Alamode and subsequently was able to pressure them to shut down the AA Appraisal Advisor program briefly before that period of amc industry capture of the majority of appraisal requests from lenders. As appraisers may recall, the AA program was specifically for appraisers so we could network and provide reviews about amc companies among each other.
ARCC if they wanted to expand the scope of services could also create a publicly searchable database by all appraisers, where we could review all types of clients whom send appraisers orders.
Found this one on the way back machine a while back. I was trying to find those same functional pages that AA had put up as the first rounds of appraiser client reviews were coming in, then it was all shut down almost immediately. Appraisers were waiting in line to sign up and were really inspired by the concept.
When is the amc industry going to finally be audited? If the original spirit of Dodd Frank Reg Z on Customary and Reasonable market rate billing was upheld with the $10k/$20k daily recurring fine for amc’s acting as agents of lenders, this has the potential to be the largest class action in American history.
Another AA photo.
And another. That’s all I have, three images. Wished I would have saved some of their site data. Anyone else have old records or material from AA?
Yes I do remember that service and it was short lived. I think a class action suit would be so awesome and a good case to win! they should pay all Appraisers for billions in lost revenue. Who can we hire. I am on board.
Unfortunately the government write the laws. They are the only once who can fix their mistakes. But, we also are not operating the way we have in the past…..oh no. We are going public with evidence so it can’t just be swept under the rug and hidden. We have a lot of fun plans for what we will be investigating, compiling, and presenting to the public, regulators, and officials.
I sent the report to my Congressman….maybe a politician trying for reelection would welcome the publicity and gain some fame? Maybe we should all send in the report to our Representatives in Congress?
its OBVIOUS what’s fueling all of this BULL SH*T are AMC kickbacks to lenders.
THATS THE DIRTY LITTLE SECRET
Why would any LENDER put up with this otherwise long term?
We need to hire the same Attorney that busted up NAR.
We are entitled to MILLIONS in lost compensation.
IF Y0U VOTE FOR KOMRAD KAMALA YOU CAN KISS YOUR APPRAISAL CAREER GOODBYE
We are in contact with that law firm
What does Kamala Harris have to do with the hijacking of the appraisal profession (which took place in 2009)?
Answer: Nothing. There is a cure for TDS (Deranged Trump Syndrome)… it’s called prison.
Anyone who didn’t kiss their appraisal career goodbye in 2009 has obviously been living off of a trust fund or mooching off of a spouse.
Leftists destroy everything. That’s why.
Not taking sides, but it’s glaring obvious that the current administration has gone out of it’s way to kill the appraisal profession in any way possible, starting with HUD and their DEI initiatives and continuing through the NFHA. If you haven’t read all the AB articles here you’re not paying attention or just ignorant.
However, the fact that you’d like to see citizens jailed for the political beliefs speaks volumes about you.
There must be nothing better to do in retirement than sit around and complain about your old job and shout at clouds.
For a minute I thought sanity had returned and he said the cure for TDS. Like having finally gone through some personal effort to consume less fake news propaganda. Nope. He’s still hooked in.
Retired, want to play a game?
SO Why are you surprised??? Again what are WE as an industry going to do about this? …TALK???
Seriously, who didn’t know that the appraisal industry was being degraded/destroyed from the get-go when this so called “firewall” of AMC’s showed up? It was nothing but a financial scam/extortion from the beginning.
Such greed with these AMC‘s. 84% gross profit margin is ridiculous. Most people don’t care about the Appraiser but this is ripping off the consumer and the appraiser.