Who’s going to clean up the primordial ooze the amc executives left behind?

There will be no ray of sunshine in this industry until the amc racket is reigned in and brought to heel.

Deborah, how are the Board of Directors lining their pockets from our dues? What a crazy assertion to lob out here with no evidence to remotely support it!

While I’m no fan of AMCs and have never done any AMC work, I know several Board of Directors and can confirm it’s currently a thankless volunteer effort on their behalf. Yes, there are clearly executive leadership issues that need to be accounted for promptly, and that the board has done their best to uphold accountability as they did a few days ago.

While I’ve not been on the national board and from this recent board experience, have no desire to ever pursue now – I have volunteered extensively at chapter and regional levels, and can assure you that there is no pocket lining going on with the chapter or national board of directors. It’s pure volunteerism to promote our profession, promote us, and promote our colleagues and peers. From my personal experience at the chapter and regional levels, the only pocket lining going on is gaining great friends and peers to offset the lost time and missed income.

While its important to recognize and promptly account for past organization failures and shortcomings, let’s stay positive to promote solutions for our organization, including our current membership and forthcoming AI memberships. The Appraisal Institute will be around long after we are gone and as designated members let’s strive to give back to it, what it has given us. Onward and Upward!

Your disagreement with designated appraisers is way off. As an MAI who received my designation in 1990 after 11 years in the field and doing commercial and residential appraisals and reviews now for 45 years, I have paid dues to an organization that has Board of Directors in bed with AMCs, and profiting on our dues to line their own pockets!

Please understand that just a license is not equivalent to a designation from a major appraisal organization. The education and training necessary to perform credible reports is more advanced than for non-çompllex properties. You come off as jealous.

Although I am not supporting the AI now for their corrupt and male dominated organization. I think the educational courses should be moved to college and university so we can earn our Degree rather than be held to high standards and ethics by crooks profiting and double dealing when it comes to secrecy clothed in privacy concerns. Go for quality! Throw out the opportunistic Board!

Baggs, Traditionally, appraisals are not ordered by loan officers or processors until after ‘subject to’ approval has been granted by the actual lender (as opposed to their correspondent ‘lender’.

This isn’t the BS “pre-approval” letter that the L.O.s type up and issue themselves. It’s the actual funding lender approving the loan three days before the scheduled closing.

As for ROV’s it’s a double edged sword. A necessary one if borrowers are to be treated fairly at all. Appraisers DO make mistakes.

As practiced though, 75% of ROVs are either nitpicking info requests for items already in the appraisal. That in turn is often used as a ‘cover’ or excuse to make value related adjustments “since you have to correct xyz anyway”.

In its worst application ROVs ARE used to illegally pressure appraisers to raise a value. AMCs are purely advocates for lenders. There is no impartiality invovled.

Drive the consumers cost up, drive the vendors charge down. Do not return cost savings to the consumers. The amc industry does not even bother hiding this anymore. Because there is no enforcement for clear as day violations of multiple federal rules. There are appraisers in the back pockets of powerful lending interests as Dave said, and they all work for amc’s as discount volume request full fillers or work at the management level of the appraisal management companies these days.

People looking from the outside in really don’t grasp the scale of the problem. There are amc’s whom prefer to send appraisal requests only to appraisers whom use that same amc company’s ‘appraisal typing services’. Basically this is signature sharing. Just about every appraisal assignment software platform out there has adopted a code and effective structure which integrates automatic features that allows for easy manipulation and alteration of assignment workflow volume based on (you guessed it) fee and turn time alone. There is no limit or effective logical restriction, however many the appraiser accepts, is how ever many the systems continue to send.

Then on the back side the same companies sell appraisers ‘acceptance management software’, which allows appraisers to violate many ethical rules as well for ‘instant acceptance’ of the maximum amount of orders. It’s marketed as a one stop place to manage assignment volume from multiple distributor outlets. In the real world they’re cleverly masking extremely disproportionate assignment volume based not on quality of service, but the appraisers violation of the management rule; providing a thing of value to the client in order to be the preferred appraiser for the appraisal assignment.

Then the appraiser has taken in far more than they can effectively fulfill. Not a problem. Enter the myriad of third party ‘appraisal typing services’, often third fourth or fifth party overseas services, requests farmed out again and again. GLB on consumer privacy and worry about repurchase or consumer harm be damned, each one of those is instant profit for the appraisers whom follow this model. They’re using third world fulfillment overseas quite often. They’re tying the appraisal development service into the same networks of people that the amc’s use for third party overseas discount appraisal management service. Think Ocwen, Corelogic, and the list goes on.

The majority of all amc’s out there are standing by enticing appraisers to use these models. That’s where performance grading comes in. Only the appraisers whom are cutting every available corner for the most minimal possible appraisal fee can climb up and stay on top of the tiered performance ranking ladders amc’s impose. It is how the amc’s sort away ethical appraisers and sort in and entice appraisers willing to play ball, advocate for clients, and provide the greatest thing of value to the amc; Expedient volume fulfillment at the lowest possible price. All the management software platforms code in the peramiters to make this easy and automated. What they do not do is protect consumers or demand compliance with appraiser independence by prohibiting the practice and forcing round robin assignment patterns.

Because in professionally developed appraisal, you can’t flip four or five a day even with a decent staff unless you have a fully functional system of active appraiser apprentices and administrative help under that appraisal firms own roof. We run across a constant stream of challenging orders that can take a week or more per individual order. At best even a simple appraisal request still takes six to eight hours to complete in most practical circumstances, factoring in drive time, etc. The time allotment varies by location and the type of real property at the local level, so variance is constant. But if you’re an appraiser using signature sharing, typing services, third party help, auto acceptance software, comps sharing, and a myriad of other technological sort of cheat the system tools, compartmentalizing every aspect of the appraisal process and diminishing the oversight and credibility of the process to the maximum extent possible, then you can provide a rock bottom discount rate in order to capture the lions share of the amc’s appraisal orders.

Being that lenders are also required to use these automated systems to facilitate compliance with the ‘separation from mortgage loan production rule’, the normalization of disproportionate assignment volume is the new status quo. The VA system serves as the last proof point that round robin distribution provides better protection for consumers, as the independent check and balance system of rotational assignment using full service appraisers does result in more re negotiations and less finalization at avm prescribed value peramiters. That’s one statistic you’ll never get to learn about; The over all closing ratio for the lenders whom are required to follow the VA model for some borrowers, and the even higher closing ratio those same lenders enjoy when using an amc assignment model outside of the VA systems.

Thank you Appraisal Coach Dustin Harris for being the pioneer in this field of how to capitalize applied restriction of trade on the appraisal industry to get truly rich taking everyone elses work availability out from under them, playing a part in destroying far more small businesses than the alternative model ever could build up, and selling the model far and wide. He’s really just an early adapter of what the amc trade groups TAVMA and REVVA both promoted.

Because lenders at the top of the ladder know very well amc’s compete for the lenders business. The amc has to provide ‘better service’ to lenders, if they want to keep their share of the appraisal assignment volume, and subsequent junk fee raking profit. They”ve all maximized the model to compete in this regard. ‘valuation security’, ‘appraisal independence’. Look at any given amc’s website, they pander and solicit to lenders, with various testimonials from commissioned agents they’ve kept satisfied and happy. ‘The appraisal process could not have gone smoother.’ Then take a look at MLS data for initial listed price vs final sold price and observe the remarkable and consistent variance in ratios. Price is not the same thing as value. But according to amc’s, best appraisal service is when price is indeed the same thing as value. Amc’s do not provide separation from loan production. Amc’s are loan production.

The amc’s all copy this language and rule making scope direction for appraiser vendors, then comply selectively except for the base minimum which does not matter anyways, because they’ve already circumvented the very reason for independent appraisers in the first place. That’s why the amc industry canned the previous TAVMA amc trade group lead person and top manager; Jeff Schurman with his cost plus full fee hypothesis white paper. Because that guy actually wanted the amc industry to fulfill it’s intended purpose of expanding appraisal independence and expanding insulation from lender pressure. He signed his own walking papers when he made serious proposals to follow the spirit of the DF Reg Z rule on Customary and Reasonable market rate compensation to appraisers ‘as if no amc is involved’, via a cost plus billing model where the amc charges a distinctly separate fee for a distinctly different service, rather than continue the improperly co mingled amc and appraiser fee structure.

Instead what we have now is an amc system that panders to any and all forms of lender pressure and every appraiser who’s still in the amc system knows exactly how the game is played. With a rare few actual independent appraisers imagining there is some independence or credibility to amc systems, as they occasionally spin in and out of the amc network for complex side and challenging work the amc’s can not otherwise fulfill with their target 24/hr/48/hr, maximum discount play ball number hitter maximum assignment volume preferred top ranked amc appraisers.

So yes, amc’s do pay appraisers market rate fees in some instances, when they have to. Because paying those fees is a protective defensive measure which serves to protect the amc’s market position and existing client set. But the fee is not directly tied to the consumer anymore but rather a part of a group funds pool. When any appraiser wrestles a fair fee out of an amc, the amc in turns applies additional pressure elsewhere to recapture the profit margin. Even appraisers whom get fair fees out of amc’s cause a sort of indirect harm even if they’ve done nothing wrong themselves and only accepted the orders to stay afloat and working for another day.

It’s those same appraisers whom perpetuate the amc model, because if the amc’s could not fulfill all the tough work, they’d lose access to their market share of the majority of easy work. Three out of four appraisers refuse to work with amc’s due to these unethical exploitative processes. They may not always be able to clearly elaborate why, but they understand from basic life experience, this is not how fair or ethical business modeling is supposed to work.

Amc’s have strategized with lenders, they’ve all seen this coming down the line and have co opted appraisal trade groups and other institutions, up to the gse managers in anticipation of installing a new model where the amc no longer even needs to pretend, and instead utilizes fully automated or fully controllable process to capture even more market share with less long term liability exposure. ‘Stake holders interests.’

There is no longer any distinction between amc’s and lenders, as amc’s are legally defined as agents of the lenders. Their true form and purpose now materialized and apparent. The urgent need for all amc’s to be regulated independent of appraisers is also apparent. There is undeniable conflicts of interest and oversight shortcomings with amc’s being regulated merely as appraisal management companies by state appraisal oversight boards, with an amc member on appraisal oversight boards, when the amc’s business reach and coverage extends so far beyond just appraisal management. Also being in a constantly antagonistic and opposing state regarding appraisal ethical rule compliance and appraiser independence guidelines.

Tie the entire picture together. How a long series of steady regulatory changes has compromised the system and nullified the intent of far reaching previously established regulatory guidelines. That’s where the avm final rule, automated valuation modeling subbing out human appraisers, expanded appraisal waivers, a risen lending demins at $400k up from previous $100k levels, so full service appraisal demand and practical consumer protections applied via the traditional appraisal process is a fraction of what it used to be, hybrid appraisals, third party property data collectors, convoluted difficult to understand and use interactive new appraisal forms being developed, and the PAREA alternative pathways to appraiser licensing without real world hands on ethical experience training comes into play.

All work arounds to diminish or eliminate independent checks and balances and effective oversight, aka; requiring independent appraisers presence to prevent fraud and maintain the stability and safety of gse based mortgage origination and access systems for the benefit of the public, aka the gse’s congressional charter mandates. The steady regulatory work arounds are also known as; ‘Appraisal modernization.’ The lenders don’t want amc’s to control just a piece of the pie, they want it all. They’ve made a play for the VA panel before and by a stroke of luck did not capture that market as well. Military service members still get some measure of reasonable consumer protection, if one ignores the fact VA appraisers are already using polluted sales data generated by the other gse systems. The general public; good luck, they’re going to need it.

It’s such a shame because there are many good people in the system in all sectors, but they simply don’t steer these policies or find themselves able to effectively navigate or effect the continual policy alterations. Directing safe and sound ethically compliant process regarding appraisal practice is supposed to be under the purview of appraisal trade groups. Unfortunately as we have recently learned, but always knew was happening anyways, the people in the top chairs are adamantly pro amc in their positioning and business interests.

That or they simply don’t care and would never rock the gravy train, being financially compensated at levels far greater than other bureaucratic positions throughout government. Wrangling the cosmic cobra to the stars and beyond. Who knew that the simple act of overlooking state based administrative procedural rules to generate continued book sales could be so profitable or gain select groups of people such astounding levels of influence on public policy that effects peoples housing and financial positions through the entire country? Sometimes truth is stranger than fiction and we often wonder if they’re resolute secret geniuses, or just got lucky, benefited from dumb luck and inadequate oversight.

They’re coming for all your guys and gals legal and government work next. What happens next is a new status quo as people acclimate and accept a non negotiable mandatory new approach where avm’s become commonly accepted as core lending utilities to fully replace appraisers. The industry long since already accepted the mid way point where avm’s provide target estimates for lending deal structuring and TRID form filling compliance, as the appraiser is no longer used for comp searches or basic acceptable market value range estimates which used to be the most common approach on the front end for lenders to structure deals around.

It won’t be long now until this new process will extend far beyond gse origination. People won’t even question why they’re not using full service human appraisers anymore. For those whom are still in demand somewhere, most likely legal, the value of their service will be diminished by the illusionary belief artificial intelligence is a reasonable substitute because the systems use advanced mathematical principals. People will not understand the concept of data cancer, that the use of automation for gse sectors has already led to manipulated markets and unreliable base data the AI systems are analyzing. AI systems after all, their core utility is; training the model via existing data. And guess who is going to provide the proprietary avm utilities to lenders, eventually reaching to other sectors, using unlicensed property data collectors for the basic property inspection needs…

Seeing how this works yet?

Many senior appraisers when I was newer used to talk about these things. They got together and made a serious effort to implement a system similar to the VA model for Fannie, Freddie, and I think also HUD. It was called the IVPI proposal. It was not perfect, somewhat overly complex, being a proposal referencing major disruption at the time. Still far better than the exploitative amc system that effects the entire country today. They’re only ‘managing appraisals’, where is the actual problem?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf

I don’t know, our experience was a little different. Yeah we gladhanded for work but the underlying pressure or preference was easy to identify if present and just as easy to avoid. It’s those aggressive people whom ruined it for the rest of us and broke the model. The part most people whom continually want to correct the system do not understand; There was a valid and effective set of mechanisms to prevent and correct those types of problems. Up the ladder the underwriting department and GSE review process used to cut out the appraisers whom were there just to hit the number. They were dis approved, set on the do not use lists, eventually had to answer to repurchase or state boards, even civil claims.

There was always a continual stream of independent field reviews and if lenders were being honest regarding the process, they’d be required to reign in the aggressive actors. Then additional layers of similar activity of review tracking and scrutiny at the GSE levels with even higher federal level oversight to force them to be honest. Then even higher there were rolling task forces from the highest levels such as the doj and fbi whom would identify then penalize people for any and all forms of financial fraud. These days that’s not happening except for rather extreme circumstances and the industry has adopted this new status quo that the appraiser is to make deals work and pay to play in the amc realm or we’re gone. The moves towards automation have nullified the vast majority of previously implemented and effective safeguards. ‘Modernization’.

That’s the main point; Equally distributed round robin assignment for full service appraisal at consistent fees is the core mechanism to utilize the maximal utility and safeguards the independent appraiser provides. We kept them honest and prevented so much problem before it could materialize or spread. When these companies send disproportionate volume and skim off the top, that activity nullifies the very reason for appraisers to be there in the first place. For the past many years the ‘reperforming loan’ program aka fnma wholesale has swept up all the problems instead of utilizing the systems to identify and cull, cutting the appraisers and management companies out of rotation for being part of producing such disproportionate volumes of faulty over valued and eventually non performing loans.

Neverending red hot printing press and fiat money creation out of thin air also plays a part in masking the problems. When numbers continually fly upward so fast for so long, why should people care about the few percentage points of constant over pricing and over valuation? Everyone that gets paid looks the other way. Then again, the inevitable result many warned about is finally knocking on the door. A housing bubble, affordability crisis, availability crisis. Entire generations locked out. The pollsters now consistently report that general public sentiment for financial outlook continues to erode, that despite higher pricing, most people feel they have less economic potential and more financial instability than ever before. Current status of GSE managers; tap dancing on a bubble, cigar and whiskey in hand.

Post this again I suppose…

I would be a little concerned with how they are assessing the proper workload as they are not privy to all that I do. Interesting part of the idea presented. That said, not sure I see this gaining traction because they have a lot of money and a LOT of influence. Way more than we do since they have been taking our money for years. Am I the teensiest bit bitter? Yep.

When you earn an MBA, PHD, and etc. these qualifications travel with you for life without paying a big yearly ransom to keep what you have earned. For many reasons I recently dropped my designation with the AI which I had for 30 years. While is doesn’t matter now because the AI is doomed, the designations should have been life long – non-ransomed qualifications. In hind sight I would have finished my MBA and pursued a PHD in finance or economics or similar – which would have likely opened other career doors. I wasted my time and money with the AI.

Screw the AMC’s.

Seek the truth.

Yep, that’s it. In retrospect the comp search model with direct contact with an appraiser and mortgage broker was far better. There were better ways to stop lending fraud and appraiser pressure than injecting amc’s into the process. All they had to do was prohibit rampant value shopping and stop the abuse of the process where the appraiser with the highest estimate got the deal, and nobody else got any service fees for their time. A rotational panel with value estimates on the front end provided by a human appraiser would be far superior to what we have now.

Because when a borrower came to the MB, the MB would know their appraisers rather well from dedicated long term working relationships and personal conversations. They could better estimate service fees and turn times, readily adapt on the front end before all the other services were paid downstream of the appraisal, if necessary.

Also the mortgage terms would be structured around the general range of estimated value before hand. This would result in better more functional loans, much longer appraisal turn times (think three weeks instead of three days at the very end of the process), and far less pressure placed on appraisers. All of which is better conducive to an appraisers small business needs. We can’t run our businesses around a question mark of how much we’ll get paid or how often we’ll work, which is a key reason amc’s decimated the industry and three out of four appraisers refuse to work with them.

All this ROV nonsense is nothing but institutionalized value pressure brought about by a dysfunctional process where nobody bothers calling the appraiser until the very final tail end when the pressure is on everyone and all other fees are paid. Somehow then the appraisal must fit into place or else; blacklist the appraiser. It was a much more consumer safety orientated process to get value estimates from licensed appraisers rather than avm’s, and to get those up front with a direct and transparent fee quote.

Amc’s created havock with their improperly co mingled fees and combined billing pools which incentivize maximizing profit via fee shopping and subsequent fee skimming junk fee raking. The model of 100% of the consumers appraisers fee going 100% to the appraiser for each individual deal was far better. Nobody was subsidizing anyone elses service costs or making bone head incredibly risky appraiser selection decisions based on fee and turn time. And under that model guess what; Nobody was using outsourced services either, lenders and consumers alike were able to have more confidence and reliance in the appraisal process, and there was far better GLB data privacy compliance. These days a customers data and personal home photos go literally around the world to fill out a two page hybrid appraisal report. It’s pure chaos and totally unsafe. Half the companies providing these third party services come from areas known to have institutionalized data theft and scam rings as an accepted business model in their respective countries. ‘Appraisal modernization’.

The real issue is that the current system WITHOUT EXCEPTION is a matter of price fixing in violation o the Sherman Anti Trust Act.

Lenders have already ‘negotiated’ the maximum fee that they will permit their AMC to charge. Long before a specific borrower walks in the door. They have to give the borrower a GFE when the application is taken. Again, before they know who any appraiser will be, and before that appraiser can possibly know any specifics on the property involved, or complexities of issues involved.

Low appraisal fees are a competitive loan issue among lenders. Loan Officers need to be able to cite appraisal costs (contrary to Dodd Frank) when they take an application. They don’t want their borrower saying “your competitor down the street only charges xyz for appraisals,.”

Any solution to this price fixing has to start with a “Cost Plus” AMC fee; and Congress needs to remove appraisal fees from TRID (TILE/RESPA) ‘set in stone’ closing cost estimates.

NO AMC knows how much I will charge for a specific complex assignment. Hell, I don’t know what I am going to charge until I research it and understand all the issues involved.

I just bid $10,000 to $12,000 on “an SFR” last week. Half is because it requires spending days in the county it located in (12 counties away); the remainder because that “SFR” is also an acreage parcel with a historic 150+ year old sfr, various outbuildings and a HBU as a business venture involving emblements. The client didn’t dismiss it out of hand, because so far they hadn’t run into anyone that COULD and WOULD do it. Admittedly, this is an extreme outlier/exception.

MANY jobs are complex by their ownership rights; permits, other uses, unfinished construction, etc.. Jobs for which a predetermined fee of $650 is simply not adequate. Fees that should be in the $1,000 to $1,500 range wind up getting shopped until a desperate, starving appraiser will take for less than the job calls for.

Back east (midwest too), net fees to the appraisers as low as $225 are often found. Quality and credibility aren’t usually elements found in the scope of work for such lowball fees.

Old axiom in the restaurant business. “Never leave a starving man guarding the buffet table.”

Dodd-Frank realized how important this is when they mandated Reasonable and Customary fees for appraisals. Too bad no one other than Louisiana tried to enforce it. A dishonest and wholly corrupt FTC put an end to that!

I choose not to do GSE work, and most AMC work (One or two pay my fees on an exception basis). I urge as many other appraisers as possible to seek other sources of appraisal jobs than GSEs as much as possible.

Until the powers that be in Congress open their eyes to the corruption and rampant lender and GSE fraud, there will be no improvement in the appraiser profession. Just opportunism.

Sadly, too true.

Respectfully, but strongly disagree. When you say UW, lenders hear Loan Officers. NEITHER should ever have the ability to remove an appraiser. THAT is the number one tool of coercion used against appraisers for decades.

Texas has an interesting way that they handle removals.(& additions). Every single appraiser on the list requires the lender pay TALCB a $25 registry fee. They ALSO have to pay a $25 REMOVAL fee when they dump an appraiser. Youd be surprised how effective it can be in terms of giving an appraiser recourse.

NO APPRAISER SHOULD EVER BE ALLOWED TO BE BLACKLISTED without an SR3 compliant appraisal review and SR4 compliant review appraisal report. NOT EVER!

Same applies to those fraudsters at FNMA misleading state regulators by the vague statement “After Review, we determined (whatever lie they are pushing)”, WITHOUT ever actually doing an SR# compliant appraisal review.

Despite being a GSE engaged in buying, bundling and selling mortgage-backed securities (and lender buybacks) they believe they are categorically exempt from all aspects of FIRREA.

Then ONLY the big AMCs will remain. THEY are the biggest part of the problem to begin with. Read the old articles in Appraisersblogs about Mark Skapinetz battles with Coester VMS, “creator” of the one-size-fits-all all national AMC fee.

Because it’s far easier to hide their overblown fee by marking up appraisals 100% and calling it the appraisal fee on the settlement statement. The amount of their extortion fee also depends on the success of each reverse auction (aka the assignment process) so they never have a set fee. Sometimes they can mark up the appraisal fee 100%, other times they may mark it up 200%. The more sucker/bidders they have the more profit they can generate.

I’m not familier with how the VA rotation panel works. Do you know where I can read more about that? Thank you.