It’s Time to Take Out the Junk: AMC Practices Exposed
“Evil AMCs thrive not only through active malice, but also through the silence and inaction of those appraisers who could intervene.” — Edmund Burke… if he had been an appraiser
It’s a conversation we’ve all had before:
“I’ve already got all my information entered. I’m used to the system. I don’t want to learn a new process. I guess I’ll just keep paying the extra couple of dollars every month so I don’t have to deal with it.”
This applies to technology, finances, personal property – or what it usually gets called eventually: junk.
Days turn into weeks. Weeks turn into years. Before long, you find yourself mindlessly paying for something – or staring at something – only because it has become part of the routine and landscape of your life.
You still have a rotary-dial telephone in the living room because that’s where it has always been. You refuse to throw away the basket of cords because someday you might need a 25-foot coaxial cable. You hold on to that Big Bad Voodoo Daddy record because one day swing music is going to make a huge comeback.
In life – and certainly in appraising – it’s important to recognize when things are at the end of their useful lives.
That brings us to another conversation appraisers have all had:
Why am I handing over a significant portion of the fee for this assignment to a company that appears to have done very little to earn it?
Or, put another way:
I challenge you to identify another profession in which the administrative middleman routinely receives compensation equal to – or even greater than – the licensed professional who performs the work, assumes the risk, signs the report, and remains accountable for its conclusions.
I’m guessing you know where I’m going with this.
Who Actually Performs the Appraisal?
One of the best ways to demonstrate the absurdity of a situation is to explain it in the most basic terms.
At a minimum, the appraiser:
- Assumes the risk of starting and operating the business
- Obtains the required education and experience
- Finds a supervisory appraiser willing to train them
- Completes the apprenticeship and experience requirements
- Invests substantial time and money in the profession
- Passes the applicable licensing or certification examinations
- Applies to and remains accountable to the state regulatory agency
- Complies with USPAP, federal requirements, state law, and client guidelines
- Purchases professional liability insurance
- Pays for appraisal software, data services, equipment, continuing education, licensing, and other operating expenses
- Inspects and analyzes the property
- Researches and verifies the market data
- Develops and communicates the appraisal
- Signs the report and accepts professional responsibility for it
Once all that is finished, congratulations – you are finally qualified to begin your career.
P.S. If you do your job well, exercise independent judgment, and refuse to become a number-hitter, you will probably lose clients eventually.
Against that background, it is past time to highlight what portion of the consumer’s appraisal fee actually compensates the appraiser – and what portion compensates the company administering the order.
This is not an argument that administrative work has no value. It does. Order processing, panel administration, communication, compliance monitoring, technology, payment processing, and quality-control functions all require time and resources.
The question is whether the compensation retained for those services bears a reasonable relationship to the services actually performed – particularly when the appraiser provides the licensed professional analysis, bears the operational expenses, assumes the assignment risk, and remains responsible for USPAP compliance.
How Did We Get Here?
When I left commercial real estate and followed the path of the independent residential appraiser, the profession seemed filled with renewed hope and opportunity.
After the mortgage crisis, new safeguards were promoted as a way to restore trust among consumers, lenders, government-sponsored enterprises, mortgage professionals, and appraisers. Appraiser independence was a legitimate concern. Loan-production personnel should not be permitted to select an appraiser based on a desired value, threaten an appraiser’s livelihood, or condition future work on “making the deal.”
That part should not be controversial.
The Home Valuation Code of Conduct, commonly known as HVCC, took effect in 2009 for certain loans delivered to Fannie Mae and Freddie Mac. It restricted the ability of loan-production personnel to select, retain, recommend, or influence appraisers.
HVCC did not, however, enact a federal requirement that every lender use an appraisal management company. It also did not prohibit every form of communication between a lender and an appraiser. Properly separated personnel could communicate for legitimate purposes, including obtaining status updates, correcting factual errors, or requesting additional support.
Nevertheless, the practical effect of HVCC was a substantial increase in lenders’ use of AMCs. A 2011 report from the U.S. Government Accountability Office concluded that several factors – including HVCC – had increased the use of appraisal management companies. The AMC offered lenders an administratively convenient way to create separation between loan production and the appraisal function. (GAO report)
That convenience eventually became market power.
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act established broader federal appraisal-independence requirements. Those requirements are now reflected in 15 U.S.C. § 1639e and implemented through 12 C.F.R. § 1026.42.
The law prohibits conduct such as compensation, coercion, extortion, bribery, or other actions intended to cause an appraised value to be based on something other than the appraiser’s independent professional judgment.
Again, none of that requires the universal use of an AMC.
Dodd-Frank also directed federal agencies to establish minimum requirements for appraisal management companies. Under 12 U.S.C. § 3353, covered AMCs are subject to registration and supervision requirements and must have systems designed to ensure, among other things, that appraisals are performed by properly credentialed appraisers, that appraisals comply with USPAP, and that assignments are conducted independently and without inappropriate influence or coercion.
On paper, this sounds reasonable.
In practice, however, it helped transform the AMC from an optional administrative service into an entity that could market itself as a compliance shield, quality-control department, assignment gatekeeper, and necessary intermediary between lenders and appraisers.
That shift fundamentally altered the balance of power.
The Gatekeeper Becomes the Industry
The problem is not the existence of appraisal management companies.
The problem is an industry structure that allows large AMCs – particularly those employing or affiliating with their own appraisers – to influence assignment distribution, appraiser compensation, turnaround expectations, review standards, and production volume while simultaneously presenting themselves as neutral protectors of appraiser independence.
The appearance of a conflict should be obvious.
An AMC may decide which independent appraiser receives an assignment, determine the offered fee, impose the deadline, control the revision process, evaluate the appraiser’s performance, and decide whether that appraiser receives future work. If that same company also benefits economically from work completed by its own staff or affiliated appraisers, legitimate questions arise:
- How are assignments allocated?
- Are independent appraisers competing on equal terms?
- Does the lowest fee or fastest turnaround receive priority over competency?
- Can an appraiser disagree with a reviewer without risking future assignments?
- Is “quality control” being used to improve reports, or to pressure appraisers into satisfying production expectations?
- How much of the amount charged to the consumer reaches the person who actually performs and signs the appraisal?
- Who benefits when the AMC’s retained fee exceeds the appraiser’s fee?
Those are not attacks on appraiser independence, they’re legitimate questions that need to be asked.
They are questions necessary to preserve it.
The Courts Are Beginning to Hear Some of Those Questions
Several recently filed lawsuits have placed AMC compensation, fee disclosures, and employment practices under public scrutiny.
In Arnold v. Appraisal Nation, LLC, AMC Links, LLC, and United Wholesale Mortgage, LLC, No. CACE-25-019181, filed in Florida state court, the plaintiffs allege deceptive and unfair practices involving appraisal-related fees charged to borrowers.
In Bernholtz v. CrossCountry Mortgage, LLC, et al., No. 0:26-cv-61978, filed in the Southern District of Florida, the plaintiffs have raised similar concerns involving appraisal charges and the division of fees between AMCs and appraisers. (Federal docket information)
A separate federal case filed in Georgia, Golar v. Class Valuation, LLC, reportedly challenges compensation and overtime practices affecting staff appraisers under the Fair Labor Standards Act.
These lawsuits do not establish that the allegations are true. No final determination of liability has been made, and the defendants are entitled to respond to the allegations in court. The practices described in these filings mirror concerns appraisers have raised for years.
However, one aspect of the Florida cases deserves particular attention: the AMCs are not the only defendants. The mortgage lenders are named as well.
That distinction matters.
Many lenders justify their continued reliance on AMCs by describing the relationship as an outsourcing of appraisal compliance and liability. The lender pays an intermediary to administer the process, monitor compliance, and create distance between loan production and the appraiser. The implication is that the AMC assumes the associated risk and provides the lender with a layer of protection.
These cases demonstrate why that assumption should be, at the least, questioned.
The mere use of an AMC does not prevent a lender from being accused of participating in, benefiting from, or bearing responsibility for the appraisal-related practices challenged by a borrower. An AMC may perform compliance and administrative functions, but it does not create an impenetrable legal firewall around the lender. Federal law reinforces this point. Under FIRREA and the Interagency Appraisal and Evaluation Guidelines, the lender is ultimately responsible for the appraisal program, the selection of qualified appraisers, the oversight of any agent performing valuation management functions, and the compliance of the appraisal itself. Dodd Frank treats AMCs as agents of the lender, not replacements for lender liability. Outsourcing administrative tasks does not transfer responsibility. The lender remains accountable for ensuring USPAP compliance, appraiser independence, and the adequacy of the valuation used for the transaction.
To be clear, naming a lender as a defendant does not prove that the lender is liable. These remain allegations, and the courts have not made final determinations on their merits. Nevertheless, the cases show that outsourcing the appraisal function does not necessarily outsource the lender’s exposure along with it.
If anything, the use of an intermediary may create another layer of conduct for the lender to monitor. A lender that delegates appraisal administration may still face questions concerning the AMC it selected, the fee structures it permitted, the disclosures provided to borrowers, and the practices from which it allegedly benefited.
The lawsuits therefore place practices that appraisers have questioned for years – fee transparency, compensation structures, employment classifications, production expectations, and the relationships among lenders, AMCs, appraisers, and consumers – directly before the courts.
They also challenge one of the central selling points of the modern AMC model: that inserting a large intermediary between the lender and appraiser necessarily reduces risk and protects the consumer.
If the intermediary does not insulate the lender from being brought into litigation – and its compensation structure, employment practices, or fee disclosures create additional sources of risk – the industry is entitled to ask whether the promised compliance shield provides the protection lenders believe they are purchasing.
Not Every AMC Is the Problem
In the interest of fairness, some AMCs perform the role they were retained to perform.
They pay reasonable and customary fees. They select appraisers based on competency rather than price alone. They employ reviewers who understand USPAP and the difference between a legitimate correction and an attempt to direct an appraisal result. They communicate professionally, respect appraiser independence, and provide a useful service to both lenders and appraisers. The problem is that these AMCs appear to be a very small exception, not the rule. If you ask any appraiser, they can name you the worst violators out there.
This next part is probably going to ruffle some feathers.
The issue is the companies that have taken a legitimate administrative model and distorted it into a system that extracts excessive fees, suppresses appraiser compensation, prioritizes speed and volume over competency, or uses control over future assignments to discourage independent professional judgment.
Another part of the distortion involves AMCs that employ staff appraisers while also controlling the assignment flow to independent appraisers. Federal law already prohibits an AMC from being more than 20 percent owned by an appraiser or appraisal firm, precisely because of the conflict created when the entity managing the panel also benefits from its own appraisal production. When an AMC bids out assignments to independents while simultaneously feeding work to its internal staff, the independent appraiser is not competing on equal terms. The company that controls the distribution of orders, the offered fee, the turnaround expectations and the future work pipeline should not also be performing appraisals for profit. That structure creates an inherent conflict and places independent firms at a disadvantage they cannot realistically overcome.
Every profession is eventually judged by its worst examples. Unfortunately, every damaging headline involving an appraisal or an appraisal management company reflects upon the appraisal profession as a whole – even when the licensed appraiser had no control over the business practices that produced the controversy.
I have seen some of those practices firsthand.
Like many of you, I am tired of remaining silent. One only needs to speak to an appraiser in the wild, check LinkedIn, or read a blog post to know that the issue with the modern AMC model is one that all appraisers agree on. And you know reaching a unanimous conclusion from a group of appraisers is a statistical impossibility.
But what we cannot do is have a civil war amongst ourselves. A house divided cannot stand. I know appraisers who have never worked for an AMC and refuse to do so. I know appraisers who are currently employed as staff appraisers because they have no other choices, and while we may have opinions on either there is no benefit from infighting that this issue appears to cause.
I love this profession. I love talking to appraisers. Of course, we know we provide a necessary and beneficial public service. But historically we haven’t been the best at convincing others of that fact. And that’s why it’s necessary to highlight these issues to the public at large because if we’re being honest, making this issue about how the appraiser has been continually stepped on and taken advantage of probably will not move the needle in the way it needs to. The Bernholtz v. Cross Country lawsuit illustrates what we all know but nobody else does and speaks louder than I can. It isn’t just the appraiser who is being stolen from. But every consumer who has been subjected to this model.
Sunlight
They say sunlight is the best disinfectant.
Over the next few days, weeks, months – or however long it takes – I intend to highlight specific practices that I believe have contributed to the degradation of public trust in the appraisal profession, including the practices that have quietly shaped the modern AMC model.
The name Appraisal Management Company creates the impression that the company is an official or indispensable part of the appraisal process. But standing beside a picture of a million dollars makes me no more of a millionaire than placing the word appraisal in a company’s name and calling itself an appraiser.
Appraisers should be offended when our profession is damaged by conduct we did not authorize, do not control, and may be financially punished for questioning.
But indignation by itself changes nothing.
For every ten stories I have personally witnessed, I suspect thousands more have never been told. If you have experienced conduct that you believe was unethical, coercive, deceptive, or inconsistent with applicable law, document it. Preserve the emails, engagement letters, fee disclosures, revision requests, payment records, and assignment histories.
When appropriate, report potential violations to the applicable state regulatory agency or other authorities. If you would rather remain anonymous, reach out to me. I will protect your identity and, where possible, help bring the conduct into the light. The HOW part of the equation is not as important as the result. Get these issues out there in public.
The current mega-AMC model – especially one that permits a company to control independent appraisal assignments while simultaneously benefiting from its own appraisal production – needs to be abolished.
The lawsuits speak loudly.
It needs to be reformed. Portions of it need to be prohibited, … or … Either way, it is time for everyone to stop staring at the basket of cords.
AMC’s cannot survive without Appraisers. Appraisers can survive without AMC’s. It’s time to remind people of this fact, and it’s time to get rid of the junk.
- It’s Time to Take Out the Junk: AMC Practices Exposed - August 21, 2026
So many stories, still no changes.
https://appraisersblogs.com/systemic-failures-in-fha-appraisal-n-loan-review/