Appraisers left high and dry as AMCs shut down

by Kelli Rogers24 May 2013
Appraisers are facing delays to their payments - or even not getting paid at all - as appraisal management companies go under.
 
When an appraisal management company shuts its doors, the argument is unsettled as to what kind of intervention is necessary to ensure agents are compensated for valuation services. 
 
“There is an industry problem with appraiser payments,” said Tom Hurst, president of appraisal management company Streetlinks.  “Whether it be with the fact that it is extensively delayed with some lenders – strung out 45, 60 or 90 days – or never getting paid.”
 
The payment problem is compounded by the string of appraisal management companies (AMC) who have declared bankruptcy in the last few years, leaving a wake of unpaid appraisers. 
 
Major lender MetLife Bank stepped up in 2012 to pay appraisers for unpaid work completed for AppraiserLoft, which declared bankruptcy in early 2012. Later in the year, Wells Fargo offered to compensate those who had completed appraisals on behalf of the lender through JVI Solutions, which also closed and left appraisers with unpaid invoices. 
 
“With multiple AMCs recently closing their doors, some lenders have been put in a tough spot – including being left to pay millions in situations where the AMC collected the funds, but failed to pay the appraiser,” Hurst said.
 
Wells Fargo noted that it wasn’t obligated to pay the outstanding balance that was due and owing by JVI,but the contention that a lender must pay appraisers even when an AMC fails to do so is supported by the Dodd-Frank Act, which states that both lenders and AMCs are required to pay appraisers “customary and reasonable” appraisal fees, said Peter Christensen, general counsel for LIA Administrators & Insurance Services. 
 
“If the AMC goes under, I’m not going to blame the banker, but there’s a general feeling that we all want to make and maintain good relationships just like we did in the past,” said Dustin Harris, an appraiser who runs The Appraiser Coach.
 
While some advocate for the government to insert a heavier hand to regulate appraiser payment, Harris advocatesthat the private sector take action. Responsibility should fall on the shoulders of appraisers too, he said. 
 
“We choose who we work for, we choose to accept assignments, so if we’re looking at a company that hasn’t paid us for three months already, a red flag should go up,” said Harris, who himself was left unpaid when Evaluation Solutions/ES Appraisal Services(ESA) declared bankruptcy and left over $9 million in unpaid invoices.  
 
Harris would like to see increased use of tools like Appraisal Advisor, where appraisers can rate and review AMCs before getting involved with them.
 
Streetlinks also recently announced their AppraiserPlus program to address the problem of late payments. Through the program, appraisers will receive the majority of their payments at the inspection versus weeks or months later “to allow appraisers to focus on running their businesses and brings back the days of “COD” style payment.”
 
Despite regulation, banks,lenders and mortgage companies need to understand that there’s still a relationship to be built with appraisers, Harris said.

COMMENTS

  • by 2BSquare | 5/24/2013 6:46:27 AM

    It is my understanding that if the lender were to split the fee (appraisal and AMC) on the HUD and the Appraiser was not paid, the mortgage has a TILA violation, accompanied by all of the recourse TILA offers.

  • by Baron Kahle | 5/30/2013 11:12:49 AM

    There are services such as Mercury Network by Alamode, inc that provide legal, ethical communication between lender and appraiser without the AMCs who are middlemen who skim fees and manipulate correspondence between appraiser and lender. An objective, neutral electronic medium that accommodates transparent, efficient order and delivery of appraisal reports. The time has arrived for such services. Besides, you will find that appraisers who rely on AMCs are the ones to avoid since the highly professional appraisers can operate competently and ethically without them. why? The veteran appraisers remember when a well developed reputation was needed to gain assignments from major institutions. The newer slam-and-jam appraisers never relied upon a clean reputation but AMCs to attract business.

  • by Burnell Thorley, State Certified General | 8/12/2013 3:47:14 AM

    The Gov. created this mess, but they dont see to be stepping up to the plate to get us out. I lost $5000 to ES appraisal when it went down. I understand that Chase won the law suite so that is not really responsible for my fees. However, it my contention that Chase knew what was happening, what kind of Co. ES Appraisal Service was, and they were working with them all the way along, and they should be taking responsibility for my fees. Now that I have read this article I am more convinced of this.

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