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Appraisal management companies frustrate brokers

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Mortgage Professional America | 21 Aug 2015, 06:30 AM Agree 0
It’s the topic the media isn’t covering and the one every mortgage player wants to read about, according to a seasoned originator
  • george | | 21 Aug 2015, 08:30 AM Agree 0
    way to cite a regulation (HVCC) that was retired in 2010 once Dodd Frank was signed into law. you've clearly done no research and at least you cited your name so that we can all see your ignorance
  • J. Garten | | 21 Aug 2015, 10:53 AM Agree 0
    We use a national AMC that does a very good job. They are constantly chasing appraisers for corrections, explanations, and more detail. So in my opinion we do not have a wide scale AMC problem.
    The problem seems to be that many independent appraisers are still resisting the detail changes that Freddie & Fannie now expect/require. Much thanks to those that are doing right! But, I do hope that that the appraisers who do not can find a way to get up to speed or get out of the business. The cheese has moved!
  • Mark Cooper | | 21 Aug 2015, 11:14 AM Agree 0
    The AMC's basically slow down the process and cost the consumers more money. They delay closings, homeowners have to get temp housing, rearrange moves $$ while they wait. Often appraisers don't show up on time (following dates in contract) and when the appraisal is inaccurate it takes days to weeks to get answers or corrections (more delays) Had a recent appraiser stop talking to AMC and all involved after taking assignment, the AMC fired her and reassigned cost the buyers days in temp housing and more to move.
  • Glenn | | 21 Aug 2015, 11:21 AM Agree 0
    "Inaccurate appraisals" is a nebulous term. When the sales agent sets the listing price without any statistical measurement, not even a CMA, the problem starts with that data integrity issue which results in an inflated listing. Flash forward a few days before closing when the Appraisal is ordered, then delivered by market supported data you now have the only professional appraised value. The agent will call the appraisal "low ball", or in this case inaccurate. I can not think of any process that places the valuation at the back end such as mortgage banking. It's obvious the appraisal is needed at the front end of the process.

    1) The majority of agents have no formal appraisal or valuation training. Yet they set the price
    2) The majority of agents have no formal training in FNMA Lender Letters, or FHA and VA Appraiser requirements.
    3) AMC's treat all licensed level Appraisers the same like their a fungible commodity as in the case of Agents or LO's...that's the issue.
    4) AMC's will restrict an appraiser within 30 miles - but still open to bring in out of area appraisers if the local appraiser refuses the low fees.



  • marcus | | 21 Aug 2015, 11:38 AM Agree 0
    An astonishing lack of research on this topic. HVCC is no more. Please don't quote the HVCC as a regulation. It never was a regulation. It was an agreement between then AG Cuomo and the GSEs as the result of a lawsuit, ironically enough, against an AMC that was pressuring appraisers to hit value.

    You also let the idea that there is an increase in inaccurate appraisals without citing any source other than a disgruntled real estate agent or mortgage officer. The data from the GSEs and FHA indicate that appraisals are significantly more accurate than they were in the 2000s. Please do some research on this topic.

    Now that those glaring pieces of misinformation are corrected please note that the number one problem with AMCs is the low pay to appraisers. Yes, borrowers are paying more, but much of that goes into the AMC's pocket. Having been on the inside of an AMC I can tell you that they need at least $150 to $200 per unit to do a credible job of reviewing and managing the process, and have some left over for profit. What does that leave for the appraiser that now has significantly more work to produce in each report? Not much. The AMCs are relying on the crop of appraisers that came into the industry in the 2000's that received little training or education. The older appraisers stuck to it during the recession as there weren't many other job opportunities. Now the older, experienced appraisers are leaving the industry simply because they can find better work in other industries. There is no new blood in the industry as it now requires a four year degree just to start, not to mention the lack of training opportunities. There are much better alternative opportunities for college grads. So there you have it in a nutshell. You want high quality appraisals from experienced, educated appraisers. Then pay for it.

  • Brad | | 21 Aug 2015, 11:46 AM Agree 0
    Como (the architect of HVCC) and Dodd-Frank have done a huge disservice to the consumer with this legislation. There is no incentive for the appraisers to produce quality work because they are hired at random. An appraiser who did bad work knows they will get hired again because the AMC cannot specify that they will not. Sure, they can be removed from the panel, but that is rare and we are all too busy to be doing the AMC's work in managing their panels. It doesn't hurt Originators or Investors nearly as much as it hurts consumers. We have had two appraisals within 4 months on the same property with an increase of 30%!!!! Didn't cost us a dime, it cost the consumer time and money.
  • Viva la Revolucion | | 21 Aug 2015, 11:48 AM Agree 0
    You think? The pinhead son of Mario Cuomo really screwed up an entire industry and many careers that worked very well for many years.
  • Really? | | 21 Aug 2015, 12:00 PM Agree 0
    AMC's were supposed to protect the appraiser from undue influence. Guess what. Undue influence is live and kicking, with lenders telling appraisers to remove reporting requirement information from the reports. Glenn is correct: Realtors have no formal training in valuation. Yet they set the price of the listing, along with the seller, who has a vested interest in the outcome. When the appraisal comes in, they are indignant and call it a bad appraisal. "The seller is not happy with your appraisal." Really? Was the appraiser hired by the lender to make the seller happy? Reconsideration of value typically has the Realtor send "comps" that are 50-100% larger than the subject. No one wants to give the lender the bad news. But hey, the appraiser is supposed to be here to protect the lender from making a bad mortgage due to value. I've had underwriters call to tell me what comps to use!!! When I say "no," I've lost business......but happily so.
  • CDG | | 21 Aug 2015, 12:18 PM Agree 0
    Problem is the AMC's are putting the appraisals up for bid at a low cost. Appraisers can look at the order and can pick and choose which orders they want to take if they so desire. Getting a consistently bad appraiser off the list is next to impossible, we are constantly stuck with poor evaluations and excessive turn around times because some of the AMC don't pay adequately for the service requested. Repeatedly the AMC's do not forward information needed to complete the appraisals. Unfortunately, the lender picks the AMC leaving brokers no choice ......the quality and service we had before now, no longer exists. Oh...and don't forget, if the value is questioned.....the appraiser is their own monitor for quality response....now how many appraisers are going to admit they botched an appraisal. Thank you Mr. Dodd for giving us high costs, poor quality and no accountability.
  • Griff | | 21 Aug 2015, 01:25 PM Agree 0
    AMC's, call the regulation whatever you like. Whereas AIR may be the newer version, HVCC was the beginning of the end for consumers, brokers and appraisers when it came to appraisals that are anything near useful. Most lenders own the AMC's so there is no recourse when a bad appraiser gets assignments one after the other. The only solution is to change lenders. My market is anywhere from 2 miles south of Cincinnati to 35 miles south. Every appraiser who is assigned a job comes from Cincinnati. There are a hundred of appraisers right in the Northern KY market, but unless the subject is over 30 miles south a Cincinnati appraiser gets the assignment. Why? because they are the cheapest. When I could I used appraisers who were honest, knew the market and had great service. Now my appraisals are done by someone vaguely familiar with the market, who take their sweet time, and at a 36% price increase to the consumer. Way to go Dodd Frank.
    If I could change ONE thing about lending it would be get rid of the AMC requirement.
  • An Appraiser | | 21 Aug 2015, 02:04 PM Agree 0
    With that in-house desk, Pool and his colleagues are assured the appraisers are up-to-date on local real estate trends and that appraisals are accurate and processed in a timely manner. Really??? Explain to me how the in house desk assures appraisers are up to date on real estate trends! Who determines if they are accurate, does the fact that they hit sales price make them accurate? The last time I checked AMC's were not a non-profit organization. Lenders, brokers and John Q Public all want quality AMC's and quality appraisers but no one wants to write the check for what it would really cost. Lenders complain the appraisers don't know the area, what about the real estate agents who don't know their area. Lenders don't question the agents ability because that's where their business originates. Lenders send over the disputes from agents with comments like "sales range from xxx dollars per square foot to yyy dollars per square foot so my subject should be worth zzz". Since when was dollar per square foot a recognized appraisal methodology. Lenders would threaten appraisers by not paying, cutting off their business, threating to take them to the local appraisal boards or worse pay extra to inflate a value. This fiasco was brought on by all the players in the industry so everyone needs to step up and take some blame. If you're always falling because you keep looking back, then look forward and move forward. AMC's are not going away anytime soon.
  • Dusan | | 21 Aug 2015, 03:11 PM Agree 0
    If your AMC is constantly chasing appraisers for corrections, explanations and details, you have an AMC problem: your AMC is hiring lousy appraisers. If they'd have good appraisers on the roster, they'd be doing no chasing for corrections, explanations and details: those come with the appraisal report prepared by a good appraiser.
  • Chris | | 21 Aug 2015, 06:06 PM Agree 0
    I really do not like George's post (first post)... I think the article was well written and shows legitimate opposing opinions. They author obviously did do homework but may not be 100% accurate. The author is raising an important issue in lending and he is correct. George is clearly a Troll pissing on people that are contributing to a conversation. George offers no content worth reading. Move on Troll George...

    That all said the AMC's are slow , add extra costs onto the borrower, hire appraisers that do the job sloppy as long as they get a paycheck....

    Small local AMC's and appraisal desks can get the job done better , faster , cheaper for the borrower , with local appraisers that know the local area. AMC often hire appraisers that claim to know the 'whole state's market.' That is bullshit. The more areas an appraiser claims to know, the more orders he receives.

    Dodd Frank regulation has added costs to the consumer, slowed the process, and has stifled home ownership and purchasing. The author is correct.
  • Tabitha | | 21 Aug 2015, 07:01 PM Agree 0
    Sorry Chris, but George is dead on. Quoting the HVCC was foolish and shows a lack of understanding of the issues.

    Absolutely nothing in Dodd-Frank requires the use of AMCs. Dodd-Frank only requires appraiser independence. Some lenders have taken the appraisal management back in-house where it belongs, and their appraisal quality has gone up considerably. These are the lenders that pay appraisers full fees, and understand that outsourcing was penny-wise and pound foolish.
  • Red Stapler | | 22 Aug 2015, 07:41 AM Agree 0
    For those who are quick to evaluate the appraiser and their process I recommend that you do your research, then please restate your opinions. Go to: http://ASC.GOV. Then if you still have the energy, go to http://USPAP.org .

    To become a Licensed Sales Agent in Michigan: A 40 hour class with only 30 minutes of Valuation Training. Then take a 75 question test. Pass/fail. Congrats your're a Real Estate Expert.

    To become a Broker in Michigan 90 hours classroom Training. Take the test, Pass/fail.

    To Become a Certified Residential Appraiser:
    Step 1: Take a 75 hour Class room training courses, Obtain a Trainee license from the State.
    Step 2: Now find a trained Certified Appraiser that is approved by the State to be your Supervisor for 2500 hours (good Luck with that).
    Step 3: Wow you did Step 2. Oh by the way you need 175 additional hours of formal classroom training before the state even reviews your Application for Licensing.
    Step 4: Now get approved by the State to take the 175 question 6 hour exam (that's only 2 minutes per question) mostly narrative questions that you have to answer statistically (Oh you don't have a Bachelor's Degree?) Never mind you're not qualified-don't waste all that training - take the gravy low bar Sales or Brokers exam.

    The most qualified, RE professional in the Mortgage process based on the above requirements: The Appraiser
  • Clark Scroggin | | 23 Aug 2015, 08:40 PM Agree 0
    While we are on the topic of inaccuracy, this article is the epitome of such. Honestly cant find a single sentence that is correct or accurate. What a biased, motivated piece of crap article.
  • Carol Johnson | | 24 Aug 2015, 10:32 AM Agree 0
    The AMC's has really slowed down the appraisal process. In our state it is mandated that the appraiser disclose their fee that is charged to the consumer. it is a sin and a shame what the AMC's are adding to the price that the appraiser actually charge. Something needs to be done about that. Within the same AMC, from one lender to another, the appraisal price vary. Why is that? Someone needs to really investigate that. The consumer has really gotten the short end of the stick on this one. And please don't get me started on the incompetence of some of the appraisers. I have never even heard of some of these appraisers. I cannot understand why the appraisal process with FHA mortgages cannot be utilized by HUD providing the appraiser such as the VA, might get better results.
  • Chipity chips | | 24 Aug 2015, 07:11 PM Agree 0
    Compare that to how many people can be put into a mortgage they simply can not afford, because the lender had direct influence over the appraiser and the value needed to make the deal work for the customer (aka, make you $$$) Don't like the rules of the business we mortgage officers created by our own bad practices? Deal with it and do the right thing
  • Brian | | 25 Aug 2015, 10:27 AM Agree 0
    I have been an appraiser over 30 years so I am going to give my opinion on the topic. Yes my world changed with HVCC, I basically lost all my 25 years marketing over night. I get it !!! However, if I had a choice between a $250.00 fee one mile from my house or $300.00 for one 20 miles from my house I will take the $250.00 fee all day long. In fact I would take any AMC's offer of $250.00 within five miles of my house, why, because I make more money. By accepting the order; my time in the car is almost one hour less, I have less wear and tear on my car, less gas usage and I know the neighborhoods like the back of my hand. Yes I am very competent going 20 miles away as I went to school there, have friends and family there and started my career there. My marketing costs are so much less than what they were 15 years ago. I don't have to collect bad debts from L/O's that begged me to please wait until closing and closing never happened. I don't have to run to the bank and cash my check before I deliver the report that doesn't meet value for fear of having a stop payment. I have completed hundreds of reviews for GSE's where the appraiser was paid "reasonable and customary" had "geographic competence" and still botched the report with canned comments and a horrible reconciliation. What the appraiser gets paid is a business decision on the appraisers part not a guarantee to the appraisers quality of work. Stop drinking the Kool-Aid that your getting crappy reports from AMC's because they only offer low fees to incompetent appraisers. Just because someone has to go 20 or 30 miles doesn't mean he doesn't know the market of the subject property.
  • TOM | | 04 Sep 2015, 11:49 AM Agree 0
    The Dodd Frank have played havoc with the housing market.AMC,s are making money at the expense of borrowers and virtually making life miserable for the Mortgage Brokers.
  • S.Smith | | 17 Oct 2015, 05:38 PM Agree 0
    Ridiculous! AMCs are a scourge and killing off the good appraisers.
  • Trainee Appraiser | | 15 Dec 2015, 01:48 PM Agree 0
    The residential appraisal business is problematic and AMCs are like trying to fix a gunshot victim with a band-aid. The fact is that we have socialized the downside risk in our financial system. FDIC isn't insolvent because we can monetize the debt, but if we ever saw that blanket put option it gives depositors exercised... that would be a problem. The secondary mortgage market is a monopsony. There is really one buyer from a risk perspective and it is the taxpayer (fannie). Given this unique market dynamic, motivations of lenders change from the days of in-house mortgages. Lenders don't care about the risk they just want to do deals, sell them to fannie, and collect their vig. The residential appraiser has been devalued and burdened at every turn. AMCs hurt appraisal quality while only pretending to eliminate moral hazard. Moral hazard is still as present as ever except now appraisers have to work twice as hard for half the money. And people wonder why low-quality appraisals are more and more commonplace. Appraisal is hard work if it is done right. It is too hard to justify doing well for a $200 fee. IMO the banks want to get rid of the appraisal profession and they are well on the way to doing it. Eventually this will cause some serious problems at the very core of our grand Fabian experiment called the Federal Reserve/FHA. Good luck to all.
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