Here is an email I wrote to a good mortgage broker client I've had for the past few years, in response to one from them asking me to please sign up with Fiserv as required by Crescent Mortgage, one of their lenders:
Hi Bob,
Tom also sent me one for Taylor Bean & Whitaker, who is using some company called SecurityOne Valuation as their AMC. Both they and FiServ typically charge the borrower more than I do now, and then only pay the appraiser about $200, keeping the rest for themselves. I actually called SecurityOne to ask what their split was, but was told it was a "case-by-case" basis. They wouldn't even tell me what a typical assignment in my area paid, so I have to assume they are rightly embarrassed by the answer.
AMC's like that tend to get the appraiser with the least experience, or at least those with no other business to speak of, that is pretty much starving and will agree to do it the cheapest (to maximize the AMC's take - they don't reduce the cost to the borrower at all), and will turn it the fastest regardless of the work required to do it properly. And even then, the appraisers that don't "make the number" probably get relegated to the bottom of the call list in favor of the ones who do.
This legislation has essentially just added another layer of bureaucracy to the process - someone else gets paid for doing next to nothing and adding no value to the process. Maybe the next step will be "Appraisal Distributors" that collect the appraisal orders from the lenders and distribute them to the AMC's?
I guess it's good for the mortgage side, as I think you will find that you will get the report back just as quickly, and now the numbers will most likely always work. But chances are the borrower or the lender is getting screwed, as in my opinion it's hard to expect an honest opinion from someone who has to rely on an AMC for their livelihood. Those appraisers out in the country with no competition can live with it fairly easily since they can mandate whatever fees they want, but here in our area where there are a lot of appraisers willing to work for nothing, the AMC's know they have us over a barrel.
However, I would expect that underwriter conditions will go up, and the turn time to get them addressed will be several days since you can't just call or email and say "can you change this one little item". It now needs to be sent to the AMC in writing, who then contacts the appraiser, who fixes it, sends it to the AMC who (theoretically) reviews it, and then sends it back to you.
I, like many appraisers that have worked hard to build a business with hard work, good service, and a quality product, won't work that cheap, nor be relegated to sitting around hoping some AMC will call to offer me what is effectively minimum wage. I am fortunate to have plenty of non-Fannie/Freddie business, so I'm not going to be signing up with any of these AMC's that take half the fee for doing 15 minutes of work.
Anyway, that is my rant on AMC's. I know that it is the lenders requiring it and not you all, and I will miss your business, but keep me in mind for any jobs that are not going to Fannie/Freddie, like FHA appraisals, construction loans, or anything else that comes along.
FYI, if any lenders use AlaMode's XSite for their HVCC compliance, or AppraisalPort.com, I am set up with both of them. They charge me a flat fee of roughly $15 for every report processed which is very reasonable. And I still get my regular fee, which is the way this AMC business should work, IMO.
Anyway, I do appreciate the business we have had for the past few years, and let's please keep in touch. Maybe after a few months of this new business model, the lenders will realize they made a mistake and we can work together again. I will keep my fingers crossed!
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