Details of the New AMC Law

Delegates & Senators Pass New AMC Law & Clear Capital Possible Violation

No paid lobbyist, just appraisers talking with the Senators and Delegates about the abuses of some AMCs…

Governor McAuliffe signed SB1573 into law requiring appraisal management companies to pay within 30 days of the initial delivery. This becomes law July 1, 2017.

Here is how it happened….

Two appraisers, both small business owners, sat down and had a conversation with Senator Frank Wagner about some of the issues appraisers are facing. By the end of the conversation, the three were on the phone with a representative of Legislative Services drafting the verbiage of the bills needed to help protect the consumers of Virginia and the appraisal profession.

Senator Wagner introduced two bills, SB1573 and SB1575.

SB 1573 required AMCs to pay within 30 days of the initial delivery of the report. SB 1575 was a little bit confusing, but in a nut shell, this bill prohibited AMCs from including their own fees in calculating customary and reasonable fees paid to appraisers as outlined in presumption 1 of 129E of TILA. This bill, because it went against Federal Regulation, was sent to the Housing Committee for a study and will be readdressed next session.

Several Appraisers spent several days meeting with Senators, Delegates and their assistants, NO paid lobbyist, just appraisers talking with the Senators and Delegates about the abuses of some AMCs and how they are harming citizens of Virginia, local communities and small independent businesses. It really was that simple. This was a personal sacrifice of time and loss business by those appraisers and a huge win for appraisers.

The legislation had the support of VaCAP, ASA, NAIFA, and AGA. All these organizations wrote letters and their members attended the legislative sessions to speak in favor of the legislation and the appraisal profession.

When SB 1573 was introduced in the Senate General Laws Committee, Senator Wagner offered a substitute bill, essentially adding verbiage that the AMC was prohibited from utilizing staff appraisers for the completion of appraisal reports. The appraisal report must be completed by independent contractors. Forty Senators supported appraisers; the bill passed uncontested.

When the bill was introduced into the House of Representative, REVAA had gotten wind of the legislation and they were there in full force opposing SB1573. The substitute language requiring the use of independent contractors was stricken from the bill and the ninety eight Delegates passed the bill uncontested.

Here is where it gets interesting. Because the Senate version and the House of Representatives passed different versions of the Bill, a conference was held to resolve the difference. The conference members consisted of three Senators, Frank Wagner, Jill Vogel and Jeremy McPike, as well as three Delegates, Christopher Peace, Thomas Greason, and David Bulova. The conference passed the House version of the bill. We are not sure what transpired in the conference, but we encourage constituents of these representatives to have a conversation, face to face, and find out what happened. Plans have already been put in place to bring up the use of AMC Field Staff Appraisers for the completion of appraisal reports in the next General Assembly session.

We really would like to thank the AMCs for helping get this legislation passed. When we talked with the Senators, Delegates and their assistants, we learned one of the legislative assistants recently refinanced her home and had a very bad experience with the AMC. She told us, the AMC was gouging and “jacked up” the fee significantly above what the appraiser was actually paid. A Senator refinanced his home and the appraiser was sent from over 60 miles away from across the Chesapeake Bay. On the House side a Delegate knew all too well as he has a friend who is an appraiser. So a big THANK YOU to the AMCs for showing their true colors!

And an even bigger THANK YOU to all the appraisers who took the time to visit, call and email their representatives in support of our profession and public trust. We could not have done this without you! Please continue your efforts.

See the entire legislation here.

Reminder to Appraisers:

VaCAP has learned Clear Capital is reducing the number of independent appraisers on their panel in some areas. Some appraisers are getting a letter similar to this one.

Clear Capital periodically performs an administrative review of its approved vendor panel to gauge the needs of its clients and the overall capacity of its panel. A recent review of panel activity and concentration reveals Clear Capital has sufficient coverage in your market area utilizing well-established, high performing vendors. Consequently, due to the inherent costs and increasing regulatory requirements in maintaining its approved vendor panel, Clear Capital is reducing the number of vendors in this area. Regrettably this letter is to nofity you that Clear Capital is removing you from its approved vendor panel.

Clear Capital would like to take this opportunity to thank you for your partnership and wish you well in your future endeavors.

We want to remind you Virginia Law is clear about when you can be removed from a panel.

§ 54.1-2022. Appraisal management companies

C. No employee, director, officer, or agent of an appraisal management company shall influence or attempt to influence the development, reporting, result, or review of a real estate appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner, including:
7. Allowing the removal of a real estate appraiser from a list of qualified appraisers used by any entity without prior written notice to the appraiser. The notice shall include written evidence of the appraiser’s illegal conduct, substandard performance, or otherwise improper or unprofessional behavior or any violation of the Uniform Standards of Professional Appraisal Practice or licensing standards for appraisers in the Commonwealth;

If you have received notification you have been removed from their panel and not been informed of any wrong doing as described in line 7 of 54.1-2022, the AMC may be in violation of Virginia Statute. Please file a complaint with the Virginia Real Estate Appraiser Board.

VaCAP Board
Image credit flickr - James
VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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14 Responses

  1. Avatar chris says:

    Congrats !!!

  2. Avatar Carl says:

    Well done vacap!

  3. Avatar Bonnie says:

    Keep it up ! Time for EVERY appraiser to establish a relationship, IN PERSON, with YOUR representative ! An email, phone call, or letter IS NOT enough ! Get in there face !

  4. Mike Ford Mike Ford says:

    Great work VaCap!

    Every coalition could learn from you guys. Clearly one of the most active & effective in the country; though not said to disparage the efforts of any others. Then again maybe Virginia legislators are simply more open minded to constituent needs?

  5. Avatar Jack Of All Trades says:

    Good job Virginia, Illinois should follow suite by the year 2075.

    • Retired Appraiser Retired Appraiser says:

      With Kentucky following suit in the year 2525.

      • Mike Ford Mike Ford says:

        California won’t be following at all…unless you can turn this into an environmental or sanctuary state issue.

        There IS a rumor that we will seek another sales tax increase to go from our very reasonable 9.75% to 10.5% rate in order to support our real estate appraiser boards outrageous salaries as they continue to drive appraisers out of business.

  6. Baggins Baggins says:

    I certify that I have not, bribed, intimidated, withheld payment, or conditioned future assignments on certain assignment results from myself.

  7. Avatar Ralph says:

    Dart Appraisal tried to get me to take a $485 fee for an FHA multi family purchase today.  The property was around the corner from my office.  When I told them it’s $650, that is C&R in my area (VA pays $625) I got the “I’ll have to see if I can can get that approved” Needless to say, I have not heard back, nor did I want the order since I’m swamped as it is, but for a fair fee, I would have accepted it due to the close proximity and I’m practical, but I will not accept a SF fee for 1025 work.  It amazes how these AMC’s continue to shop the lowest bidder especially during a purchase transaction.  I hope the rest of you are rejecting  unfair fees or countering for C&R in your area.  Keep up the fight!

    • Avatar chris says:

      They all SUCK !!! Turned appraisal ordering into a pimp/whore relationship. Stick to your guns, the hell with them. I am so sick of seeing “This is a new client for us and we are trying to impress them with turn time”…..ya right !!!

      Wait another of couple of years !!!

    • Mike Ford Mike Ford says:

      Good job Ralph! I wouldn’t do a 3 or 4 unit for $650 either. A duplex? Maybe…if I needed the money, but in my area that’s still about 10% low imho.

    • Avatar Raymond says:

      Ralph, I have not done any work for DART in about 4-5 years. however, i received a call from them about 2 weeks ago, on a $2 million estate in rural and exclusive residential. I informed about the area and told them my fee ($1,500, 2 weeks). she thank me and stated “she had to get it approved” and code words for you are to HIGH. laughable and what is more laughable is they probably got someone to do it for 350 and 3 days.

    • I hope ‘the rest’ are accepting at least one a month of low fees for the express purpose of meeting the VaREABs requirement for turning an AMC in for paying less than C&R fees.

      Cant file a complaint unless the order is accepted and completed at the low fee.

      Think of it as charity work.

  8. Avatar realrose says:

    Chris – I couldn’t agree with you more!  I have been saying these AMCs are pimps looking for whores to do work for less than reasonable and customary appraisal fees because they are not required to disclose to the appraiser before or after their quote or delivery of the report, or in the settlement statement to the homeowner, how much $ went to the appraiser who did the work and how much $ the pimp (AMC) is getting!

    I only joined up with a few AMCs to see what types of practices they have with respect to residential appraisers. I have always been a commercial appraiser since 1979 but I have always done a few residential appraisals to keep in touch with what residential values are, and more recently to know what most residential appraisers experience since HVCC was initiated in 2006-07, (then evolving into AMCs), turning appraisers into slaves for these pimps!

    Without protection from bad AMCs (which are run by some appraisers and some non-appraiser companies) appraisers are screwed and no wonder nobody who does this as a full-time profession don’t encourage new appraisers to get into the business of appraising.  Let’s face it, appraisers have no effective lobbying and realtors and banks have oodles of money to spend at killing legislation, writing legislation and explaining the unintended consequences of legislation that favors realtors and banks.  We independent appraisers, despite being held to high ethical standards and expectations about what an appraisal is, have been thrown under the bus and made to work for the lowest fee possible in the quickest turn-around times for companies who can’t really evaluate our performance because they are UNQUALIFIED!!

    It is completely insulting to educated, trained and experienced professionals to be forced to compete with a computerized valuation program using raw data from realtors who are self-interested in having the highest value possible!  This is nothing but a total joke!  We all know that people buy homes for their family, and I have to say that I will recommend automated valuation methods and regression analyses for mortgage appraisals when robots start buying houses for their “artificially intelligent” co-habitators, and not until then.

    Behavioral economics is what we are doing when we estimate the market value of a property whether it is a commercial, industrial, retail or residential property.  If I had the time, I could prove that behavior of buyers is guided by need versus choice, I could demonstrate how rediculous it is to use regressional analyses to support a residential appraisal.  Computers who don’t “feel” buyer’s motivation should not be a primary source of value in a lender’s loan amount. Women make most of the decision about which home to purchase for their families; this is a place to live, not an investment!  It is very important which school their kids attend and how far the home is from work, shopping, recreation and other things like neighborhood character, none of which can be judged by any computer program!

    With all the computerization of the appraisal process from data gathering to writing up the report, the most aggregious is the selling of automated valuation to the public and even trained appraisers, and none of it contributes to a substantial improvement in the appraisal practice of we professional appraisers.  Anyone can enter data into a form but small spaces to describe market forces and other supporting appraisers’ comments to explain their opoinion have been introduced into the form reports used to appraise residential real estate for mortgage financing.

    This profession is an art, that uses some mathematical calculations but it is up to the experienced appraiser to use simple math and proper methodology that is often complex (whenever it isn’t a new tract home) to sort out the dominant forces that translate into the price of real estate in a specific locale, as of a specific date.  The move to make standards of professional practice into international valuation has completely missed the point that there are definite appraisal principles that can be interpreted by human intuition after examination of confirmed data, reasoning and with logic are supported by facts.

    Get the politicians out of our profession!  The AMC model must be thrown into the trash.  Most of us are suffering the post delivery beating up, just like a pimp beats up his whore (scope creep and why didn’t you use these comps?).  When AMCs think they own us, we must stand up to these unlicensed, untrained clerks who are getting an unknown amount on top of our fee!  At a minimum, prior to providing a quote on fee and turn-around time, the appraiser must know in advance what amount as a percentage on top of the appraiser’s fee is going to be charged to the borrower.

    I would never get on Clear Capital’s fee panel because I get a very bad feeling about their practices and think we should all tell AMCs that our appraisal already addressed all relevant data and analysis when they come back to do their so-called “review”. What I have found in the work I have done for AMCs is that they will lie that they are licensed or the AMC let the underwriter from the bank review our work, or they put it thru a computer program they call an analytical tool that identifies weaknesses in the appraisal.  This does not take into consideration that each property purchased may be custom or have unique features that are marketable or which value is substantiated by our normal methodology outlined in the sales comparison approach. Where land values are professionally estimated, construction costs are known, soft costs and indirect costs are included, doing the cost approach gives us a check on our value by the sales comparison approach. (kind of like a check and balance).

    Stand up to those AMCs and file a complaint for each transgression as we need to get these unqualified profiteers out of any role in our opinions and conclusions as to value.  We are the professionals here and need to expose how unlicensed, untrained AMC clerks with no experience doing this work are capitalizing on our experience, licenses, e & o, mls fees, re-licensing fees, and who wrongly take a fee for putting our labor into a computerized program that causes us to do more work to prove what we already substantiated, all so they can steal a substantial portion of the appraisal fee for themselves.

    By the way, do these clerks at AMCs have to go thru a background check?  Maybe they are too young to have done any naughty things in their life that would be of record.  Yet an appraiser who has applied for a license or renewal is subject to a background check as a normal course of business.  How are we so dangerous?  Even some states allow the sale of guns without a background check!  How many AMCs have been assessed fines for improper pressure on the appraiser or negligence to pay in a timely manner. I guess we put up with the squeeze on our profit because we have to put food on the table and pay the rent or mortgage, but I can speak from experience that every time I finish an appraisal assignment, I go out of business.  How many other professions in the financial industry are regulated to death by others who use their services to make a profit.  I can’t think of any business; Do CPAs get background checks? Can they choose their clients without excessive rules coming between them and their users?  It is about time we get aggressive to rid ourselves of these pimp machines and discredit computer programs that pump out valuations for 50 cents in ten minutes, and why would we, who have licenses and training try to compete with an AVM?

    Given the choice, many appraisers have expanded their practice to clients who are not lenders.  I have always done appraisal for other than lending purposes but when that’s the bulk of the jobs out there for appraisers, we are severely restricted beyond what is reasonable, in favor of the banks which are the owners of many of the AMCs.

    Fellow appraisers, please correct me if I am wrong on any of the above comments. I invite you to make a case of why we should support the AMC model or work on antiquated forms that cause us to speak to Fannie and Freddie’s computers so they can package loans and call them securities.  They sunk our ship in 2008, and we didn’t cause the housing crash, wall street and FNMA and Freddie Mac did, with the help of their mortgage brokers and realtors and banks who always get their way then they helped politicians write Dodd-Frank, but they ignore the fact that we are the only qualified professional in the financing of a home that can provide an opinion of value that uses one or more approaches to support our value opinion.

    And don’t even get me started on what damage the Appraisal Foundation has done to ruin our profession!  They say on their website that they are the foremost experts on real estate valuation. I am just disgusted when I see that after they have injected their two cents into the rules we work under, while doing nothing but destroying our professions!  Then we have regulators going to meetings and conferences that issue licenses in the state that have never prepared one appraisal, and who have no background in this profession figuring out ways to disqualify appraisers, thereby putting more appraisers out of business.  You’d think they were trying to limit the supply, then they think they can tell us what a reasonable turn-around time should be!


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Details of the New AMC Law

by VaCAP Board time to read: 4 min