Exposing Predatory AMCs

Exposing Predatory AMCs

Exposing the inner workings of these predatory AMCs and their corrosive influence on the housing market. 

Cindy Chance’s recent comments about the concerning practices of some appraisal management companies (AMCs) have struck a chord with many in the real estate valuation industry. Chance is shedding light on the troubling ways in which certain AMCs have come to wield significant power and influence over the appraisal process, often to the detriment of both appraisers and the public. The growth of AMCs in the wake of the 2008 financial crisis was driven by the misguided belief that they could help “ensure the integrity and independence” of property valuations. However, the reality has played out quite differently, with many AMCs prioritizing profit margins over quality and fairness.

These predatory AMCs have created a race to the bottom when it comes to appraiser fees, driving down compensation while simultaneously increasing their own fees charged to lenders and consumers. The lack of transparency around AMC fee structures means the public has little visibility into how their hard-earned money is being diverted away from the actual valuation work. Chance rightly points out that a well-functioning market requires transparency, and the current AMC-dominated model falls woefully short in this regard. By exposing the inner workings of these predatory AMCs and their corrosive influence on the housing market, the CFPB’s initiative represents a vital opportunity to enact real, meaningful reform. Appraisers should take this opportunity to participate in the public comment process and help catalyze transformative progress towards a more transparent, accountable, and consumer-friendly mortgage landscape – one where their role as impartial, objective professionals is truly respected and protected, not exploited for the financial gain of unscrupulous intermediaries. To comment click here.

From Cindy’s desk?

Last week I hit a nerve with some comments about the value of appraisers and predatory AMCs not respecting their value. I got many notes from appraisers who were supportive and a few from AMCs, one of which was downright upset. And here I thought they would agree with me! I was thinking I was careful to call out predatory AMCs only, but apparently the number with ethical, transparent practices may be smaller than I imagined.

How did AMCs become such a powerful market player, and how have they affected real property valuation?

AMCs or “appraisal management companies” function as an intermediary between banks and appraisers to “ensure the integrity and independence” of the appraisal process. The use of AMCs by lenders grew greatly following the financial crisis of 2008 and Andrew Cuomo’s overreaching attempt to universally apply his “Home Valuation Code of Conduct.” The theory was that AMCs would streamline the process, and ensure quality control and compliance. What has actually happened? AMCs have created a race to the bottom in terms of fees paid to professionals and time spent on appraisals. Why? Because there was money to be made in being in the middle and there was nothing to stop AMCs from raising their fees while they reduced the fees they paid to appraisers. The public is not aware of this because AMCs do not need to disclose their fees—something the Appraisal Institute has long supported. The regulatory oversight of AMCs appears inconsistent and lacking in protections for the consumer.

Any market requires transparency to remain healthy and thrive. Appraisers are highly trained professionals – essential to our real estate markets – and very capable of thriving in a fair, competitive market. When they are “managed” by AMCs, a lack of transparency regarding the value they produce for the fees the appraiser earns is a risk to a healthy market. A healthy market is transparent and competitive, with oversight that protects and respects the consumer and the public trust.

In today’s world, many AMCs bid out work, sometimes by sending a text notification of an appraisal assignment, and then quickly awarding the appraisal to the lowest bidder. (I was shocked this fall to see some appraisers jumping to bid for these jobs.) Appraisers who know what it takes to do a quality appraisal are often left shaking their heads, asking who would take a job at that price and with such a short turn-around time. AMCs are also increasing the use of property data collectors to inspect the subject property (also called a home), to “increase efficiency.” The public should be concerned that management companies who were supposed to help protect them from another financial crisis have been reducing the fees paid to appraisers through these means, and increasing their take of the consumer’s dollar – with no serious response from banks or the government.

I am certain that there are ethical AMCs who apply best practices and work to ensure high quality appraisals. I want to hear from them! If you are an ethical, consumer focused AMC, your work is getting a bad name based on the practices of predatory AMCs, bad actors who are harming the system they were created to protect. Stand up and tell us how you ensure excellence by upholding high ethics, professional standards, and by protecting the consumer.

To residential appraisers, please join the Appraisal Institute. We will fight for what is right, and there is strength in numbers. Tell us your stories so that we can help the public to understand what is happening. Together, we can make a difference. Your work has value and you need to be paid fairly for the time it takes to do it well.

We are committed to getting the message to consumers that appraisers perform an essential function in our economic system, and anything that interferes with the professionalism and quality of an appraisal is a risk to the public. It is sad indeed that many AMCs, put in place to ensure quality in appraisals, are doing just the opposite

Cindy Chance, CEO

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46 Responses

  1. Avatar Pat says:

    The BIG screw turns
    Lock them up

    6
    • Baggins Baggins says:

      Pat this is the financial market. Nobody ever goes to jail. Except if you’re the guy whom exposes institutional level fraud or somehow disrupts the gravy train. Too big to fail, no one goes to jail.

      6
  2. Avatar Joshua says:

    Hey Cindy, I enjoyed the article. I think many appraisers are silent about the issue, fearing reprisal from the AMCs.

    We track bid conversion (response time, turnaround time, fee, complexity) and are certain that many of these companies do not use the lowest cost, fastest appraiser. They already have an appraiser in mind for the job and are bidding out the assignment with them in mind. They “rig” the system by inputting misleading information into appraiser profiles (quality scores, location, etc.) to drive down the appraiser’s bid appeal.

    On the other hand, ultimately appraisers are responsible for the state of the fee structure. “Reasonable and customary” is too subjective. Some appraisers are doing 1004s for $200 next-day deliveries. I think standardizing fees, similar to VA appraisals would negate the current state of the industry.

    7
    • Baggins Baggins says:

      Of course the companies using those platforms manipulate profiles to redirect orders, aka; preferential appraisal assignment. Get a revision request for absolutely nothing like all the time. If an appraiser is qualified and accepted to be on an amc or a lenders approved appraisal panel, they should expect an fair share of assignments, aka; round robin distribution. Faster you get them done, faster you get back in line for the next available order. They are still assigning at enough of a discount to rake a substantial junk fee, while also dealing with a preferential appraiser situation so the lender benefits from dealing with appraisers whom always make deals work. If the amc puts truly independent appraisers in front of lenders, the lender will simply use another amc instead.

      The crux of the problem also lies with assignment distribution platforms because they allow for more than one appraisal request to be sent to more than one appraiser at a time. As if that is necessary to place one single appraisal order. This is why the amc industry shut down AA Appraisal Advisor, then bought Mercury and then Alamode, because there were tools in a developing stage to counter rate and grade amc’s and lenders, not just appraisers. When Corelogic bought these companies, they were also developing and patenting advanced avm and review analytic software. They wanted the database and they wanted the data populated with appraisers whom made deals work more often than not.

      Missing the IVPI proposal yet?
      https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf

      5
  3. Avatar Dave says:

    I appreciate Cindy’s interest and views, but as far as the Institute is concerned it is a day late and a dollar short. They have a long way to go before recapturing the trust of “residential” appraisers and frankly the 100+ page narrative reports are becoming dinosaurs.

    9
    • Actually Dave, the AI is more focused on residential appraisers now more than ever. As an SRA designated member, I get a couple calls a month for projected assignments just because of my designation, which is up from years past. Also not sure about your reference to 100+ page narrative reports and how that relates to residential appraising. The last residential narrative report I completed was my SRA demonstration report over 30 years ago…while narrative reports are still typical in the commercial world, they never have been in the residential world. Having said that, most of my form appraisals exceed 40 pages, but that is not AI related.

      0
  4. It’s quite perplexing that Facebook seems to be repeatedly removing today’s article “Exposing Predatory AMCs” without offering any clear explanation as to the reasoning behind their actions. One can’t help but wonder if there may be some underlying agenda or bias at play here. After all, the post appears to be simply voicing criticism and concerns about appraisal management companies – a topic that is certainly worthy of open discussion and scrutiny within the public sphere. Are we now living in a world where even measured, legitimate critique of certain corporate entities is being actively censored on major social media platforms? This raises troubling questions about the extent to which these tech giants are willing to go in order to potentially shield certain industries or business interests from public accountability. If users are no longer allowed to openly voice criticism of AMCs or other similar companies on a widely-used platform like Facebook, it could set a dangerous precedent of stifling important dialogue and limiting the free exchange of ideas. One would hope that Facebook would provide clear, transparent justification for repeatedly taking down this post, rather than simply removing it without explanation. After all, a healthy democracy depends on the ability of citizens to freely express their views and concerns, even if those views are critical of powerful institutions or organizations. The repeated deletion of this post, coupled with the lack of justification, is a worrying development that merits further scrutiny and raises vital questions about the role of social media platforms in moderating online discourse.

    9
    • Baggins Baggins says:

      Predictable, what’s new? Amc’s are the linchpin for so much fraud. The junk fee billing windfalls from appraisals also allowed them to corner other non appraisal related markets. Lenders whom care about consumer protection issues and honest transparent process do not use amc’s. It’s that simple.

      4
    • Avatar On The Mark Appraisal says:

      Funny how the current administration always states the other side is a “threat to democracy” when they are the biggest threat by colluding and censoring free speech with the big tech companies ever since the era of Covid.

      2
    • Avatar Detachedaz says:

      POST IT ON “x” (TWITTER) AND SEE WHAT HAPPENS

      0
    • Avatar Pray Hard says:

      “Are we now living in a world where even measured, legitimate critique of certain corporate entities is being actively censored on major social media platforms?”

      You already know the answer to that question. Facebook has exposed its leftist agenda over and over and over, thousands of times.

      1
      • Retired Appraiser Retired Appraiser says:

        Perhaps X owned by “Nut Job Mollusk” will compensate you can sleep at night. Praying hard that you regain your sanity.

        0
  5. Shawn Vanderhart on Facebook Shawn Vanderhart on Facebook says:

    AMC’s over all are crooks !

    9
  6. Ross Grannan on Facebook Ross Grannan on Facebook says:

    The latest scam is the fees AMCs are charging for direct deposits or ACH. Or Class where take out their “portal” fee after the fact.

    8
  7. Avatar Bill Johnson says:

    I don’t work with AMC’s but I was contacted out of the blue the other day to do a drive by for $265 where as the fee 20 years ago was $250. Before I could even a produce laughable response I was somehow contacted by the owner who said they got an email with my contact info from the client. In short, they were being charged $500 for the drive by and were furious when the appraisal fee wasn’t the appraisal fee. The client was Nations Direct Mortgage and the AMC was Appraisal Marketplace, LLC (CA3008097). Interesting enough, the AMC appears to be owned by Reggora which used to be just a software provider similar to appraisalscope, etc.

    Seek the truth.

    9
  8. Avatar Older and maybe Wiser says:

    Most the AMC’s I worked with were crooks. They took more of the split then I was getting as the appraiser who was actually doing the work. And they would all-to-often come back with frivolous (unpaid) revision requests to try and justify their existence. An AMC should NEVER send a report back for revisions. That was never their intent when they were created.

    As far as the Appraisal Institute goes, I have ZERO faith in them as a residential appraiser. They are out to make money and not always looking out for our best interests.

    I only have 3 to 4 more years then I’m out of this business. It used to be a good profession. Not so much now.

    11
    • Baggins Baggins says:

      Older, you’re going to love Jeremy Bagotts new article, just dropped today. Same topic, Cindy from the AI. / Gov’t-Indulged Middlemen Are Wrong Rx for Battered Borrowers, the Infirm / He details exactly that, various whistle blowers detailing a higher fee rake for amc’s than paid to appraisers. I don’t understand why we need whistle blowers when literally everyone involved in mortgage lending knows this is happening. A complete top to bottom audit of the entire amc industry is in order and well deserved. CFPB is going to do ‘an investigation’ into the matter. It was the CFPB’s own safe harbor rule on customary and reasonable appraisal billing rates which set the stage for the next decade of appraisal management billing fraud.

      10
      • Avatar Pray Hard says:

        “Customary and reasonable fees” is communism.

        4
        • Baggins Baggins says:

          No, customary and reasonable fees is not communism. C&R is the market rate in a free market not manipulated by people not actually performing the services. Like when you call any independent provider of services anywhere, they provide you their best possible quote for the quality and level of service performed. Take a survey of ten or a hundred or so similar contractors, kick out the outliers and skewed data points, and that average of service fees would be the market standard customary and reasonable rate at the time for that specific service. Subject to change over time with changing market conditions. What makes the amc debacle different is these unnecessary third party companies are colluding to drive the appraisers fee down, consumers fees up, and pocket the difference. That’s not communism but it is junk fees and racketeering. C&R billing for appraisers is clearly much higher than amc’s pay, which is why three out of four appraisers refuse to work with amc’s. Yet consumers often pay the equivalent of a C&R fee, it’s just the amc steals the majority of the fee, even though they’re not provide the appraisal service. The problem is improperly co mingled fees for distinctly different services. Amc’s should bill separately for their services, and how much or how little the appraiser charges should not influence the amc’s process and handling fees.

          1
  9. Avatar Frustrated Appraiser says:

    Facebook has removed it from my personal and my business page. What is going on!!!???

    3
  10. Avatar Pray Hard says:

    Here’s something that happens often:

    AMC Q: What’s your turn time and fee on this?
    ME A: That address is not in MLS or the tax records. Do you know what it is? Could you send the correct address to me? Is it a new build? Appraisers are really not allowed ethically to do blind bids.
    Silence, never heard from again.

    AMC: What’s your turn time and fee on this?
    ME A: I found this property in the tax records. There are five different properties with that address. Which one or ones do you want me to appraise? Appraisers are really not allowed ethically to do blind bids.
    Silence, never heard from again.

    AMC Q: What’s your turn time and fee on this?
    ME A: I looked this property up in MLS. It’s $220,000 higher than the highest similar property in the subdivision and the only difference is a pool.
    Silence, never heard from again.

    Me: Everything I get from you guys is 10% to 40% over-priced. What is going on?
    AMC: Other appraisers are jumping on these the moment we send them out and they don’t say anything about being over-priced.
    Silence, never heard from again.

    Etc., etc., etc., ad nauseum, ad infinitum …

    8
    • Baggins Baggins says:

      Please allow me to help you simplify the process. What’s your fee and turn time? How much was the consumer charged? You need to bid on this order for a chance to be assigned the order. I only work with companies whom assign the order directly to me and me alone at a reasonable standard and consistent billing rate.

      Because when you get lender clients whom operate that way, so many of those other problems you’re dealing with become few and far between. Fifteen years handling over 80% of all mortgage lending appraisal requests for this entire country, and they still can’t figure out a standard service rate for the amc side or the appraisers side. The amc industry appears to be in competition with the government for setting new records for long term operational incompetence.

      1
      • Avatar Pray Hard says:

        Yeah, I “need” to do a lot of things, as in retraining in another field in which I don’t have to put up with this and in which I can make much more money, which I’m currently doing. Yeah, I know there are many special appraisers out there who don’t see a problem with anything. Once I do, it’ll be nothing but a cloud of dust and a hearty “Hi yo, Silver” …

        0
  11. Avatar Mark skap says:

    While I applaud Cindy Chance for efforts here, this is not new. For years and years, we as appraisers have voiced our opinions about these AMC’s and their price gouging and bullshit While I applaud her for her efforts on raising this issue or bringing it to the public, she has to fix the blind eye that her predecessors Put forth, especially to the members of AI who also own AMC’s

    As I stated, we as appraisers have been voicing this for years and of putting out evidence day after day, with coalition like VACAP And others pushing the issue. We have seen the Louisiana state board lawsuit, with AMC involved, we’ve seen the coaster VMS of the world get away with shit… we now see CLASS appraisals getting away with shit. And maybe now finally we will see some change actually happen However, I’m not going to put all my eggs in that basket

    This is not just an AI issue. This is an appraiser issue nationwide. With many appraisers that have turned their own blind eye to the situation because of the fact that they did not want to lose jobs from AMC’s who dictate who gets jobs and who does not.

    All of this has been said over and over and over and over for many years And nothing has changed.

    I am happy to hear that the CFPB and others are looking into this. I’m happy that I have been able to contribute to this cause. I would hope that most of you out there will continue to contribute or will contribute to this cause And not look the other way.

    Lastly, I think that not only do we need to look at the AMC‘s however the CFPB and others need to look at REVVA AND ITS MEMBERS THAT THEY REPRESENT. I BELIEVE THAT THEY SHOULD BE AUDITED. I BELIEVE THAT ALL THE AMC SHOULD BE AUDITED.. Sorry for the cops as I am speaking talk to text and did not realize it.

    We have been talking about this issue for many many years. AVCC/Dodd Frank is garbage. Appraisers have not been able to actually compete a free market for years. This is why I went and took my business to the private sector because there’s no way I can make money on the Lender side. Now being alone, I totally understand why because I see how the AMC is overcharged and find the cheapest and fastest.

    While I have some hope that things will change, I also believe that there will be many others, putting their own thoughts into the ears of others to make it so that it does not happen We have a choice here What are we gonna do about it?

    7
    • Avatar On The Mark Appraisal says:

      Mark Skap – glad to see you still fighting for the independent fee appraiser. Josh Tucker for at least a year if not more has gone above and beyond by collecting and having appraisers submit actual examples of all predatory and unethical business practices the AMC’s have committed and getting these examples in front of and to the CFPB.

      3
  12. Avatar Pat says:

    Just the tip of the iceberg!
    I can’t wait for the subpoenas to start flying…..in all 50 states!

    5
  13. Avatar Pat says:

    Post it everywhere?!!

    2
  14. Retired Appraiser Retired Appraiser says:

    It’s time for an Appraisal Management Company fraud and abuse hotline so homeowners can report the bashed herds and compile a database for class action lawsuits.

    4
  15. Avatar Pat says:

    The class action sounds great!

    We can get one started for around $500,000. We need to get the media involved To do that we have to spread this message as far and wide as possible!!

    Little steps here.

    More steps on Linked in,, Facebook, local news papers.

    Send them Jonathan Baggot’s article. Keep reposting it!!

    4
  16. Blake Kernea on Facebook Blake Kernea on Facebook says:

    “Appraisal Fee Disclosure – Pursuant to the above requirement, your report must include the following: For this report the total compensation paid to the appraiser is $165.00, and the total compensation retained by Clear Capital is $545.00.

    4
    • Baggins Baggins says:

      The CFPB call for appraiser whistle blowers to disclose amc billing fraud does not make sense. All they need to do is audit the amc industries billing records, as well as the lenders whom use amc’s for ordering appraisals.

      Every amc company. Every single time. For the past fifteen years. For over 80% of all appraisal work which has gone through GSE servicing. For the entire country. The data could not be any more readily available in sufficient quantity.

      1
  17. Eric Boggs on Facebook Eric Boggs on Facebook says:

    So glad I am out after 40 years

    3
  18. Avatar Erick Kennedy on Facebook says:

    I just tried to post it on Real Estate Appraiser Forum and it was blocked.

    1
    • It’s troubling to think that a forum ostensibly meant to serve and support appraisers would actively suppress content that aims to shed light on the predatory tactics of AMCs – the very entities that have long been accused of unfairly driving down fees, imposing unrealistic deadlines, and interfering with appraisers’ ability to do their jobs with integrity. This censorship seems to indicate that the forum may have been compromised or unduly influenced by AMCs. This is a troubling sign of the times, where even the appraisers forum appears to be bowing to the interests of powerful corporate entities rather than serving as a voice for the hardworking professionals they are meant to represent.

      1
  19. Avatar Maria says:

    I definitely think a class action should be brought against AMCs.
    Consider false advertising and breac of contract.
    Take a look at most AMCs websites. They promote appraisals performed by the most qualified appraiser. No mention to your order will be sent out for bidding.
    Then letter of engagement says ( in some cases) appraiser was selected based on competency, qualit, etc. no mention to fee and turnaround bids.
    Another huge problem is staff appraisers, do not forget about this. How is this legal? When AMCs were allowed to be appraiser companies. I think the staff appraiser model is the biggest issue.

    1
  20. An important thing to consider is some lenders are their own AMC. I won’t mention the specific lenders/AMCs here. It totally destroys the original purpose of the AMC which is to keep lender influence away from the appraiser/appraisal. I feel it’s a violation of the original 2010 Dodd-Frank Act. I found out while investigating some AMCs. I noticed they were owned by the same person as the lender and had almost the exact same address. I asked around and it turns out it’s a legal loophole.

    Another thing is some lenders use AVMs. An AVM does not go through an AMC. Some lenders also use in house appraisals, hybrids. They also don’t go through AMCs. I realize that appraisal waivers are legal but it circumvents the use of AMCs. The lender is doing the appraisal. There is the possibility that the appraisal will be favorable to the lender as they control it. There is no appraiser independence because there is no appraiser. The appraisal is just a loan underwriting service.

    The original purpose of the 2010 Dodd-Frank Act was appraiser/appraisal independence besides other issues. If lenders can own and control the AMC, there is no independence or undue influence on the appraiser. If lenders can use in house AVMs and appraisals, there goes appraisal independence because there’s no independent appraiser. I’m sure that’s why lenders are now their own AMC and use AVMs, in house appraisals. If you get rid of the independent appraiser/appraisal, you can control the deal, loan and the profits. We’re in essence back to where we were before the Dodd-Frank Act.

    0
  21. Baggins Baggins says:

    https://downloads.regulations.gov/CFPB-2024-0021-0040/attachment_1.pdf
    Updated CFPB letter from appraisal groups on amc junk fees.

    Please write your letter today.
    https://www.regulations.gov/document/CFPB-2024-0021-0001

    0

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Exposing Predatory AMCs

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