Leaving the Appraisal Profession

Baggins says:

‘ I’ve lost quotes this week from appraisers who are ‘ This keeps happening, it’s like deja vu! I identify the appraisal problem, and in turn provide an appraisal solution. Perhaps stop working for free? Why, when the consumer is already quoted an appraisal fee before hand, their money or payment commitment most likely already collected, the deals are lined up, the pieces in place, your services absolutely necessary and required, the appraisal order is already formed and filled out, are you required to bid? What we got here is failure to communicate.

Eric you have so many great things to say and a really well rounded understanding of what’s happening in this industry. Which is why I’ll remain mystified why you would even bother quoting amc’s. Why don’t you ask them what their best possible fee is instead? You forgot TAF and Bunton whom rakes $750k a year to have milk and cookies with Andre Perre at Brookings, while communicating with the same lawyers and lobbyists behind incentivizing witch hunts against appraisers, and then hiring those same people to coordinate and provide consultation services to The Appraisal Foundation. That’s what they said on the internet, and I believe them.

‘USPAP is nothing more than a loaded gun for state licensing boards to to increase revenue ‘ Sure, but before we dive into that, lets’ talk about complying with your states procedural rules act(s). We’ll need to ask the good persons at the state exactly which USPAP version they are referring to, and then they will need to provide documentation for us to locate this ever updating legal standard in their own published systems. ‘by rolling incorporation’ is simply insufficient and itself falls outside of states various procedural compliance requirements. (do you see what just happened there? If not, see Jeremy Bagotts articles, he can be found here, and on twitter. It is unconstitutional for state agencies to hold licensees accountable without complying with their own states procedural rules which require fair notice and comment periods, possibly adjustments to the standards, before any updated guidance provisions may be adopted. TAF never had the authority to bypass this process with bi annual rewrites to appease stakeholders.) Let’s play a game; spot the paper tiger.

Baggins says:

Close no cigar. See CFPB’s safe harbor interpretation rules which altered the dodd frank reg z C&R rule to be customary or reasonable, in other words. Read through the various added interpretations.

Start here.
https://www.consumerfinance.gov/rules-policy/regulations/1026/42/

Then explore this concept. How this section was written, and had no specific prohibition on with holding work from appraisers whom refused to discount their services. They would have had that in there, as a primary goal of these sections was to protect appraisers wages. Many appraisers contributed and volunteered their time and effort to speak with people whom formed this language. They specifically had the C&R rule on fair compensation, so there was no need for a redundant clause here. However, they did not forsee the cfpb simply nullifying the C&R rule so quickly before the regulation even took effective date.
https://www.consumerfinance.gov/rules-policy/regulations/1026/42/#624ee2f92dc2880a16e889c0b4621171e0ecd168ca11c3efbfd49dba

And then we get to the disappointing part, the betrayal of the original spirit of the C&R rule. So take the time to read through all the bs interpretations which shift what was a rather cleanly simple written guidance into one big bureaucratic mess.
https://www.consumerfinance.gov/rules-policy/regulations/1026/42/#f

I mean, come on. How many appraisers being excluded from the market constitutes a violation? Three out of four and a hundred thousand appraisers quitting is not sufficient evidence? Collectively, we need a lawyer. Click the top bar.
(ii) The creditor and its agents do not engage in any anticompetitive acts in violation of state or Federal law that affect the compensation paid to fee appraisers, including:
If this amc situation which excludes 75% of all appraisers from the process is not anti competitive, well, because clearly the situations appraisers deal with are anti competitive. Which is why three out of four appraisers are unable or unwilling to work with amc companies. It’s their behavior, they do not pay fairly and to this day there is clear as day difference that for the majority of orders placed, a lender whom does not use an amc pays substantially more to appraisers than lenders whom use amc’s, despite consumer ‘appraisal service’ charges being generally similar across the board.
(B) Engaging in any acts of monopolization such as restricting any person from entering the relevant geographic market or causing any person to leave the relevant geographic market, as prohibited under section 2 of the Sherman Antitrust Act, 15 U.S.C. 2, or any other relevant antitrust laws.
https://www.consumerfinance.gov/rules-policy/regulations/1026/42/#eb0dfa0a14c6f78903272763f5bc91a6120e869b6c08addb90700472

And this is why some appraiser was saying for the longest time (which I just copy again these days)
‘Please advise when the fictitious alternative presumption of compliance rule will be rescinded.’
At the time people struggled to read through this and even understand what it meant. We still do, so purposefully convoluted. Somewhere in the history of appraisers blogs or the appraisers forum, buried deep in archives somewhere, is endless appraiser communication trying to figure this all out. The proof that there is a C&R workaround is apparent though, amc’s were no longer held to the simple standard that;
https://www.consumerfinance.gov/rules-policy/regulations/1026/42/#f-2-ii-B

(i) The creditor or its agents compensate the fee appraiser in an amount that is reasonably related to recent rates paid for comparable appraisal services performed in the geographic market of the property being appraised. In determining this amount, a creditor or its agents shall review the factors below and make any adjustments to recent rates paid in the relevant geographic market necessary to ensure that the amount of compensation is reasonable:
Then further down we get the convoluted definitions of ‘reasonable’.

Initially the industry eagerly put together fee schedules, and Alamode pre corelogic ownership, issued a customary and reasonable fee schedule from it’s mercury records which at the time had mostly non amc compensation, and for amc’s data, they simply parsed that away. Appraisers decried that; ‘I do not get that much from the amc’s in my area!’ Amc’s braced to pay appraisers the full amount as if they were not there in the first place with improperly co mingled billing, and they sent TAVMA lobbyists to the CFPB whom shortly after issued the ‘alternative presumption of compliance’, and other confusing complex interpretation rules.

And suddenly because appraisers continued to accept amc fee rates, the amc’s were therefore in compliance with reasonable payments. Because customary AND reasonable, just basically became customary or reasonable.

That’s the point of this story though. Appraisers whom worked with amc’s and continued to do so have perpetuated the amc industries presence which in turn the amc industry has invested heavily in every means possible to replace every one of us whom still focus on mortgage lending.

Meanwhile, appraisers like me continue to harp on the simple premise that they should just mandate a separate fee for these distinctly different services of an appraiser providing an appraisal, and the amc’s providing some other services, which is not actually licensed appraisal. Then without an improperly co mingled fee, the amcs would no longer have the ability or motivation, to drive the appraisers fee down, and drive the consumers fee up, to pocket a variable difference and never return cost savings to consumers. Think of the gravity of the deception here for this regulation and interpretation to go through so many mental gymnastics and complex interpretations about surveying fees and compliance and all of that. When the root cause problem remains that there is an improperly co mingled fee going on which places appraisers at severe disadvantage, always played against each other, compensated less, under more pressure, and these market pressures imposed by amc companies ultimately result in three quarters of the licensed appraiser workforce being excluded from the vast majority of mortgage lending services today, and having caused over a hundred thousand other appraisers to shut down their previously vital and thriving small businesses. The amc industry are straight job killers and replace qualified educated licensed appraisers with low level non specialized replaceable staff. Now with PAREA, they plan to hand all of them appraisers licenses.

One of these days, I’m going to just pass on even looking at this anymore. Nobody else does. But if more people did… Fifty states in this union, is there even one whom would force separated billing to remove these perverse billing incentives? Yes, one state did stand up for appraisers, which resulted in Louisiana vs FCC. They went through all of that, instead of just issuing a demand for separated billing and transparent billing disclosure. Geesh. What a damned circus and total butchering of logic and reason on both sides.

What’s the big deal with all these tests of compliance? Answer; The powers of oversight. Government people seem to have a real hard time releasing these self appointed privileges of the audit and oversight capabilities, and replace them with a simple separation of billing rule. They never audit the amc’s though, so curious of a choice to only apply effective oversight to beleaguered appraisers. We simply can not trust appraisers so therefore appraisers no longer are trust worthy to act as a free market to themselves, and control their own industries fees. That’s the amc’s job now, and the government involvement shall be increased not made less.

Call me crazy but I seem to remember a day when appraisers were in charge of their own fees, and everything sailed along quite nicely, and no special interpretive rules or appraisal management companies were even necessary in the first place. But if you guys like working with those companies for reduced compensation and never collectively dig out of this hole but rather would prefer to face a total shift in appraisal related approaches and modeling for this entire industry, where another twenty thousand or more independent small business appraisers are driven out of business, and amc’s now dictate GSE policy from positions valued over and above your individual licensing, I guess that is the industry you would prefer to have.

They sold it and you guys bought it. Working with amc’s has always been a voluntary choice and what many amc appraisers do not realize is that many of the lenders whom use amc’s also do not use amc’s in many circumstances. They work directly, with appraisers whom still readily provide them service but absolutely steadfastly refuse to work with amc’s. So non amc appraisers get the better work anyways, the lenders repeat customers get direct assignment, all the origination and poached customers switching over to the lender, they get run through the amc program.

If they identify you as being willing to be an amc appraiser, you’ll simply never make it onto direct assignment panels or those mini panel approval lists. And if more appraisers simply opted out of the amc program, within months the lenders often switch back to using mercury systems or alternatives and appraisers no longer have to share their fees. Better was notable over the past few years, they assembled a direct panel and paid the VA rate or higher just for conventional and FHA loans. What a great model example and it’s a shame the mortgage downturn hit them so hard.

And all the lenders know how to navigate direct assignment systems. At some point there has been a steady rotation of companies whom used Mercury Appraisal Port, Scope, etc. It’s just they were the constant target of amc solicitations, many folded, many did not. And the VA makes all these lenders navigate their own VA specific direct assignment system, so the lenders know damned well how simple it is and how much better service and better broader appraiser coverage they get if they do not use amc companies.

The idea that amc’s dominate the market and appraisers are powerless is all one big shell game. Appraisers dominate this market, but they choose to allow the amc companies to persist. I guess they really do need that management factor and were not really worthy to be true independent small businesses after all. Sela vi. Well, I guess that is how the appraisers wanted it to end. Sad, there was always a better path lying right in front of those 25% appraisers whom stayed with amc work. Their compliance cost many of us dearly. They boast in response to the other appraisers hardships. They laugh at the anti competitive practices, because they are on the winning end of the discrimination. They made fortunes while many other appraisers lost out. So much for the peer standard. They prefer dog eat dog and bidding singles for the rest of their lives in an infinite race to the bottom, so be it. We’re not playing that game. I do not bid for work orders. I establish meaningful client relationships and roll with standard C&R fees. Simple. Easy. On time. Steady. I’ll remain mystified how amc appraisers run effective businesses around a question mark. Thanks for reading the Appraisers Blogs. I’m signing off for now.

Flash says:

Having a Real Estate License is a bonus as an appraiser. I have a Broker License and Certified Appraiser license. If the Estate likes and trusts you to represent them in selling a property all you have to do in escrow is disclose that you provided prior services. I agree my own listing of properties generates a good side line of income. The other service I offer to lenders is Nothing by the Rush bids which have larger rush fees included.

Just a few months away, in 2024 the mortgage interest rates will drop significantly and create a refinance and a purchase market which will create a need for appraisers. So this is where the Nothing by the Rush bids occur and most lenders are willing to pay them to close the deal.