Appraisal Bullying, Still Going Strong!
It’s time to stop appraisal bullying for good and put some teeth in any new law.
Even today there is undue pressure being put on appraisers to make loans work. All the new regulations in the appraisal industry did nothing for the bullies who work for AMC’s now. It’s sad to hear veteran appraisers talk about the way they were disrespected and treated unprofessionally, and how they are making plans to leave the industry. It happens every day in appraisal forms and blogs all across the country. The bullying and intimidation is as bad now as it ever was before.
This would never happen in any other industry and there is obviously a huge discrepancy between how appraisers are trained and what the mortgage industry expects from them. Appraisers are taught from day one; protect the buyer, lender, and mortgage investor. Make sure the value is fair to the best of your ability. 100% imbedded in every appraiser’s brain; be ethical and fair, you are there to protect the public and are influencing large financial investments. Then they discover this is NOT what lenders want. They might say they do in public, but their day to day business operations tell another story. The lenders and AMC’s (who pay the appraisers) often could care less if the loan is secure, not their problem. Make the loan, get paid, and let the next guy worry about it. Sound familiar?
So, what has really changed? It appears not much in the mortgage lending industry. Oh, except for the fact that prior to the HVCC each lender handled appraisal ordering and reviewing, and paid their own appraisal related expenses. Now, they pass that expense along to an AMC, who in turn takes it from the appraiser. Yet consumers are paying more than ever. Not because of appraisal fees, but due to AMC increases, which are conveniently listed under “appraisal fees” on a closing statement. I’m still amazed that lenders do not have to disclose AMC fees to consumers. If they are not trying to hide something, why would they care about having their fees disclosed on a closing statement? Every single fee related to the home buying process is listed on a HUD1. All except one; AMC fees. It’s a flat out deception of the home buying public.
Let’s call a lemon a lemon. AMC’s are not in the best interest of the public and basically add zero value to the mortgage lending process. Far too many AMC’s are all about getting appraisals done faster and cheaper. They force appraisers to complete work so fast it has to hurt quality. Then, the reports lay around on some lenders desk until the rest of the process catches up. Do we really think the lending process is any faster now than it was prior to the HVCC? No way, it’s slower than it ever was, and it is now obvious the appraisal has no bearing on the speed of the lending process. Getting appraisals done cheaper only helps AMC profits. Appraisers have to do more work for less money, so what do you think happens to the end product? Try this process at your job, more work for less pay. It’s a system doomed for problems. And, those problems only hurt the consumers who we have been led to believe they are designed to help. There’s no logic in this process. It’s all about profits and power, certainly not consumer protection.
The bullying and intimidation is as bad now as it ever was before.
Appraisers are being harassed and threatened by untrained and unlicensed people (often in another country), that understand little or nothing about the appraisal business. They only know forms, distances and percentages. They expect perfection from a system where perfection is not an option. Real estate will never be a form filler, computerized process. At least NOT if you want accurate results. The AMC’s goal is to find a way to force the appraiser to make the loans work, whatever it takes. There are even appraisers being blacklisted for not accepting their low fees. AMCs are bullying appraisers by saying you will work for what we tell you, or we will make sure you don’t work for anyone. That’s absolute intimidation and it should be illegal. But wait, it is illegal, but no one enforces it! File a complaint and an appraiser will never work again.
How about an in-depth study by one of the television news shows looking into AMC practices? If the public knew what was happening and what they were paying more for, they would be outraged. And, they should be. The only ones being served by AMCs are AMCs (and big banking). Oh yea, remember the Golden Rule? This is a perfect example. The ones with the gold (big banks) are making all the rules.
AMCs are bullying appraisers…
Why teach appraisers to be so ethical and hold them to such high standards, when the people that pay them don’t want them to be that way. Talk about a communication gap! There needs to be an appraisal product that lenders actually want, that still protects consumers and mortgage investors, and that allows for some common sense back in the appraisal process.
For the appraisal industry, and most importantly for consumers, AMC’s don’t work as promised. The home buying public receives zero benefit from an AMC controlled appraisal industry. The only ones who win are the banks (who no longer have to pay for appraisal management), and the AMC’s (who literally got business dropped in their laps the day after the HVCC). They did NOT earn their place in the market, one government official gave it to them.
When will it stop? When one politician stands up and says enough is enough. Remove the HVCC and Dodd-Frank from the books. Good try, but didn’t work. We are no better today than we were prior to the HVCC. Focus on lending practices and let appraisers do what they have been trained to do, the right way. Give consumers an unbiased appraisal and give the appraisal industry back to the people who actually care about doing things fairly. After seeing all the fines and penalties placed on the banking industry the last year (in the BILLIONS), I think it’s clear that the focus needs to be on the banking system. And after that, we need to take a look at Realtor® quality. Remember, appraisers are only as good as the data they rely on. The MLS is another story, but is also is a large player in appraisal quality. It’s time to stop appraisal bullying for good and put some teeth in any new law.
- No Appraisals Required. The End of Appraisers? - March 9, 2023
- Is ANSI for Appraisers Really the Answer? - November 18, 2021
- Statistically Supported Appraisal - June 9, 2021
If you don’t bring a property into value, you will see a revision request, wanting an explanation why? And you will not see another order either.
They chose a more crafty way of seeking a higher number with us. After spending three days on an incredibly tough assignment we were hit with a list of some 35 comparable sales the next day from the AMC. The note simply stated please evaluate each of these comparable sales with regard to your appraisal and submit comments about why each one was not used in your appraisal.
We evaluated them promptly by copying their idiotic request and submitting it to the proper authorities with the statement claiming that it was an attempt at change the final value of the property.
The AMC refused to pay us for the assignment at that point and we then sued then in court winning twice the original cost of the appraisal. Thankfully that AMC went out of business within the year. I am now thankful for that particular assignment because it provided me with a glimpse of the future of appraising. We closed our doors within months and headed for fields of gold, leaving the fields of rust to younger lesser inexperienced appraisers.
An Opinion of Value below the Contract price will result in a (or more) Reconsiderations of Value, insults by the realtor and, in many cases, a frivolous complaint filed to the Appraisal Board. We are held to extremely high standards but are fought every step of the way.
But the article on this same website just before this, told me that 95% of all appraisals should come in at purchase price, almost as a defacto standard. LOL! / Great article here. Illustrating the process of backwards rewards and that rewarding advocacy is still present. Want accountability? Originators and salespersons must be held accountable. Absent of fines based on income, citizen and governmental enforcement simply cannot afford to prosecute. That or eliminate the secondary government avenues for loan packaging and resale. Skin in the game and such needs to be 100% and no less. As neither of those are really feasible at the moment, I’ll continue to argue for mandated rotational distribution panels, uniform fees for all appraisers on panel, and equalization of the distribution process. The root of all evil when it comes to appraisal distribution, is the art of preferential assignment. If you’re an advocacy minded appraiser, you will get more work than the next guy. That simply should not be a permissible action.
Appraisers need to straighten themselves out and realize that they should be thanking the AMCs every day for cleaning up all of those error filled nonsensical appraisal reports.
Baggins, I think you’ve won me over (mostly). I don’t like flat fees for us anymore than I like them for AMCs from banks ($495) nationally. Having said that; IF we set up a multi tiered pricing system, it could work. $650 for a non complex, FNMA conforming loan limit SFR; $850 if “complex” and $1,000 IF the proposed transaction amount requires a certified residential appraiser OR the AMCs policies make that a requirement (we’ll see a LOT more work open up for licensees this way). Anything over 1.5 goes up $500 for each increment of $500,000 ESTIMATED value over 1.5. presuming that the degree of difficulty USUALLY increases among higher priced housing (better than the current assumption which holds they are the same as a $200,000 house in terms of complexity).
The numbers may vary, but if the result is something that approximates equivalent federal pay scales for appraisers, them Im ok with it.