Hey Pat – you know how those AARO.net conferences go. 30% more AMC reps in attendance than Regulators and 80% more than Appraisers. Just spreading the OUR wealth that we don’t get to touch

If regulators do not know what is going on, they will not do anything. Maybe it is our job to let them know. Get all of us in contact with your legislators (state and federal) and let them know what is going on.

Everything traces back to the fed.

I am from another continent, and after living in the US for over 25 years, I still cannot understand why lobbying is not illegal? Why people are OK with that? let being taken the power from their hands? I do not recall that would be the goal of the Founding Fathers. I feel I am from another planet…

First fee was $300, last one $410. Every time I ended up working more than if I would do the inspection. (I guess they are desperate, but one less victim on the market.) One property was 5 min walk from the office. I tried. I learned first hand what is it about.

The idea is, that they take the inspection from our hands and everything they can, except do the, truly the appraisal work, the analysis. With every step reducing our fee. The problem with that is that I can diversify and delegate the inspection to someone I trained, and let others do the administrative work hired by me. Still all is in my hand, so I can do a throughout analysis. AMC is a fancy name, but their presence is a cancer.

We have the responsibility to educate both the public and representatives. Oh, also mortgage companies, as they do not know what is the law. All mortgage officers I talked with thought they cannot hire directly a contractual appraiser.

Welcome to the party. A few years late but welcome none the less. As far as responsibility goes, talked about that many times. Exponential increased liability burden via increased volume, the full weight of uspap and specific sow still applies, no meaningful relief via assumptive theory in appraisal disclosure disclaimer language games can save you. Amc’s win again. Get your mind around the concept that appraisal management companies purposefully game the system and treat appraisers as disposable hero’s, while remaining unaccountable themselves. My vote remains for individual licensing requirements for every single amc employee, right down to the janitor. If they are ‘managing’ appraisers, every one involved in that process should be required to hold an appraisers license themselves. The point of the amc industry from the very beginning has been to pressure and intimidate appraisers, while simultaneously shifting liability to appraisers while finding clever work arounds to escape traditional conventional regulatory oversight. Mission accomplished. Appraisal modernization! If you are serious about discovery and industry change, send your real world contemporaneous examples of these products faults and engagement terms to Mike Ford with the Appraisers Guild, or the administrator of this website. The end is near.

In our family we say; The very last place we turn to for safety advisement is the government. Every single regulatory agency has been captured by the corporations they pretend to police. Every last one of them. The FTC, FCC, FDA, and the long list of others, are exactly where we left them. Just one problem, half of their staff has already been or will soon be employed by the corporations they portend to regulate. Lobbying as a career choice for monetary compensation should be illegal.

Where is FTC?

https://www.cbsnews.com/colorado/news/colorado-state-company-fake-documents-operations-propdoks-visual-prop-studios-aurora-denver-fraud/

Holy smokes!

And you know, anyone with an ounce of pc and photoshop related skills can and do create similar documents at home for themselves, unbeknownst to anyone else, unless they are identified individually.
______________________________________________

The business advertised its products as theatrical props, educational tools and good material for playing a joke.

Consumer protection investigators and state prosecutors branded the offerings as fraudulent, devastating, and even dangerous.

“The false documents this company sold, including those used by criminals to victimize Coloradans and to fool law enforcement and other officials, were not harmless props,” stated Colorado Attorney General Phil Weiser in a press release.

Prosecutors claim the business has filled tens of thousands of orders over the past two years and expanded its offerings to more than 70 types of false documents.
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Coming soon out of the basement and to an actual store front near you. In fact, a darn miracle if this is not already prevalent in your state as well right now today.

Meanwhile…

Beacon Property Data Collection services allows applicants to source their own and submit their own records checks to their company. Can’t make it up. All I was doing is routine news reading, and come across that piece.

It’s not really a free market when AMC’s contol 80% of GSE work and treat the Appraiser as their chattel. In 2007 they raising requirements because there were too many Appraisers. Since the AMC’s stole our business model in 2009 now…. not so much reason to go into this “business”.

You can move to any town in the USA and take ALL the business from the “locals” just by cutting the fee by $5. The AMC business model will never be satisfied until the Independent Appraiser is paying THEM for the privilege to do the work. What a scam they have had since 2009. Infuriating, cruel and a violation of TILA in every respect.

Great job !!

The persons whom wrote Dodd Frank included the C&R billing rule specifically for amc’s, with a $10k/$20k recurring daily fine provision, which was specifically meant to stop the expansion of the amc industry, to stop those companies from pilfering the appraisers fees and defrauding consumers in the process. After the CFPB’s safe harbor interpretation, references to the $10k/$20k daily recurring fines for amc’s was silently removed from Reg Z wording, as that became instantly irrelevant, since amc’s would no longer be subjected to rules which stated ‘they should compensate appraisers at a fee rate, as if no amc was involved.’ FTC vs Lousiana regulatory board which came years later illustrated the inadequacy of regulatory structure at hand, they actually ruled in favor of continued unrestricted unearned fee raking, unbeknownst to the consumer. The noble members of the Louisiana board were the only state agency to try and actually implement C&R rules, as they were originally intended to be implemented, exactly as first written, to correct the erroneous CFPB safe harbor interpretations.

To reference Mr Retired Appraiser as well, the amc lobbyist actions of bullying in a CFPB ‘safe harbor’ provision which changed the definition of C&R compliance also coincided with the event of reformation of HUD 1 forms, where the industry heads selected a new consumer disclosure form, among several possible choices.

Specifically the amc industry and partner lenders sent big deal lobbyists to persuade not to select the HUD 1 version which specifically included an amc billing line as it’s own unique line item, set apart from the appraisers compensation fee in a clearly separate disclosure line. That now abandoned form was developed under the notion that Reg Z C&R would be enforced and therefore amc’s would need to state upfront service charges which would be recorded on the new disclosure forms. Consumers nationally would have been made aware of the amc’s superfluous variable additional billing charges, and could have made better informed decisions. Instead we have an imbalanced state by state amc regulatory structure which is wholly inadequate, where in some states it’s legal for amc’s to silently tag on additional secretive fees, in other states they must disclose.

Most state agencies took the position it was the lenders responsibility to provide oversight of the amc, as the amc companies activities fell under the purview of regulatory oversight for lenders. Most state based amc regulation was focused around timely compensation to appraisers rather than fair compensation. Nevermind the scale of david vs goliath, as it’s basically impossible for an individual appraiser whom was subjected to amc pressures to bring successful challenges to the lenders purposeful disregard of the harms their selected amc causes consumers and appraiser vendors alike.

Instead we ended up with improperly co mingled billing, and the CFPB safe harbor interpretation which allowed the amc industries rapid proliferation and fee pilfering to continue. An activity which if engaged in by any number of other licensed individuals would clearly represent violations of ‘junk fee billing’ and ‘unearned fee raking’ provisions already present in existing guidance and regulation.

Even the Federal Register had special wording that amc companies were not to select appraisers by fee, but rather should select appraisers based on experience and best interests of consumers and such, issued in a similar time frame. However, the allure of unregulated junk fee billing was too great for the amc industry to resist, which is why the entire body of these companies all either kept their unearned fee raking model or finally switched to the unearned fee raking maximized profit model.

You can not find a single amc company out there, nearly two decades after amc companies began proliferating, which clearly bills separately for their ‘management’ service. The primary goal of this improperly co mingled billing is to drive appraisers compensation down, drive consumers costs higher, and pocket the difference. In turn, the amc industry used this variable excess compensation to create a myriad of ancillary services and tools which places consumers in even more harm, also meant to substitute the appraisers presence entirely. Coming to fruition now in the form of ‘modernized forms’, ‘certifications for avm valuation estimates’, ‘property data collectors’, and PAREA programs which provide provisions to skip apprentice and field training in favor of inadequate virtual training to be an appraiser. In turn allowing rapid licensing of employees of amc companies to become appraisers, whom will not be subjected to similar rules as independent fee appraisers. Also special bonus, PAREA arguably has constitutional violations on selecting PAREA participants based on affirmative action type principals, which the supreme court just struck down in education specifically. The appraisal industry has remained frozen in time, most appraisal companies unable to expand, hire, or train, as all that potential energy went to the amc industry instead.

For those appraisers whom did capture amc work, there is a long standing argument the reduced compensation did effect work quality, as well as creating systemic training deficiencies for new appraisers whom were brought up in the amc world. Mr Ford from the AGA group as seen to the left of this post, covered that topic, analyzing a GSE White Paper written on the matter, which was basically an industry cover up to shelter the amc industry from accountability. We were able to infer from the data there however, that only one out of four licensed appraisers submitted appraisals to the CU data base, while working with an amc company, and that half of all licensed appraisers no longer submit reports to the CU database. As the amc industry then continued to brag about record setting business growth to the appraiser community whom they took those opportunities away from in the first place.

Several of the amc’s cleverly maintained consistent billing and consistent appraiser compensation with some of their major volume clients, so when audited, they could claim there was no such imbalanced compensation activity happening, even though it was beyond obvious the amc industry at large had moved to this bidding variable fee raking model. Every single licensed appraiser in America at some point dealt with amc bidding requests.

Appraisers decried the unfair nature of this daily, and roughly half of all licensed appraisers left the field of mortgage lending as a direct result of the regulatory structures inability to reign in these corrupt amc business practices. Tens and tens of thousands of appraisers quit overnight, on repeated occasions. There was a letter writing request at the Federal Reserve over this matter and if I recall correctly, that publicly available body of appraiser objection letters numbered in the thousands of appraiser responses, nearly all containing similar pleas that the amc industry would decimate the best of the valuation services members and eventually cause a shortage of appraisers.

Any appraiser having dealt with these pressures can relate to the end result of the amc industries applied pressures on appraisers; ‘What is your fee and turn time?’ They routinely call fifty or more appraisers for every single order request, in order to maximize their fee raking profits. Appraisers known to always provide the lowest fee (the most thing of value to the amc, to be the preferred selectee, aka the largest bribe) are gifted with direct assignment, and the lions share of work orders.

The response which placed any given appraiser into immediate appraiser non grata status was simple (aka blacklisting); ‘ What did you charge the consumer for the appraisal service? Because that should be my appraisal fee.’ Hence my long standing rebuttal; ‘Distinctly different fees for distinctly different services’, separated billing. Or as they used to say, get the amc’s hands out of the cookie jar.

This allowance for amc companies to take variable fee raking from the total appraisal fee resulted in an entire generation of appraisers receiving the upper hand with massively imbalanced work flow, incredible business expansion, as the rest of their otherwise worthy and equivalent peer appraisers lost fair access to those work flow opportunities. Those other appraisers whom lost out, the ones whom understood this ethical violation and departure from the management rule that we should not ‘provide a thing of value’ to be the preferred assignment selectee. Understanding this was an untenable and unethical engagement, which we should therefore refuse out of general principal and adherence to ethical standards.

Despite the cosmic cobra effect and systematic bi annual re writing of the supposed ethics book for this industry, and continued pleas from tens of thousands of remaining appraisers, no powers that be were willing to face up to the idea that it was a violation of ‘the management rule’ for an appraiser to provide a discounted fee, in order to be the preferred selectee. ‘It’s only a discount, not a bribe.’ ‘Then why doesn’t the consumer save any money!?’ At a minimum, an indisputable fact that amc’s do not benefit consumers with any cost savings. Yet the amc industries apparent primary focus is carving out lower vendor fees. The lending community and GSE heads now parrots the cost savings line in unison as supposed justification to eliminate appraisers entirely, ignoring that the appraisal services fee is actually an improperly combined fee from multiple companies, an individual appraiser, and a corporate amc entity.

Clearly an appraisers fee reduction from the amc companies point of view, is nothing short of a bribe to receive ‘the lions share’ of work orders, ahead of otherwise equivalently if not better qualified peer appraisers. Evidence of this imbalance surfaces routinely, I believe it surfaced recently on this blog, with the story of the one appraiser company receiving millions in compensation from a single amc, and the next most compensated appraiser firm received only a fraction comparatively. That is not fair distribution and there was nothing that special about their service to warrant the imbalance, except those appraisers had the lowest fee, by which the amc profited more, and consumers never saved a dime. Tried to find the article, too far back, had an image disclosure of the one appraisers having been compensated millions of dollars via some court discovery.

Or you could just look up ‘The Appraiser Coach’ for lessons on how to claim unfair advantage over more deserving appraisers in this industry and skate away scott free with their entire workload, drive your competition straight out of business, aka restraint of trade practices in a free market setting. Despite that activity being clearly illegal in many other unrelated industries. If a person in government called for biding on contracts in this manner, then selected the lowest cost vendor, then charged the maximum service charge amount to the budget as if vendors never provided lower cost services, and kept the difference as undisclosed personal profit, they’d be guilty of embezzlement and be hauled straight away in shackles and handcuffs to a federal prison.

The appraisal industries general recognition of this became quite simple; Survive by refusing to work with mortgage lending and GSE’s, because amc companies dominate over 80% of all work in these fields. There is no shortage of appraisers, only a shortage of appraisers willing to play ball for amc’s.

There was no need for appraisal modernization and industry retooling efforts in the first place. There would have been a near instant recovery of the appraiser vendor populace and their ability to serve the lender community, if not for the amc companies lasting presence. Roughly 40,000 appraisers would instantly return to mortgage lending, if Reg Z on C&R compensation was actually enforced as originally intended. Rather, when the CFPB safe harbor rule was implemented, the appraisal industry shed a hundred thousand licensees whom built their business solely around mortgage lending work. A substantial portion of a well qualified, experienced, and educated professional workforce, vanished in an instant. Over the next decade and a half, appraiser populace went from nearly 200,000, down to 80,000. Half of the 80,000 whom remain today refuse GSE work due to amcs. Of the half that are willing to complete GSE work, half of them refuse amc work.

When a lender chooses to utilize an appraisal management company, they purposefully deny themselves access to three quarters of the licensed appraiser community. A lenders cries of inadequate appraiser servicing is a self imposed illusionary hardship. Because they only want to work with pliable appraisers. Amc’s, the long arm of predatory lending interests. However this assists appraisers in more easily identifying ethically adherent lenders; they do not use amc services.

This is beyond a clear example of restraint of trade practices, that amc’s have caused 75% of all remaining active appraisers to boycott their services. This is industry racketeering as persons within government collude with persons within lending and the amc industry, to purposefully drive out qualified licensed professionals, with the intent of replacing us with automation which is absolutely inferior and will cause great consumer harm. As Jeremy Bagott wrote; ‘Exploiting gutted mortgage underwriting.’ Wizardry.

Appraisers like myself are the last of a dying breed; focused solely on mortgage lending and default management, but refusing to work with amc companies. We maintain the position our goals are service to the public by way of regulated government institutions involved with mortgage lending. You know, in support of the American dream of home ownership?

We held the line and shifted many a lender away from the amc model, but this was a moving target and difficult goal, as we continue to operate under systematically applied pay to play systems and are subjected to daily restraint of trade practices. Many of us have spent far more time dealing with amc harassment and demanding they stop contacting us, then we ever spent in our brief try outs with these companies. Hardly any of the amc employees understand regulatory structure. Except for one single appraiser, the entirety of any given amc company employee set is unregulated, and unlicensed. They routinely run roughshod over any appraiser they work with, and similar treatment for any unfortunate consumer the lender places in front of them. See Yelp reviews of any given amc company for proof of their service quality from a consumers point of view. The amc companies are unrestrained by regulation. Appraisers whom work with amc companies are disposable heros.

This defies logic and normal reasoning to accept that regulations apply here, but not there, etc. That is in fact, a major part of the problem. For those not understanding why Dave’s post is so important here, it’s important to have a basic understanding that this exact reason of regulatory authority and the confusion there to, has allowed the appraisal management industry to basically branch out to limitless sectors within real estate and lending, and remain virtually unregulated. Reasons for these moves towards appraisal modernization is a mechanism to allow amc’s to operate without similar oversight as regulated licensed individuals. Total elimination of a very valid check and balance, the independent fee appraiser. This needs to end.

What was the point of even writing all these various regulatory guidance documents, if a new company type can simply move in and ignore every last rule and operate outside the scope of regulatory oversight? But that’s what the amc’s have done, and is exactly why these companies have a consistent predictable motivation to systematically replace the duties of all licensed individuals, claiming that market share for themselves instead. They will not stop with appraisal related items. They’ve already branched into inspection, sketching, software development, forms development, order management systems, data retention systems, now commercial, etc, etc.

One of these days we’ll have to sit down and have a heart to heart conversation about how most appraisers feel about appraisal management companies, and specifically why we feel that way. Personally, at the end, nothing happening, my lenders went under, the end is near. But if I were to apply to amc’s, I could still be completing one appraisal or more every single day. All that would take is for me to play ball and steal that work away from the other amc appraisers, by way of providing a greater incentive to the amc to send me the work order, by way of a lower fee. I would simply have to abide the amc companies requested terms that I keep my compensation secret from the consumer. Some may call that a predatory engagement strategy, to take from others rather than earning the position through merit, so we therefore prioritize fair dealings and ethic first. Human decisions which are subsequently driving another 20,000 appraisers out of business soon as ‘appraisal modernization’ becomes broadly implemented. Modernization! Equity!
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https://appraisersblogs.com/canadian-banks-will-exploit-gutted-u-s-mortgage-underwriting

https://files.consumerfinance.gov/f/documents/cfpb_supervision-and-examination-manual_tila-exam-procedures_2021-10.pdf
(control +F) to bring up the find tool. Search; ‘Customary’. then Appraisal. then Inspection.
Regulation Z seeks to ensure that real estate appraisers, and others preparing valuations, are free to use their independent professional judgment in assigning home values without influence or pressure from those with interests in the transactions. Regulation Z also seeks to ensure that appraisers receive customary and reasonable payments for their services. Regulation Z’s valuation rules apply to creditors and settlement services providers for consumer credit /
My question is are amc’s still in compliance with these rules, having so much stake in all these ancillary services they now provide in addition to just managing appraisers out of the picture? Are those exemptions noted still applicable if basically the amc company now provides the valuation service themselves through avm’s, partner affiliates, and employee appraisers?

More specifically, Regulation Z:
Prohibits appraisers and appraisal management companies hired by lenders from having financial or other interests in the properties or the credit transactions;
Requires the payment of customary and reasonable compensation to appraisers who are not employees of the creditors or of the appraisal management companies hired by the creditors.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended TILA to include several provisions that protect the integrity of the appraisal process when a consumer’s home is securing the loan. The rule also requires that appraisers receive customary and reasonable payments for their services. The appraiser and loan originator compensation requirements had a mandatory compliance date of April 6, 2011.

https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-42/#42-f-1-Interp

They gutted the original spirit of the C&R rule. I’ve scoured the data bases for the $10k/$20k amc fine language but can no longer find references to this. Biggers wrote a piece before this happened which mentioned the fines, and appraisers still maintained hope to reign in the amc industry. Attached. If you were an Alamode subscriber, search for Dave Biggers emails in your 2010 emails for the full letter. I posted several waybackmachine Alamode articles as well in previous posts from earlier this year, and you can also find those quite easily and look through them yourself if desired.

Thanks David Samnick for posting this brief, but inspiring article. At this point we’re just rehashing the same regulatory shortcomings, the same appraisal management racketeering evidence. Unless some miracle client shows up or more companies turn course and go back to ordering full appraisals, the end is near for every single independent fee appraiser whom has thus far relied on GSE work. There would be enough GSE requests to go around and sustain all of us right now, benefit consumers with our services, if not for all the changes. By imperial decree, GSE heads in coordination with a corrupted co opted group of appraisal organizations whom are managed by everyone except working appraisers, have retired our positions. Retired Appraiser and the other hundred thousand appraisers who walked away were right, there is no saving this industry. American consumers will ultimately pay a much dearer price than we have. But at least we tried to hold on to traditional checks and balances and consumer protection principals. Who knows, maybe these interests will defeat themselves, having finally achieved their goals. Perhaps one day we could look forward to a total abolishment of the GSE programs and see a return to sensible lending where risk management is not shouldered by the taxpayers. Thanks for reading on The Appraisers Blogs. Cheers.

All right, here you go! I’m a lumberjack and I’m o.k., sleep all night and work all day.

Oh, wait, that’s not it. I might as well write a book because this isn’t even the half of the story. Has to be some limit though. BRB.

The following excessively long post started out in response to Dave’s above comment on regulatory exemption structures.

Oh hey, thanks Pat. Or, well, let me re read this here today and perhaps tomorrow. It’s literally like 3 pages long in my email draft. I keep tinkering with it and adding subtracting, so it’s more like an article now rather than a post. Hang tough I’ll get it out there if you want to read, one person paying attention is enough for me. Thanks. Probably mod will want to post it as an article, so I’m sort of how to present this. Will re read again today first. Spent like almost nine hours writing that up a few days ago.