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Can I quote you on that, AMC? HVCC take heed....

Every time I get an order from an Appraisal Management Group I'm reminded of the HVCC's proposal to make AMCs the go-betweens for lenders and appraisers. The idea behind this is to reduce lender pressure and coercion in finance transactions. Pardon my military, but Whisky Tango Foxtrot?

I'd like to share some excerpts that come straight from the mouths (er, emails) of AMCs :

"Please advise if the borrower's estimated appears to be unobtainable prior to scheduling." [Hmmm... shouldn't you just say ‘comp search'?]
"Please remove the supplemental addendum from the report." [Thank you for saying please... NO.]
"For future reference, we need to have the reports without invoice" [I'm not sure I feel comfortable with that.]
"PLEASE COMMENT IN REPORT, "Appraiser is completing the cost approach section solely upon the request of the client. The cost approach figure was based upon inspection of public records and, as such, the comparison approach would be considered the more reliable value." [Please don't put canned statements in my mouth]
"you are allowed to make changes and consider information after the effective date of the report." [why bother with a comment here?]
"comments found on the supplemental addendum noting revision requests should be kept separate from the report." [but then how will the reader know why changes have been made?]
"Per ERC Guidelines, this adjustment is always to be a lump sum adjustment" [this would be your client's guidelines, not ‘ERC Guidelines]
"If we can not get a hold of your office to confirm that the inspection has taken place we will be faxing out new forms titled 'STATUS UPDATE REQUEST FORM'. These must be filled out and faxed back" [Now there's a time saver]
"I am in the middle of a mess right now." [you and me both, sister]
"ABC Company is the client in this case and you can answer them directly." [Ummm... no, YOU are my client and I cannot correspond with them at all]
"One of my coworkers is able to remove the pages" [Wha wha what??? Note to self, always number pages!]
"We reassigned it to another appraiser. " [Could it have been my attitude or requirements for living wage fees?]
"We are anticipating a significant increase in business due to the 2009 Legislation" [ARrrrgGGGhhh!!!]

But wait, there's more! In general I have experienced a higher communication breakdown with AMCs over lenders, more (yes, I said MORE) pressure, status calls from multiple AMC employees (who don't check their emails?... because that is where I send status info), general real estate knowledge barriers and for all this... a smaller pay check.

Now... is it really a stellar idea to call AMCs the ethical answer?

I can't predict the future, but I bet the industry is going to lose some darn good appraisers if this is their only option for finance and refinance appraisals.

Posted by Sara Goodwin - Portland, Oregon Appraiser on 07/16/2008 01:52 PM

Comments (37)

appraiser issues, hvcc, amc, ethics

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37 Comments on Can I quote you on that, AMC? HVCC take heed....

JUL

2008

Sara,

I came from a year in hell with a national bank that had to use an AMC. Whiskey Tango Foxtrot doesn't even begin to discribe what is going on there. I now work for a bank/broker and we are still able to assign our own appraisers (for the moment). I have never tried to influence an appraiser's value, but I do know that one appraiser knows more about a specific area than another does or maybe a specific type of property.

I know we will all be using AMCs soon, but the only thing I see it doing is slowing down the work flow and increasing the price. Both wonderful for the lender and the borrower. Thanks for your blog.

JUL

2008

Hello Fred - Thanks for checking in. It's good to hear that it's not just appraiser's that are discouraged by the HVCCs proposals.

Michael - It will be interesting to see if current events change focus on the HVCC while the government is busy pulling FM and FM out of the sink hole they decided to dive into.

JUL

2008

Sara, I generally like what your saying, but I disagree with the one, ""ABC Company is the client in this case and you can answer them directly." [Ummm... no, YOU are my client and I cannot correspond with them at all]." While correct in regard to who is the client, when the client gives you permission you can correspond with anyone.

In the case of such a statement, I suggest corresponding with the lender as requested. Ask the lender how much they are paying the AMC, then explain to them how much time and money they can save by hiring you directly. LOL

I've worked for AMC's over the years dropping tose who paid too low and expected too much. There were some which originally appeared to be operated by appraisers who knew what constituted a good appraisal and acted as a go-between with the lender. However, I have noticed substantial slippage from that position as more and more AMC's crop up and competition between them becomes more fierce. One of the formerly better ones now requires that, when a comp is distant, I must include the verbage "beyond the 1 mile guideline" and when they are dated I must include "beyond the 6 month guideline". Although I should know better, I still like to think that the Intended User has something between their ears which allows them to understand that the two statements mean the same thing.

JUL

2008

Hello Greg - I actually verified this with my state licensure board... they said I was absolutely not to speak with anyone but the client. I had to relay this on to the client who had never heard of an appraiser coming back to them saying that they would not / could not speak with the intended user. You may want to verify this with your own state board.

Hi Richard - I know what you mean. I always know I'm going to work harder to get paid less with these companies. I'm not sure why they have three people checking up on status in three different forms of communication and no one seems to have access to the general email box. I just don't want to have to get used to this as my only means of income in 2009.

JUL

2008

I am an appraisal assistant in NY. I am struggling to get fully licensed. I feel it is almost not worth it with the impending doom of the HVCC lurking. AMC do not wanna work wioth me because I am not fully licensed. My bread and butter were mortgage brokers who are now slow as heck. I am at a cross roads and considering a new career path. UUGGHHH

Richard-How much more do you have to do, to become Certified. If you don't have much more to go, get certified, and do appraising as a second job, till it picks up. If you don't have much more to go, I think it would be a waste, to walk away now. Trust me I feel your pain, by the time I got certified, most of the business dried up!

JUL

2008

I am actually very close. Being stupid I have acumulated over 200+ appraisals over the last 2 years. I thought I was ready to go. I sent in my app to NY State. I didn't read the fine print first. Apprently not only do you need X amount of apprentice hours but they need to be broken down into specific segments. For instance I had approx 75% of my appraisals being multi-family units and the rest being single-family units. They informed me I have to have 80% single-fam and the rest multi. So here I sit grinding away, making no money right now. I agree Michael, I am to close to walk away. For now I am delivering Pizza in the evenings and waiting for appraisal orders/assignments dut=ring the day. LOL.

Richard - I concur with Michael... even if there seems to be no light at the end of the tunnel, I would keep striving toward the license.

The hardest part for me was finding an appraiser to intern with, the second hardest part was dealing with the bureaucracy. I am not sure how, but I'm pretty sure I ticked off the person who accepted or rejected appraiser application packets and she made my life hell. While applying and re-applying, I took jobs as a loan processor at a couple different companies. I'm glad I did as it gave me a better understanding of the loan process. Now that things are slow, I contemplate getting my Realtors license. The key to any sort of self-employment is acclimation.

Good luck.

JUL

2008

Sara - What you are saying about self employment is very true. I just got my real estate sales agent license as well just for another means of income. I think I am going to go get the home inspector license as well. I figure it can't hurt and it will give me something to do during this down time.

JUL

2008

I just love reading your posts! Long time no chat....

I have many of the same problems with AMC's. I had a large AMC send me an order and in the comments it read from client: Only proceed if you can obtain value requested. I told them that I always pull my comps before I go out so that I can get pictures of the comps while I am near the subject. If there are any large differences in the "owners estimate" of value and the range indicated by the comparables I will not proceed with the order. I thought that was pretty witty and would send the message that I do not complete valuations on such limited scope of work. So they said proceed then an hour later I get an email emphasizing that it was absolutely necessary to obtain the value if I want the order. It was pretty funny to me at this point. I called explained that I will not be able to complete the assignment with the requirement of minimum valuation. They said "we are not asking you to do that, we just need to know the value so that we are not wasting the borrowers money". Were they trying to use the force on me? I was confussed at this point. Then the day of the field observation they canceled it and reassigned the order else where.

Well hello, Dawn - Where have you been? I know it's unheard of for a real estate professional to vacation in the summer, but I've been able to step out of the office for a day or two at a time due to the lack of work. I hope you've been taking advantage of it, too!

Hi Adam - What worries me is that AMCs have even less governing than loan officers do and so they feel like they can get away with this... and obviously they're right. Oh the future will be interesting.

AUG

2008

I am not convinced that the HVCC will ever even see daylight at this point. With the current state of fannie and freddie I highly doubt that it is of high priority. Plus from what I understand there is so much legal wrangling going on that it will be years before it even gets a chance to come into play.

YEA!!!!!!!!!!

AUG

2008

$X@$!*&^$% well, insert whatever feels right....the problem I see happening is that some are adopting the HVCC as if it were already in effect....

I accepted an order for two four plexes with a slight discount in my fees since they are identical and next door to each other. The agent tells me I will have to fill out some paperwork to be on the approved appraiser list. I discover that the broker has set up it's own AMC in house called the Real Estate Department. Here are a few of their demands:

A. Appraisal Company understands that there will be an occasional person whom ABC CO is unable to collect payment from. Appraisal Company agrees to assume the loss on uncollected appraisals in this occurrence, so long as it is no more than 1 in 20 raito. ABC will notify appraisal company when this occurs.

HUH??? They told me the reason their fees are so low is because they do the collections and the marketing so the appriser doesn't have to worry about it.

B. Appraisal Company agrees to assist REal Estate Department in determining neighborhood values free of charge.

MY GOSH..a new way to say comp search??? I questioned this and they said in no way would it be tied to an address and that a range would be fine...like $730,000 to $750,000. I said wow, most neighborhood ranges aren't so closely valued if you aren't narrowing the GLA/BED/BAth count to an address, in my opinion. No answer to that one other than, oh, no, we aren't tying this to an address.

C. Fees -- the appraiser agrees to their fees -- insert low -- which she assured me many appraisers are happy with since their normal fee is much lower. Luckily I negotiated my four plex fee before I saw their paperwork...I'b be working for $600 less than my normal fee for these two SRIPs. And we all know how much work a four plex is.

Okay, sorry, I'm done but not over it. It does help to get it out there and I thank you, Sara, for starting this thread because I see the HVCC already in effect with this company. Their agreement also said I could not accept assignments from the loan officer and could not send the report to him.

This is like fighting a ghost....it isn't real yet it's there already negatively affecting my business.

AUG

2008

I think it's time to have a one week strike!! If we could band all of the Appraisers together, and nobody accept any jobs for a week. It would send a message loud and clear, but it would never work, because most appraisers wouldn't go for it. Just another one of my pipe dreams.

AUG

2008

Greg - I retract what I said before regarding your comment "when the client gives you permission you can correspond with anyone."

While two different people at one of my state license agencies said 'absolutely no, you may not speak to anyone but your client', the other said the same thing you did and backed it up with some USPAP (which is what the first state agency was basing their rules off of). This licensure board sited the following USPAP FAQs:

36. DISCLOSING RESULTS OF APPRAISAL ASSIGNMENTS

Question:	I have been asked by my client's business associate for information relating to an appraisal report I prepared for my client. Can I disclose the results of an appraisal assignment to parties other than the client?
Response:	You can, but only if you receive authorization from the client before sharing confidential information with the client's associate. The Confidentiality section of the ETHICS RULE states, in part:
		An appraiser must protect the confidential nature of the appraiser-client relationship.
	Appraisers may disclose information relating to an assignment to:
		...the client and persons specifically authorized by the client; state enforcement agencies and such third parties as may be authorized by due process of law; and a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.

71. Appraisal management Company as authorized agent for a client

Question:

I accept assignments from an Appraisal Management Company (AMC) that has informed me they are an authorized agent for the lenders they represent. The AMC does not want me to list their name as the client, and asks that I only list the name of the lender they are representing. USPAP says the appraiser's client is the party who engages the appraiser. Is it ethical to omit the AMC's name as the client on my reports?

Response:

Yes. If the AMC is acting as a duly authorized agent for a lender, identifying only the lender as your client is acceptable.

Now I must retract my previous denial of corresponding with the intended user and try to extinguish the fire on that bridge...

Adam - I hope you're right or at least they don't rush into bad decisions just because they gave themselves a 1/1/09 go date.

Alisa - I'm all about negotiating... With your new client (should you so choose to take them on) I would only accept COD. Their contract is unacceptable.

I don't like the rest of their wording either - They sound like they may need a smack down a mortgage and fraud agency. If nothing else, their up front customer service ediquette is atrocious.

Michael - I'll strike next week! Who's in?

AUG

2008

THE GOOD NEWS

Even if HVCC becomes fully implemented on January 1st and hands over 60% of every appraisals paychecks...don't worry. Every appraiser with half a brain will abandon the profession when that happens. We can always go back once the goverment grows a brain and figures out that no intelligent appraiser will work for free. Just prepare to abandon the profession for a few months and wait it out. I guarantee that if it passes they will rethinks the HVCC (HAVOC) program very quickly afterwards.

THE GOOD NEWS

AUG

2008

Hi David -

Wouldn't it be easier for appraisers to ban together and demand a working wage? I've noticed appraisers have a hard time commuticating with one another (sort of like a roving pack of 'loan' wolves... ha!) - Perhaps now is the time to start building some community... but I don't even see the Appraisal Institute, NAIFA, or anyone else backing our cause -

SEP

2008

I decided to post this here as well - as it seems it is needed..

Just Think About It For A Second...

I have been worked with Lenders, AMCs, Appraisers, Realtors, and other real estate professionals for the last 10 years. I believe that the HVCC is a GOOD thing. Why?

My reasons are twofold.

As a broker and former Realtor and Appraiser, I have dealt with extensive pressure from the BUYERS to meet a value which in turn, I unintentionally put pressure on appraisers, even thinking of talking value ranges. Large lenders always questioned value and in turn I had to deal with the go between with the appraiser on these questions. Many times this compromised my integrity as a Broker. Many times I believed that if I didnt have someone who hit a specific value, I would LOSE REFERRALS from current clients.

Many people blame AMCs. They consider that thier ungoverned hands become dirty from client pressure. Doesn't all of ours? If you as an appraiser can say at no time you have felt and even succumbed to the pressure of valuing your properties between 2002 and 2006 then you are lying to yourself and everyone else.

What is to say that many appraisers didnt get these great relationships with brokers and direct orders from lenders BECAUSE they 'played ball'. I beleive many appraisers, if they only offered unbiased opinions, would have no business. Brokers and Lenders want appraisals that make deals work. That is the bottom line. No deal, no meal.

On the other hand, when I started using a trusted AMC (LSI) I felt a load of pressure lifted. They were the conduit from which all of the pressure I felt could be flowed through. The AMC has Quality Assurance groups DEDICATED to quality only. If your value is supported, no problem. If a value came in low, and the client was upset, they DEFENDED the appraiser! Imagine that! Why would they do that?

1. If they dont provide a quality appraisal first, they would have no business.

2. If they didnt defend their appraiser's appraisals, what does that look like to the quality of work they are providing as well?

3. They provided causal information to the lender that only they could explain in laymens terms. If the lender was still under pressure to make the deal work, they would order a second or review appraisal. (and review appraisers will tell you they are the cream of the crop) Imagine that as well! More work for more appraisers.

All of the calls and emails that the AMC's focused on you are by their client and vendor reps. They have very little if any call on whether your appraisal is quality. They just want it in on time. Again, if you didnt provide timely reports for your direct orders from Lenders and Brokers, do you really think you would still have their business? No!

Yes the turn times are slightly tighter. But FROM EXPERIENCE it takes 2 and a half hours tops to complete a difficult assignment. Yes you have drive time, yes you have inspections to set, yes you also have preliminary research time. But you would do that anyway.

The country is in a customer service oriented mode, why should appraisers be indemnified from that? They shouldn't. Everyone wants everything faster, cheaper and better. If you could buy a quality 52" HDTV for less than a grand, wouldnt you?

Take into consideration your fees. An average American worker makes $65000 a year. If you complete 3 appraisals a day working 10 hrs a day for $225 per order, you have made over $130,000 a year! Double that of the average worker in a 2000 hr workweek. Many appraisers don't have college diplomas but are concerned over continuing education fees. What about those making 65k for an $80,000 degree? We all have to pay for education, gas and our own time, so none of those should be factors in considering the differences in income. We all drive cars to work. Appraisers just drive to more places of employment (I'm talking about the subject property). Many people drive to and from work the same amount of miles you put on your cars driving to appraisal appointments. The difference is we can't claim them on taxes!

I am not here to say that appraisers should not get paid, I am just saying look at it from the normal working Joe's eyes. If you complain about fees and they take the time to add them up, you will get more opposition than you bargained for.

OK now off of that soapbox, the second reason I believe appraisal management companies are a GOOD THING is that they offer you large volumes or actually whatever volume you choose. Appraisers who do good quality, timely work will get the most work. If you owned a company, maybe you own an appraisal company, would you benefit more if your appraisers were punctual, ethical and produced high quality work or those that produce the other choices? It is a no brainer. Again appraisal management companies offer work to the best appraisers at the best fees, not just the best fees.

Well I dont know who if any of you will agree but it is hard to knock common sense. Most AMC's are built on that. Many of them will not bend to pressure even though one or two were shown to have done that. One last thought. If Cuomo would have caught a specific appraiser with inflating values, would you have wanted everyone to assume that all of you were doing that too? Just think about it.

Hello Broker - I understand in a perfect world that having mandated AMCs would solve pressure issues ... however my point was that my experience with AMCs is no different than with lenders. I still get pressured and due to communication breakdowns, I spend more time than I would directly talking with the lender. You lost me at 2 1/2 hours as well. I can't remember a time when I've only spent 2 1/2 hours on one assignment.... and don't even get me started with the amount of fees that appraisers have to pay for licensure, continuing ed, etc . I would bet the appraiser is already the lowest paid real estate professional out there on average.

FEB

Hi Sara, Kudo's to you for showing what the AMC's are really all about. I've never worked for one in my 18 years of appraising. I'd like to add one point to this discussion. If all appraisers will be working for AMC's, with no pressure to increase values, and appraisals are based on past sales; how will this affect the recovery of the housing industry? I foresee a long period of stagnation that will not last for years, but for decades. I e-mailed my opinion on HVCC to the Obama website, and all I've received so far has been spam. Speaking of spam, that's probably what most appraisers will be eating soon.

FEB

Hello Gregg - Very good points, all of them - And good for you for sending your opinion to the Obama website (the spam ... of all kinds... is unfortunate) - If you have a moment, could you post the web site here for others to follow suit?

It's the same as before, WhiteHouse.gov. While I'm on the subject: I had sent a couple of disagreeing comments to the Bush administration, and about the 3rd time that I went on the website, "they" started downloading some kind of program on my computer. I have no idea what it was, but once I heard my hard drive start grunting, I immediately shut off my modem, shut down the computer, and went back in and deleted the file that they'd tried to install on my computer. I would have to assume that this could happen under the current administration, so always be careful when you're on any .gov website, especially WhiteHouse.gov. Thanks for your reply.

FEB

Ouch - Good to know. I'm sure we all (appraisers) have an FBI file... I don't need to get on their 'suspision list', too -

APR

Re: JC - Broker In Maine's comment

Who is this person and what planet do they live on? It takes 2 1/2 hours tops to complete a difficult assignment? Perhaps is every house in your town is 1,000 sf and that's the most difficult...perhaps...certainly not with the 1004MC however. I have had difficult assignments that took 2 1/2 hours to measure and sketch alone.

Your calculations appear to indicate that appraisers earn far more than they deserve. I don't know many appraisers that work a 40 hour work week (especially if they complete 3 orders per day). That is closer to a 70 hour work week if you are going to be completely honest. In that case you can assume the appraiser is now earning $135,000 per year for 2 years work squeezed into one year. Now take into account that you failed to mention overhead and expenses (40%-50% for most shops).

Wow...when you actually do the math correctly and include ALL of the numbers you will find the appraiser that you appear to both envy and hate 70 hours per week to earn $37.00 before expenses and $22 per hour after expenses but before taxes.

Now let's take into account FHA's 10 new appraisal requirements (including the form 1004MC, absorption rate analysis, 5 comps, etc.). In most cases this at least doubles the amount time required to complete the FHA appraisal. In rural areas with poor MLS it could conceivably triple the amount of time. The appraiser will now need to work 140 hours per week to make the same income. This gives him 1.7 hours of sleep per day to eat, sleep, and have a personal life. If he manages to do that and survive he now earns $11 per hour before taxes.

Oh yes...let's not forget the AMCs fee. Take 1/2 of the fee away again and you'll find that he is now making $5,50 per hour and working 22 1/2 hours per day 7 days per week to make that same coveted $135,000 per year.

Do you still think appraisers have it made Mr. Broker from Maine? Better buy a new calculator and brush up on the REAL facts of life as they are in our business.

Forbes magazine rated the appraisal business the 4th least profitable business last year. This was prior to the government's new plan that forces appraisers to surrender 1/2 of their operating capital to AMCs (banks).

It's a losing business friends...no matter how you slice it. You can come to terms with that fact early on...or you can come to the realization when you receive you final paperwork from the bankruptcy courts.

Re: JC: Broker From Maine's comment

One more comment regarding Mr. Broker's ridiculous statement. You ask us to consider how the average Joe looks at our fee. Maybe you should ask the average Joe how much their salary has increased over the past 17 years. My research reveals that the cost of living (and most normal wages) have increased by 50% since 1992. The average appraisers fee has increased perhaps 20% but only because additional forms and research were required of the appraiser (3 year sales histories, 1 year sales history for the comps. There will likely be no fee increases for the new FHA requirements although they will easily double the work load.

Just out of curiosity, did you take the time to explain this to the Joe's of the world when you were doing your survey?

MAY

Hi Sara, How're you adjusting so far to the HVCC? I haven't received a single order from an AMC yet. It's only been 10 days, but I have to wonder. Well, actually I haven't signed up with any of them yet either. I might go full time in the real estate business, if things continue on the same course. Well, I hope that you're doing well, and I'd appreciate your feedback.

MAY

Hey there, Greg -

I've been fortunate to have a couple of direct lender clients, FHA appraisals and one AMC that pays full fee that keep me busy. I am having to drive all over the place, but I'm ok with that as opposed to the alternative.

Keep your chin above the water line!

JUN

If I were close to getting my appraiser's license I would consider myself lucky that I didn't waste the money on the license or the E & O, or the MLS, or the camera, or the...etc.

I spent 17 years building an appraisal practice; only to watch it go from $22,000 per month to $300 per month in May of 2009. Appraising is a business for chumps (until they do away with HVCC).

Personally I would rather dig ditches or deliver pizza than do a new appraisal with the 1004MC for 1/2 of the old fee.

I have just written a letter to the NAMB to encourage them to partner with the NAR. I believe that the time has come to produce a television commercial that will show borrowers just how much they will be screwed by HVCC. Example: Loss of loan locks and a higher rate (a near certainty); increased appraisal fees (guaranteed); potential of paying for multiple appraisals (strong odds); being defrauded at closing on the HUD-1 through misquoted appraisal fees (virtually certain). Need I go on?

Best of luck to everyone.

JUN

My goodness, David ... you must not need a lot of sleep. I couldn't keep up a pace of constant 14 +/- appraisals a week. That would make my work weeks about 80 hours long on average!

Much luck from one chump to another ~

JUL

I still want to know how the hvcc was so quickly brought to a reality, and who it's actually benefitting ~ how is it legal to take people's private businesses and make them join an AMC who tells them how much they'll make!?!?!?

What country is this?

JUL

Hi Shelly -

The original 'go date' of the HVCC was pro-longed by about six months (once pleas from all sides argued that we weren't equipped for the drastic changes and the lack of sufficiant 'fixes' that the HVCC had to offer) giving us approximately a year and a half to try to indefinitely postpone it. A lot of us tried. All of us failed.

This is a capitalistic country and HVCC is the scapegoat plan of some very capitilistic companies.

NOV

Hi Sara, Appraisers need to contact their Senators, and tell them to vote to dumb HVCC, when the Consumer Finance Bill reaches the senate. The time for complaining is over folks. We may only get one shot at this. Tell them how lender pressuring has shifted from the lenders to the appraisal management companies. Tell them how the greedy appraisal management companies are stealing our profits, and putting many decent and ethical appraisers out of business, ran out by those who would set up illegal sweat shops full of unlicensed individuals. Anyone who knows someone running an appraisal sweat shop needs to turn them in to their state regulators. The time to fight back is now, write or call your senator today!

NOV

You don't believe the HVCC is dumb enough? ;-)

Our state only allows two trainees per appraiser. And the appraisers are held accountable for every little thing the trainees do... which really doesn't breed appraisers around here much at all... however it seems as if the elder appraisers never retire, either.

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