The Shadowy AMC Fees Draining Billions from Homebuyers
The hidden costs of appraisal management companies (AMCs) in the real estate industry have faced growing scrutiny, as highlighted by a recent Business Insider article titled “The Hidden Middleman who cost homebuyers $12 billion dollars and counting.” The article examines the opaque practices of AMCs, which frequently charge exorbitant fees that can exceed the amount paid to the appraiser. As highlighted by former Appraisal Institute CEO Cindy Chance, this issue has faced significant resistance from entrenched interests, mirroring the challenges faced in other industries such as the pharmacy benefit manager (PBM) sector, which ultimately led to an FTC investigation.
The Appraisal Regulation Compliance Council (ARCC), co-founded by Josh Tucker, has meticulously collected evidence of this fee disparity, revealing instances where AMCs like Class Valuation, Clear Capital, Solidifi, and Nations Valuation Services have charged fees that match or exceed the appraiser’s compensation. In one striking example, an appraisal managed by Solidifi for a single-family home in California listed the appraiser’s fee as $375, while the AMC’s fee was a staggering $725. Estimates suggest that AMCs could have charged consumers approximately $12.3 billion over a five-year period, with Solidifi reporting margins of up to 28% after subtracting appraiser payments and other transaction costs. While AMCs argue that their fees are justified by the additional services they provide, such as quality control, a 2018 Federal Housing Finance Agency working paper found no clear evidence of systematic quality differences between AMC and non-AMC appraisals.
The solution seems simple: require lenders to disclose AMCs’ fees clearly to consumers, allowing them to make informed decisions about the fairness of the charges. Some states already mandate this disclosure, but there is no federal requirement in place. The Consumer Financial Protection Bureau has the authority to require this disclosure under the Dodd-Frank Act but decided against it in 2013, citing concerns about information overload for consumers. Industry leaders argue that this decision was a mistake and has allowed AMCs to abuse the system, reaping significant financial benefits at the expense of consumers and lenders. As Tucker aptly puts it, “We have a captured industry where these middlemen get to kind of do whatever they want.” It is time for regulators and industry stakeholders to take action and ensure that the appraisal process is transparent, fair, and serves the best interests of homebuyers.
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Fraud
https://appraisersblogs.com/uncovering-flaws-in-fha-appraisal-n-loan-review-process/#comments
Thanks for giving this more light!
Thank you Josh Tucker for your efforts over the past few years, amazing effort! Hopefully the media will cover this with the same ‘appraisal bias’ rigor
And why would anyone with half a brain believe FHFA? They have an agenda. Everyone needs to see through the trash.
Why does the author seemed shocked that, “in California listed the appraiser’s fee as $375, while the AMC’s fee was a staggering $725”. THIS HAPPENS EVER DAY IN CALIFORNIA. Just yesterday (from NVS), an appraiser friend of mine received an order for $275 for a property located at 4055 Bermuda Dunes Pl, Bonita, CA 91902 (+/- 1.8 million / 6 Br, 5 Ba, 3,866 sf, etc.). I would bet a Coke that the appraisal fee paid by the borrower was at least $1,000 ($725 take for the AMC).
Considering CA has around 12% of the countries population, running the numbers at $725 per AMC take means huge undisclosed profits.
Seek the truth.
If a lender is requiring an AMC service than the lender needs to be paying for that service not the consumer. Period
$Billions in overcharges ?? Seems that borrowers and Independent Appraisers may be owed some Reparations 😉 Just dreaming out loud…
Not only that think about the orders that went to the appraiser with the cheaper fee from another city or less competent. I can only imagine some cases where there is a case for disservice directly caused by the AMC
We can call it whatever we want and it is sad that with all the in your face evidence that the management companies are allowed to continue on the path of screwing the consumer, everybodies ass is on fire to come after the appraiser for trumped up charges that have no substance. This is just additional evidence there is an agenda to take down the appraisal industry at any cost. When the government is tripping over the dollars to get to the pennies and worse, allowing Americans to knowingly be screwed over something is obviously going on behind closed doors.
I think “one striking example” is probably just a typo. Thousands of striking examples would be something that needs to be investigated though. Let’s move on to learning how to change the right fee.
“The Consumer Financial Protection Bureau has the authority to require this disclosure under the Dodd-Frank Act but decided against it in 2013, citing concerns about information overload for consumers.”
I’ve heard some huge BS before, but that’s some of the biggest. Do they actually think that people believe these lies?
that’s rich!
This would be a bit more believable if the photo could spell “Homebuyer” properly.
Appraisers are so heavily scrutinized by all sorts of federal and state laws, committees, agencies and organizations. Why can’t the entire industry be so scrutinized ESPECIALLY AMCs?? We are the ones that work at the highest level of ethics. Yet we’re the ones that are accused, manipulated and cheated. It’s time for the legislators to legislate and do the work that’s required of them. What say you?
As an appraiser this is dishonest hysteria. This isn’t “costing” homebuyers billions. The appraisal fees are what the fees are. AMCs don’t have the power to increase the fees. You guys are bent out of shape about the fee split. Which is typically disclosed on transactions that I have seen. Do you guys lose your mind over the split you have with your appraisers in your appraisal office? Do you demand to disclose you pay your appraisers 45%? or 55%? By not doing that is it “hidden fees” screwing the consumer? Its the same thing. The fee is the fee. The split is the complaint. Its not an “added” cost and the consumer isn’t getting screwed. Some appraisers are that take the lowball assignments.
Interest rates and volume are the problem in our industry right now. New appraisal products will be the problem. How much time do we waste making AMCs the boogeyman when you don’t even have to work for them? Its a complete waste of time.
you are missing the point, and not really informed, rarely are the AMC fees disclosed, they are lumped in with the fee the Appraiser got for doing the work, AMCs don’t review, they are at best administrators in the process and are really only entitled to a small portion of any fee paid by a borrower – an appraisal that should cost $400-500 is commonly $800+
I just bid two jobs at $25 less each than I was getting twenty five years ago for the same types of job. I pushed the due date two days out due to the snow/ice storm we’re having here. Will I get either of them? Nope.
And, I got another one of those compliance agreement requirement things as if an AMC has a right to ask me about moral turpitude or anything else, especially any AMC out of California!
price fixers…