Lack of Fee Transparency: Exposing the AMC Exploitation
Thank you for the opportunity to comment on the Consumer Financial Protection Bureau’s Request for Information on Fees Imposed in Residential Mortgage Transactions.
The growth of Appraisal Management Companies (AMCs) in the wake of the 2008 financial crisis was driven by a well-intentioned but ultimately misguided belief that they could help “ensure the integrity and independence” of property valuations. The reasoning was that by inserting a neutral third-party between lenders and appraisers, it would eliminate any potential conflicts of interest or undue influence that could compromise the objectivity of the appraisal process. However, the reality has played out quite differently, with many AMCs prioritizing profit margins over quality and fairness.
In their pursuit of maximizing profits, AMCs have created a race to the bottom when it comes to appraisal fees, driving down compensation for the actual valuation work while simultaneously increasing their own fees charged to lenders and consumers. Appraisers, who are the backbone of the real estate ecosystem, have seen their incomes plummet as AMCs squeeze every last penny out of the process. This has led to an exodus of experienced professionals from the field, replaced by a new generation of appraisers who may lack the depth of knowledge and expertise to properly assess the true worth of a property. Meanwhile, 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 and into the pockets of these intermediary companies.
Prior to the Home Valuation Code of Conduct (HVCC), appraisers had the freedom to work directly with their clients, often developing long-standing relationships and an intimate understanding of local market dynamics. However, the new regulations mandated that appraisers could no longer interface directly with loan production staff, forcing them to navigate the unfamiliar terrain of AMCs instead. This overnight change left many experienced, ethical appraisers feeling betrayed, as they were suddenly stripped of their client base and forced to adapt to a system that prioritized cost-cutting and speed over quality.
As an appraiser who refused to comply with these new practices, I chose to boycott AMCs altogether. The primary issue I took umbrage with was the contractual clauses imposed by these companies, which prohibited the disclosure of my fee to the borrower and the inclusion of my invoice in the appraisal report [1]. By keeping the borrower in the dark about the true cost of the appraisal, the AMCs are able to charge exorbitant prices and pocket the difference (as shown in Figures 1 through 10), exploiting the consumer’s lack of knowledge [2]. I recognized this as a deceptive practice that undermined the principles of transparency and honesty that are central to the appraisal profession. I was unwilling to be complicit in this type of behavior, as it would have required compromising my personal integrity.
Despite the industry-wide shift towards AMCs, I have never encountered a single AMC willing to allow appraisers to disclose their fee to the borrower and include their invoice unless mandated by law for the appraiser to do so. This lack of fee transparency is a crucial issue that has not received the attention it deserves, as it directly impacts both the consumer and the perceived value of the appraisal profession. We need to advocate for fee transparency, and ensure that consumers are not being overcharged and that the integrity of the appraisal industry is maintained.
Moreover, the troubling priorities of AMCs have become increasingly clear. In private communications I have witnessed, AMCs have openly admitted that appraisal quality is not a priority with the decision of which appraiser to use being based solely on fee and turnaround time, not on expertise or thoroughness. This callous disregard for professional competence is further exemplified in a recent news article [3] that highlighted the concerning consequences that can arise when experienced, qualified appraisers are systematically bypassed by AMCs in favor of cheaper and faster – but woefully incompetent – alternatives. In this case, the AMC appraiser failed to properly note critical details about the home’s infrastructure, marking it as having public water and sewer despite the fact it was on well and septic and that it did not meet the FHA’s minimum property requirements regarding the distance between the home’s well and septic system. This oversight in the appraisal process was then approved, allowing the sale to move forward and the unsuspecting single mother and her children to purchase the home. However, the appraiser’s omission of these key details would ultimately leave this family homeless and financially devastated, as the home’s inability to meet FHA standards came to light after the fact. This raises serious concerns about the competence and integrity of the review process conducted by Class Valuation, as they seem to have willfully ignored or misrepresented crucial details that should have been accurately captured and addressed. This tragic scenario lays bare the systemic failures inherent in the AMC model, where a prioritization of speed and cost-cutting over thorough, expert valuation has enabled predatory practices to thrive at the direct expense of the very individuals the system is intended to serve and protect.
The issue of bundling appraisal fees and third-party fees has long been a source of frustration and confusion in the real estate industry. The current TRID disclosure form does not accurately reflect the true cost of an appraisal, as it lumps together the appraiser’s fee with additional charges from third-party entities like AMCs. This lack of transparency can be deeply problematic, as it creates a significant discrepancy between what the consumer pays for an appraisal and the actual amount the appraiser receives for their professional services. Many appraisers have voiced concerns over chronically low fees, which has in turn led to an exodus of skilled professionals leaving the field due to inadequate compensation. Appropriate and fair pay is absolutely critical in attracting and retaining high-quality appraisers, as their expertise and impartiality are essential to the integrity of real estate transactions. The bundling of appraisal fees with third-party costs only serves to obscure the true value of the appraiser’s work, leading to consumer distrust and a lack of understanding around the appraisal process. Ironically, the unintended consequences of policies like the HVCC – which were ostensibly meant to protect the independence of the appraisal profession – have in many ways undermined that very integrity, as AMCs have exploited the system to the detriment of both appraisers and the consumers, homebuyers and sellers they serve. Restoring transparency around appraiser compensation is a crucial step in addressing these longstanding issues and ensuring a healthy, functional real estate market.
It is deeply concerning that many appraisers have felt compelled to voice their concerns to the CFPB about AMCs anonymously, rather than openly, due to a culture of intimidation within the industry. This unfortunate reality speaks to the significant power imbalance and climate of fear that has taken root.
AMCs are known to blacklist and ostracize any appraiser who speaks out against their tactics. The threat of being shut out from future appraisal assignments – a terrifying prospect that could jeopardize one’s entire livelihood – has forced many talented, ethical appraisers to remain silent, even when they have valid, important criticisms to share. This pervasive climate of fear has stifled open discourse and allowed the AMCs to prioritize their own profits over the integrity of the appraisal process, which is a fundamental pillar of the housing and mortgage markets. Appraisers who value their careers and livelihoods are left with little choice but to voice their grievances anonymously, knowing that their careers could be irreparably damaged if they challenge the status quo. This troubling state of affairs highlights the urgent need for greater oversight, transparency, and accountability within the appraisal industry. Professionals must be empowered to freely advocate for much-needed reforms without the constant threat of retribution from the entities that wield such outsized influence over their careers and livelihoods.
Footnote:
[1] Appraisers Not to Disclose AMC Fee? (https://appraisersblogs.com/xome-questions-ny-amc-disclosure-fee)
Where Is the Invoice? (https://appraisersblogs.com/missing-invoice-4-appraisal-services-amc-hiding-fees)
[2] Consumers Overcharged by AMCs (https://appraisersblogs.com/AMCs-overcharge-consumers)
What’s Not in Your Wallet? (https://appraisersblogs.com/consumer-must-know-actual-appraisal-cost)
AMC Fee Impact on Appraisal Fee (https://appraisersblogs.com/amc-fee-impact-on-appraisal-fee)
AMCs Take a Sizable Cut of the Appraisal Fee (https://appraisersblogs.com/appraisal-management-companies-take-a-sizable-cut-of-the-appraisal-fee)
Appraisers and Their Lack of Fees (https://appraisersblogs.com/appraisal-cost-appraisers-lack-fees)
[3] Uncovering Flaws in FHA Appraisal & Loan Review Process (https://appraisersblogs.com/uncovering-flaws-in-fha-appraisal-n-loan-review-process/)
- Lack of Fee Transparency: Exposing the AMC Exploitation - July 31, 2024
Damn well done!!
Thanks for the HUGE EFFORT!!!
How do we forward it to the CFPB?
If they would (CFPB) screwed with TRID we wouldn’t be in this excrement.
Thank you, Pat. Here is the direct link to the letter. Feel free to download or forward it as needed.
https://appraisersblogs.com/wp-content/uploads/2024/07/Desiree-Mehbod-CFPB-2024-0021.pdf
All I can say is YESSSS! Thank you.
100% true!
Excellent letter. We need to share this everywhere!!
AMC’s were never “well intentioned”. They knew what they were doing from the get-go. Thanks to our little buddy Cuomo in New York, lenders can own AMC’s. Now, by its very nature, a lender owning an AMC and making profit off of an appraiser’s back is a fraud on the American public. Oh, they’re supposed to be neutral? They’re not in the least. They represent the lenders, period. Most AMC people I know, don’t have even a minimal clue about appraising real estate or what we are required to do. As far as fees go, if I hear complaints from a borrower, I just tell them that I only get paid one quarter to one half of what they were charged for the appraisal. It’s too complex for them to understand anyway, so I never elaborate much.
Well done Desiree!
Relating to appraisal fee transparency, its also important for the powers to be to understand that even if an AMC is not used by the client we are often charged 5 to 12% for so called technology, platform, or review fees. Meaning, in the case of United Wholesale Mortgage, when they say they pay $555 for a typical appraisal (in San Diego / most expensive city in the US), the actual net to the appraiser is $493.6.
Junk fee transparency goes beyond the AMC split and should be disclosed to the world.
Seek the truth.
It’s completely insane that we tolerate the “technology fees”. No other industry would be able to get away with kicking their cost-of-doing business down the line…
And let me tell you, as a software provider myself (not to AMCs) it does not require $15 in developer salaries and servers to process an order.
Good exposure. However, how does this impact or adjust the appraisal fee beyond what appraisal companies or appraisers are willing to accept? While this information is valuable and necessary for consumer disclosure, we must be realistic—the paying party of the appraisal is primarily concerned with the overall fee, not the breakdown of where the fee goes.
Perfect Desiree. I made the same decision not to work for any AMC and am happier than ever with the job. Private work can be a well paid job with a great deal of client appreciation. It’s a disgrace this hasn’t been stopped by now. Public Trust is a joke these days and no one seems to care. Good job. Thanks for the time and spreading the truth!!!
AMC’s have pretty much ruined this profession. Glad I decided to retire (earlier than planned but happy) and leave all the BS behind.
We have no voice in this. No one has looked after our interest because we’re 70,000 individuals. They starve us and pick us off one by one. A starving dog will eat scraps.
Sorry to bring this up, but you young/younger appraisers here might believe that some day things will get better if you just keep believing. I’ve been doing this 41 years and they’ve only gotten worse. There have been interludes of good times, but they are too brief. The propagandists, including appraisers, will tell you that if you just do this or that, work harder and longer for lesser fees, take another course, integrate DEI, find another matched pair, just push value on this one deal, etc., that you’ll get more work, higher fees and we’ll, etc. and live happily ever after. Not so.
Young appraiser here… We are not optimistic. We see the writing on the wall and know that this is not a promising profession. There’s too much money and influence outside of the profession, which continues to suffocate new appraisers. I think the larger AMCs will lock step with FNMA and push out the remaining ethical appraisers when they release new forms that will require more time, money, and analysis, but offer less compensation for the product so they can keep the orders in-house.
That will continue for a few years, and they’ll be able to push appraisers out of the lending space once and for all. It’s unfortunate that people with no real estate experience working at these huge AMCs have more power and influence than the so-called “racist and inaccurate” appraisers who have been sounding the alarm of ACTUAL corruption for the past few years.
DEI? Seriously?
Well written and I agree with 99.9% of what you have written. What I question is – doesn’t the initial fee to the borrower come from the lender? It’s seems to me that the lenders should be sharing the blame along with AMCs.
I want to applaud you, specifically, on the bit about appraisers being afraid to speak up/out unless it’s anonymous for fear of their livelihood. Coming from someone who did speak out, not anonymously, to an AMC regarding their unethical practices & am now no longer receiving work from this AMC, I appreciate this being voiced. I will be sharing wherever I can!
Thank you for taking the time and effort to bring all this together.
HA HA HA, The worm is turning. I just kicked up my bids a hundred bucks. I haven’t been making any money for a long time. I could have made more money mowing grass.
Awesome, and well done!
Thank you!
Desiree for President. Nicely done!
Well done! The only thing that I think needs to be added is the LENDER’S part in all of this. AMCs are not required, and the Lenders are failing to do their due diligence and Audit their vendors (AMCs) Lenders are also responsible and need to be held accountable.
Thank you for a lucid, intelligent and well thought out objection. Now if we can just get anyone in DC to listen 😉
Prayers
Mrs Harris is already blindly following the current HUD talking points so buyer beware.
Nobody cares what happened to the once incredible appraisal profession; be it government, banks, regulators, Realtors, or homeowners. That does not surprise me. What surprises me is the fact that appraisers never cared what happened to their own careers. Not once over the last 15 years have they seriously discussed a nationwide shutdown or even a class action lawsuit. Why would you ever dream of an outcome that was any different?
Absolutely! If we don’t have a seat at the table we eat scraps.
Retired appraiser has been retired since 2009, 15+ years and he’s always on here complaining, yeesh! When I’m retired I’ll stay retired and you won’t see me commenting on appraiser blogs, especially for 15+ years. Seriously you need a hobby! stamp collecting might calm your nerves!
My hobby is trying to understand why appraisers love being kicked in the nut sack on a daily basis and continue to come back for more. It’s far more entertaining than any film or television production.
Thanks for sticking around RA, words of experience and wisdom are needed. There WAS a life before AMC’s controlled 80% or more of the work and the fees…. this used to be a Profession. But we have been picked as the low hanging fruit. The Feds and rules determined us to be Independent – and the AMC’s have abused and taken advantage of our Independence at every opportunity. Until thd CFPB or someone in DC can make some revisions to Dudd-Fwank, the beatings will continue.
Amen
Your inability to understand why the appraisal profession is necessary to save, to protect the very fundamentals of checks and balances incorporated alongside independent small businesses. You’ll see how the absence of these safeguards affects your family, and entire communities in the future. Just wait.
We’re too damned independent for our own good.
Hey who mentioned lawn mowing? It’s true you know. Thanks for reading the blogs.
I encourage everyone to take the time to read through the various anonymous comments and the few interesting and some highly detailed report presentations in the CFPB commentary areas. A set of title agency persons submitted a pre written form letter several hundred times. Mostly in the past few weeks. If you’re going to stand up for the appraisal profession. If you care. Only one day left. Letters are due tomorrow. The comment link is in the above article.
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CFPB has been asleep at the wheel for over a decade. The regulatory body is co opted by the stake holders. FHFA alongside the GSE’s demand a total restructuring of the entire system, not just the appraisal sector. All the regulatory institutions are co opted. Every single one of them through every single industry they were supposed to regulate. There will be no relief. The swamp.
https://www.regulations.gov/comment/CFPB-2024-0021-0417
https://downloads.regulations.gov/CFPB-2024-0021-0468/attachment_1.pdf
https://www.regulations.gov/comment/CFPB-2024-0021-0459
https://www.regulations.gov/comment/CFPB-2024-0021-0427
______________________________
Here is the amc trade group REVAA’s response.
https://downloads.regulations.gov/CFPB-2024-0021-0419/attachment_1.pdf
The amc’s put quite a bit of effort into damage control. More lies, more mis characterizations, more false claims.
I don’t think CFPB has been asleep – they are actively accepting “help” in their actions and opinions from REVAA.org
As well as others!
Baggins..i think you could be the right person to contact an established union to bring a cohesive effort to give appraisers a voice. it’s a big ask but the industry could use your voice..
Thank you for the vote of confidence but I’m not the one. I do not want to be an appraiser anymore and would not recommend this career to anyone. Only by a string of very lucky circumstances am I hanging on. The fight for the entire appraisal industry happened in the GSE space. And that fight appears to be lost.
Nobody wants me in charge. Because I’d walk down the line and say; You’re fired, you’re fired, you’re fired, you’re fired, you’re fired, to literally everyone whom had anything to do with setting appraisal industry policy over the last two decades.
with the thousands of appraisers out here with no voice… how about… contact a major union and get some muscle behind a bunch of scattered people that can’t get themselves together.. An established union would have the pieces to step right in and bring respectability and fairness to the appraisal industry… for a fee of course
If we don’t have a seat at the table, we eat scraps.
I’m in… actors are independent contractors and have a union so why can’t we as an industry??
AFL -CIO ?? anybody anybody …
BUELER BUELER BUELER
There IS a union. The American Guild of Appraisers, AFL-CIO They have an ad on this very page. If they got a sizeable membership, they’d be able to get a seat at the table.
BTW, click on the ad and it will take you to their website.
something must be missing..we hear of unions trying to form in coffee shops, hotels, uber and others on a regular basis…big unions are there to help with organizing…it would come with a cost but i think most appraisers would rather give a few dollars for dues rather then hundreds to AMCs..
Appraisers have always been prohibited or discouraged from discussing fees because of “price fixing”.., But I rest assured the AMC do this because they are not under the same antitrust fixing guidelines..
Appraiser have been too afraid to address this topic because of antitrust rules … Agreed there is something missing. The ability to openly discuss fees and compensation.
Define “sizeable”. Have they presented their case in detail to appraisers and informed appraisers as to what they can expect in the form of action? I have yet to run across their action plan much less their statistical projection of success.
Union dues are around $300 a year or less. That’s less than what AMC’s take out of one appraisal fee.
Appraisers may be willing to pay that IF they were certain that the union would move forward and do something. We’ve been hearing about unions offering to help for years but nothing happens. I suggest that the unions interested in collecting those fees present their plan upfront to appraisers and tell them precisely what they can do to assist. Make the fee collection contingent on collecting so many signatures. Example: Appraisers will not have to gamble away $300 until they collect 10,000 signatures. Once they have that type of interest and the union has stated their case the fee grab can commence. I realize this is a pipe dream but appraisers will never throw money at any union until they are convinced the union will do their part.
The statement justifying the fee paid to unions was;
That’s less then what amc’s take out of one appraisal fee.
The catch 22 is;
Because amc’s have restrained our trade, we don’t have that income source in the first place.
Half of nothing. Is still nothing.
The AMCs are taking half or more of our fees with every appraisal. Why doesn’t someone ask the AGA to comment? The success of any concerted action is achieving critical mass.
If the appraisal industry were to have a unified union which all appraisers were aware of and had simple access to, that would need to come directly from The Appraisal Foundation. Otherwise we’re left with volunteer efforts which the majority of industry participants are unaware of, and there is no cost effective way to reach out to them or compel their likely membership. Perhaps if TAF adopted AGA and legally incorporated them together, possibly.
A union might actually be effective at reigning in some of the rogue appraisers whom have profiteered by way of complicit dealings with unethical entities and processes. Our voices are drowned out by an elite group of special interest advocates.
Or sub the effort if the CFPB would simply honor the original intent of Dodd Frank Reg Z on C&R customary and reasonable billing, and require amc’s to pay an equivalent compensation amount as lenders pay whom do not use amc’s, aka; the VA fee schedule, or face $10k/$20k daily recurring fines for violating that basic fair dealing requirement. Put the money back in the hands of the people doing the actual work. Lenders would start ordering directly from appraisers again more frequently and skip the unnecessary superfluous additional costs imposed by amc’s.
It is impossible for appraisers to price fix, because lenders can call a different appraiser instead. Price fixing generally means from a service providers point of view; An excess cost or artificial parity price in favor of the vendor, via collusive tactics. Price fixing does not apply to a worker requesting a fair minimum wage. Refer them to the VA appraisers fee table. The VA has surveyed actual fees to come up with the fees by region table, hard factual data.
If any entity is paying less than the VA fee table, they’re paying less then a customary and reasonable billing rate. They are the ones engaging in an ongoing price fixing racket. Because they field loans on both sides of the spectrum and know how far diminished the pay scale is for the exact same appraisal request which does not flow through the VA system.
Apparently if one wants equal protection under the law, one must be a veteran or of service to veterans, otherwise the CFPB’s Reg Z on AI C&R safe harbor rules omits them from fee based due process protections. As an ML appraiser for Fannie or Freddie, your constitutional rights are violated on a daily basis, for more than just billing, your speech and protections from malicious prosecution.
https://constitution.congress.gov/browse/essay/amdt14-S1-3/ALDE_00013743/
But the wheels of bureaucracy grind very slowly. If a professional guild with tens of thousands of members demanded action, attention would be paid.
Dudd-Fwank created these “unintended consequences” and have refused to address them adequately. Customary and Reasonable?? Lack of fee discloure to lender/borrower?? Revise the damn law and take away the AMC golden ticket rule. Hold the AMC’s accountable for their process and business models. Until this is addressed at the Fed level the beatings will continue. If anyone in this country is owed reparations from the Federal Gubment it is the Independent Fee Appraiser
I’d love to see a “Where-are-they now” piece done by Baggins or someone else with knowledge and names of those who pushed hardest for Dodd-Frank. I know a few off hand (forced to resign as gov, overseeing bank closures, etc). Just like high school reunions, we should really check in on how these people have turned out the last 15-20 years… If they have all failed in epic ways then why should the industry rely on this failed policy as well… I wish I knew more and could articulate my feelings a little better but that’s where some of you more seasoned vets could add clarity to the picture.
“Customary and reasonable” is communism.
Actually C&R is based on reasonable fee surveys aka the going current market rate.
Just like per hour standards for legal representation, hiring a plumber, dealing with a general contractor.
All people whom a consumer can contract with directly.
The socialistic aspect befalls the appraisal community, because the consumers of the product can not contract with us directly for FRT’s and instead have to go through an middle manager whom jacks the consumer price up and drives the vendors fee down.
Hence the concept of C&R based on fee surveys, meant to inhibit the ability of intermediaries power to disrupt the free market. Lack of C&R is price controls. Which erodes the product quality and drives providers of the service or product out of the market space, also harming the consumer whom no longer has reasonable access to vendors whom provide the product or service.
Cam R, that sounds like a full time job with no pay. lol. How about an industry recap instead? / The point of constantly referencing DF Reg Z on AI C&R is because thousands of appraisers wrote letters, published articles, met with politicians or industry heads, or somehow were involved. Dave Biggers of Alamode personally delivered thousands of petitions to congress and had issued an independent fee survey using their Mercury systems internal database, proving factual C&R appraisal fees per region which specifically excluded amc fees. (which amc’s would have been required to abide as minimum fees.) The HVCC and interim final rule letter writing campaigns years prior had thousands of legitimate appraiser concerns, most of which have came true today.
Industry persons in the know called everything that would happen with the implementation of amc companies. 2012.
https://appraisersblogs.com/appraisal/naihp-letter-to-cfpb-regarding-appraiser-independence-regulations/
The ‘interim final rule’ summary piece by a valuation focused magazine. 2010. This was a piece before the CFPB botched the interpretations, allowing amc’s to self certify the fees they paid independent appraisers were C&R.
https://www.valuationreview.com/Resource.ashx?sn=VRSP106InterimFinalRuleReport
Congressional research summary document. 2012. The regulation of real estate appraisers. 12 pgs.
https://crsreports.congress.gov/product/pdf/RS/RS22953/11
More on the final rule. The legendary; volume discount. Abused from minute one by amc’s, and continues today. Put thousands of appraisers out of work overnight. And has caused three out of four licensed appraisers to refuse to be of service to consumers in the mortgage lending realm today, Cost savings from discounted appraisal service are not returned to the consumers, instead kept by the amc. Consumers save nothing. So much for the ‘volume discount’ theory. There is no discount. Rather a bribe. Improperly co mingled fees. Pay to play.
https://www.consumercomplianceoutlook.org/2011/third-quarter/valuation-independence/
FOUND IT! Yes! READ THE COMMENTS. Federal Reserve Board interim final rule on Reg Z C&R billing for appraisers. 2010. First link is rule, click pdf for full read on the federal register. Click second link for open comments, mostly from appraisers. How right all the appraisers were. Amc’s would decimate the industry. Amc’s had already destroyed many appraisers careers. Appraisers were begging for relief. The CFPB nullified the basic meaning of C&R, allowing amc’s to self certify instead of being forced to rely on third party surveys which did not include amc fees, or simply use the VA panel fee tables. The original intention of the rule was to require a $10k/$20k daily recurring fines against any individual amc that failed to comply with C&R compensation rules.
https://www.federalreserve.gov/newsevents/pressreleases/bcreg20101018a.htm
https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1394&doc_ver=1
Rising demins. When a substantial portion of appraisal work which sustained every day appraisers and helped us train people with more simple tasks simply vanished. The lending thresh hold which required an appraisal jumped from $250k to $400k. First link; The rule. Second link; Comments. Many from appraisers.
https://www.federalregister.gov/documents/2019/10/08/2019-21376/real-estate-appraisals
https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1639&doc_ver=1
AMC companies final rules. Click pdf in the first link for the federal register posting. Clarifies it is lenders responsibility to provide oversight of amc’s if they choose to work with them, and amc’s are agents of the lender. Second link are the open comments.
https://www.federalreserve.gov/newsevents/pressreleases/bcreg20150430a.htm
https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1486&doc_ver=1
Better then where are the politicians now… Where are appraisers today? Below; Image snip from Dave Biggers monthly news letter to Alamode subscribers on the C&R rule before the CFPB got involved. Before he betrayed everyone and sold the company to Corelogic. But up until that point he was our hero. The most respected man in the appraisal industry.
Cleanup, other. Research links. Source of the above FRB material.
https://www.govinfo.gov/content/pkg/FR-2010-10-28/html/2010-26671.htm
https://www.federalreserve.gov/apps/foia/dfproposals.aspx
Thanks for the good info again Bags. We fought like hell during HVCC and Dudd-Fwank implementation but always got bullied out due to our lack of resources. Remember the IVPI Proposal? I’ve still got a copy 😉 As low hanging fruit our profession has been used as Chattel for a cash grab by the AMC’s, REVAA and the lenders and gubment officials who are getting the lobbying checks.
Thank you. Appreciated. The second link mentioned the IVPI proposal. Still available online and I’ve posted this below comment and link many times before. The IVPI proposal. 2008.
Missing the IVPI proposal yet?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf
Thanks again – it has been a distressing decade having to work under this so-called business model. I’m mad as hell and not gonna take it anymore 😉 Well, I’ve been mad as hell since 2010 😉
For the past two decades we have been devoted to consumer protection principals, specifically in the realm of real estate appraisals. Price is not the same thing as value. Only to be told by special interest focused persons whom enjoy rich taxpayer funded incomes that the efforts do not matter, that consumer protection is better served by automated process controlled by the very same companies whom on multiple occasions have dealt with exculpatory evidence in a manner which excuses their behavior and places the blame on well intentioned appraisers instead. As if independent 1099 appraisers have any meaningful influence on mortgage lender policies and procedures, or government regulations, which we do not.
Who is really at fault? The every day workers or the persons whom instructed them and prescribed industry policy? Appraisers like myself have been consistently shut down for over two decades for simply prescribing to the notion that the principals of consumer protection should come first. Let’s talk equity. Restraint of trade. Racketeering. Or if the issue is to complicated for the people; simply call the appraisers racist instead.
For all the appraisers whom so boldly proclaim they are only a few years from retirement or have already exercised that privilege. For the gloriously well compensated people on the government payrolls. What about us? What about all the independent appraisers whom dedicated their lives to the ethical principals? Appraisal modernization. Their win will be a hollow victory.
Reading through the comments supplied to the CFPB I came across the following anonymous comment which provides insight into the lie related to appraisal fees.
As a certified residential real estate appraiser with 25 years of experience (part of 10,000 appraisals / +10 billion dollars) thanks for the opportunity to peel back the curtains related to closing costs, junk fees, appraisal management company (AMC’s) fees, and specifically what I know about (appraisal fees).
From a historic perspective (thousands of personal examples) its extremely important to understand what was charged to the consumer locally for the most popular appraisal forms some 20 years ago. In short, for a typical non-complex, non-rush conventional loan appraisal (forms 1073/1004) the fee collected by the appraiser was around $400 (add $50 for FHA loans). Multi-unit appraisals (form 1025) were at $700, with rent surveys (form 1007) and operating income statements (form 216) being priced at $75 each. Important to note is the fees quoted above were based on appraisal industry standards of the time which when compared to today took some 25% less time to complete (regardless of technically advances). Additionally, neither the appraiser nor the consumer paid any hidden appraisal junk fees. Meaning, the appraisal fee charged to the consumer was the same fee paid to the independent business owner appraiser.
Fast forward to 2009 (HVCC) / 2010 (Dodd Frank) and up to today and the following is true. The typical non-complex, non-rush conventional loan appraisal (forms 1073/1004) fee today is locally around $325. Multi-unit appraisals (form 1025) are near $500, with rent surveys (form 1007) and operating income statements (form 216) being priced at $50 each. When adjusting for 20 years of inflation the following is fact, $400 = $663.17, $700 = $1,160.54, and $75 = $124.34 (CPI inflation calculator). Additionally, and as previously stated, based on increased scope of work (SOW) requirement concerns, the time to complete the typical appraisal takes 25% longer today then from 20 years ago. Meaning, for the consumer to pay an equal fee for services from 20 years prior the above noted inflation adjusted fees should be as follows, $663.17 = $828.96, $1,160.54 = $1,450.67, and $124.34 = $155.42.
Based on the detailed analysis above (repeatable throughout the country via other millions of appraisals/appraises), and with what is presented below, for any party including the CFPB to place blame on the appraiser for the so-called increase in mortgage closing costs is at best laughable, and worst negligent and criminal.
Specifically related to the CFPB’s concern over increases in mortgage closing costs (junk fees), its important to distinguish between fact and fiction. In comparing the above adjusted for inflation plus SOW work appraisal fees (forms 1004/1073 – $828.96 / form 1025 $1,450.67) to what is available by way of a currently known government agency fee schedule ((VA appraisal fees) the following is fact. With an effective date of Dec 1st 2021 (no raise in nearly 3 years) VA fees in my county of practice are $700 for forms 1004/1073 and or discounted to the consumer some $128.96 below post inflation/SOW adjustments. Additionally, with the VA charging $950 for a multi-family appraisal (again my county of practice) this represents a discount of $500.67 to the consumer from the inflation/SOW fee. Bottom line, specifically related to appraisal fees, a blanket statement from the CFPB indicating that mortgage costs are increasing are not only false from the highlighted years of 2021 to 2023 (combined 36% increase), but are FALSE DATING BACK TO 2004!
As previously indicated, locally the current ACTUEL FEE being paid to the appraiser for the most popular forms (1004/1073) is $325, however as presented to the consumer, the appraisal fee on their loan forms is often double to triple this amount. Without required separation of fees, the borrower, the general consumer and unfortunately many other government agencies falsely believe the appraiser is getting what is been stated on the loan documents. This false belief contributes to the lie that the appraiser is gouging the consumer for profit when in fact even if paid in full (full loan stated appraisal fee), the fee paid to the appraiser would be below when adjusted for historic inflation.
The deception surrounding the appraisal fee (actual fee paid to the appraiser versus what is referred to as the appraisal fee on the loan docs) can be pinned on the use of appraisal management companies (AMC’s) popularized post HVCC/Dodd Frank (2009/2010), and or other appraisal platforms used by lenders. Without separation of fees on the loan docs, or the requirement of lenders to separately track, the borrower, the public, nor any government agency have had the ability to track these type of junk fees for 15 years. The junk fees are in essence the difference between what the appraiser gets paid and what the borrower is being charged. Based on hundreds of dollars per loan (example $300) over 15 years, combined with over 10 million appraisals, these junk fees are in the range of 3 billion dollars.
In closing, (1) the CFPB needs to historically understand the appraisal fee to judge what is truly customarily and reasonable (C&R) and apply those standards as outlined in Dodd Frank (most likely 10 to 20% above VA standards / no local increase in 3 years). (2) Work from a cost-plus system where the appraisal fee is separate from any AMC fee (often hundreds), and separate out other appraiser platform fees (an additional 5 to 15% taken form the appraiser). (3) Provide enforcement/penalties to those parties who do not pay appraisers C&R fees per Dodd Frank requirement. (4) To create competition, create a system to monitor the amount of these junk fees which often go by names of, technology, review, platform, etc. (5) For full transparency, make public any findings related to those who have contributed to the increase in closing costs, and as in the case of the actual fee being paid to the appraiser, those who get paid less today compared to 20 years ago (saving the consumer money).
Good analysis but we all knew this already. The question is, what is anybody going to do about it? Complaining to each other in this and other forums isn’t working. At the very least contact your congressional delegation, write the CFPB and make a stink to the people who CAN do something.
I suspect that the AGA & their AFL-CIO connection is the only possible solution at this point. The problem is that they are not putting in little to no effort to win over appraisers. Passive marketing doesn’t cut it. If they truly want people to join their organization they should be submitting articles to this site and other sites stating how many appraiser signups are required to actually get the ball rolling. They need to explain their plan of attack as well. Otherwise, why would any of us gamble $300 on their membership?
Merely an observation from the cheap seats.
Mr Ford recently posted in another thread. I tried to find the comment again but had deleted the link. On an older article from years ago. He said;
(from memory). Not finished, just waiting. Meaningful change may not be possible with the current administration.
Or something close to that. The thing is there is such a concerted attack on the appraisal profession, the AGA may be working overtime on just existing defense of appraiser management. This is a great concept to explore though; Integrating AGA into the TAF. Finally, new management. As far as advertising, just search Mike Ford in the above search link. His articles were among the best researched and most meaningful content ever posted to this site. His forecasts and concepts are even more valid today then they were at the time. He called almost everything that would happen with precision accuracy. Thank you.
Please see my post below regarding sending a complaint to the CFPB,
https://consumerFinance.gov
and FTC,
(go to http://www.reportFraud.ftc.gov)
Yep, it’s insane. I was getting paid $325 more than twenty five years ago.
Desiree – great voice. You have said what many appraisers have wanted to say. I remember you from my classes years ago and it is heart warming to see your ethical standards today. One big part of this problem, is the oversight of the AMC’s – other than paying State registration fees, there is minimal oversight. Each State should be auditing the AMC’s on a regular basis, but unfortunately, that is, for the most part, not happening. Desiree, great job standing for the appraiser.
Coleen, I have such fond memories of your classes at NOVA when I was a trainee – your instruction was incredibly valuable, and I still recall that time as if it were yesterday, even though the appraisal industry has changed so much since then. I’m curious, are you still teaching or appraising today?
Desiree , I am still appraising, but I am on the MD State Appraiser’s Board, so I am unable to teach while I serve. I am in my second term, which ends this year, so not sure if I will pick up teaching again. I may just write articles or courses. Who knows what our futures hold sometimes. Again, I am so happy to see your growth.
Colleen, I’m on the Virginia Board again. I would love to chat sometime
Absolutely!
This is great Desiree!!
How about an effort to fine AMCs that pay low ball fees that are NOT REASONABLE and CUSTOMARY? We all need to email or mail a letter to the CONSUMER FINANCIAL PROTECTION BUREAU (www.consumerFinance.com) – they are the authority for enforcing the Act with regard to AMC fees (Truth in lending, dodd-frank, etc) AND also submit a complaint to the FTC (go ro http://www.reportFraud.ftc.gov) they investigate bad business practices, financial fraud, etc.
Here is what I received from the federal reserve board:
Thank you for your recent correspondence to the Federal Reserve concerning a complaint against an appraisal management company.
While the Federal Reserve publishes a wealth of consumer credit information (http://www.federalreserve.gov/consumerinfo/default.htm), the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated the transfer of authority for enforcing such rules under Regulation Z (Truth in Lending) from this agency to the Consumer Financial Protection Bureau (CFPB). You may therefore wish to contact the CFPB at 202-435-7000 or visit the consumer complaint section of the CFPB’s website at http://www.consumerfinance.gov/
I hope this information is helpful.
Sincerely,
Board Staff
Another one of those days where an AMC sends me a bid before the mortgage deal is cinched. So, I spend a day putting everything together (and I put a lot together prior to acceptance and inspection) then the deal is cancelled. This used to only happen maybe once a year. Now it’s a common occurrence. My inference is that I’m supposed to quickly kill myself to cinch the deal for the lender. I’ve mentioned a few times that it’s not my job to cinch the deal. They don’t listen.
The other one is “why did you set the inspection appointment on the due date”? I didn’t set the appointment, the borrower told me that the due date was the only date they were open for me to inspect the house. Now, the AMC is angry and snippy with me. My inference is that I’m supposed to pressure the borrower into setting a much quicker inspection date. Again, that’s not my job. It’s the lenders job to stress the importance of “time is of the essence” to the borrower and maybe even tell them that an appraisal is required and to cooperate with the appraiser when he calls. But, I guess that’s just too much to ask.
I don’t know if any of you guys are experiencing this sort of thing, that is, more and more work being piled on us that simply is not part of our purview. We’ve succumbed to it way too many times. Don’t do it.