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.