There goes the last of the good AMCs

Sara - Contact STARS.  They've been my favorite for some time paying full fee with prompt payment.

Donne - There are several "new" AMC's which have sprung up to sidestep the loss of client relationships.  I have been solicited by them where they also ask for present clients (lenders) to solicit their services with the intent of matching lenders with preferred appraisers when orders are placed.

Didn't FHA pass a rule about having to pay appraisers a typical appraisal fee, someting about what was considered customary in the area?  I know in my area there has been people complaining because the AMCs have raised their fees about $100.  These guys are raking it in off our work & experience.  Maybe we should start our own AMC for these lenders that can no longer use their appraisers & add those appraisers to our list, so they can still use them.  Just a thought. I think a small local AMC could offer advantages to lenders that the large national ones could not. 

Craig - That was done by the Appraisal Co-op which struggled through formation over the past year plus and has, not to my knowledge, had any positive results.  Yes, FHA and other entities have stated that appraiser fees should not be reduced due to HVCC compliance.  But what is the base fee?  Is it the fee charged by the AMC to the lender or the fee accepted by the cut-rate appraiser working for the AMC?  I know when I have been presented with competitive fee scales per geographical area by AMC's and lenders, they're no where near what my standard fees or those of others in my market are charging.

Sara - To the best of my knowledge, neither I nor my processor or anyone at Cobalt for that matter are allowed to have any contact with the appraiser.  Starting with all FHA case numbers assigned on or after Feb 15th, I must order all my appraisals through an AMC.

My fave appraisers refuse to work for AMC's because the AMC's around here (Los Angeles & Ventura counties) only pay around $200 per appraisal and the standard FHA appraisal is around $400.  A good appraiser won't work for those terms for the exact same reasons you stated in your post.

Sara:

My guess is that after the AMC gets a few weeks or months of "50% off" appraisals, you'll start getting orders again.  They'll quickly realize that the low priced appraisals end up costing them a lot more in terms of poor quality to their customers, extensive overtime for their review staff and long turn times for multiple addendum requests.

The "upfront" cost of a quality appraisal is actually a lot lower than the "backend" cost of a poor appraisal.

Sara - AMEN to Jesse!  Every HVCC appraisal I have received, I have ended up appealing because of poor, sloppy inadequate work.  I'm sure those appeals and the appraisal reworks costed something and that is a cost that definitely needs to be factored in with the cost of the appraisal. 

Mind you, those HVCC appraisals that I appealed were all from AMC's that supposedly "reviewed" the appraisal before giving them to the lender and the buyer.  Good grief, one of them didn't even have the correct address for the subject property.  How much reveiw do you think went into that "appraisal review"?

Unfortunately, one of the pitfalls on the AMC's is that the appraisals are reviewed by an automated system which does not read addenda and commentary which is essential to comprehension of the report.  Then they request additional commentary which is already present.  At this point, perhaps a breathing reviewer will read the report and request verbage be added specific to each lender since they don't want to ruffle any feathers with their clients as to items being stated in a different fashion than they prefer.    If all goes well, the report is then forwarded to the client who has their underwriter (typically a person working at the job until they can find an opening at Burger King) with absolutely no appraisal experience or local knowledge, reviews the report and requests better comparables and additional commentary which was already included in the report, only done so with multi-syllable words beyond their comprehension.  This request is then channelled back through the AMC to the appraiser with the appraiser expected to "properly complete" the report for no additional fee while the AMC adds another handling fee.  Finally the report is completed with the appraiser working for peanuts, the AMC getting wealthy, the underwriter flexing the full strength of their power over something they know nothing about, and hopefully the rate lock hasn't expired or the buyer walked. 

Look at my post about competing with BPOs, what will an appraiser be able to do.  Check out this new product & post what you find out & what you think.  It's an alternative product that I don't think will be under the umbrella of HVCC.  Maybe it will be a good way to increase some of our income losses?  They say these are going for $100 - $175 & take about 1 hr to do.  That's not bad money per hr.  They do take a $30 fee for the service which provides all the data etc. to do them with.  You can find out about it by going to the Appraisal World site.

The HVCC does not mandate that a lender use a AMC from what I understand.  If a lender wanted to have a person, other than a LO or loan processor do ordering, I've heard that would be OK.  I think many lenders switch to AMCs because of the AMCs sales pitch of no cost to the lender, easy etc.  etc. Maybe some will get fed up with the AMCs and start their own ordering system that is HVCC compliant.  Could they even charge a small $25 appraisal ordering & processing fee, under HVCC?  It would be cheaper to the borrower than the high AMC fees.  I think a lot of lenders think they have to use a AMC to be compliant.  Maybe we should be informing them, they have a choice, if they do.

Sara - Craig above is absolutely correct.  No where in conventional and/or FHA guidelines does it state that a lender must use an AMC for appraisal ordering.  As a matter of fact, AMC's are not mentioned anywhere in any guidelines except for particular lender overlay guidelines. 

Lenders are free to do their own appraisal ordering and some lenders actually do.  I just wish more of them did because I assure you, not would my clients gladly pay a small (key word being small) fee to have a much more pleasant and less stressful appraisal experience than the nightmares their getting now having to work with AMC's.  I'm sure appraisers would be happier too because then they would be paid fairly.

When the government and these companies get so many complaints about their cut rate appraisers, I think they will see the error in their ways and those discounters will leave the business and professionals like your self will be fine.

it will take time but I agree these things will pass, but lets hope the good appraisers have not retired or moved on to other careers by them. I'm considering the move thing!!

I think in the long run the low fee AMC's will fade because no appraiser will work for them and they will probably be providing the sloppiest appraisals (because the good appraisers will not be using them-leaving only the sleeze bag whores in the biz to use them (sorry for profanity, as you can see this touches a nerve)).  In the end I think the middle of the road AMC's that pay decent (although still lower than we would like) and turn out a good product will survice.  The big question is-how long will this take?  Thanks for the post Sara!

I love the BPO requests from eighteen countries away where they want a drive by in the next twenty minutes two hours away and for a whopping $40. Wooo Hooo Nooooo. BPO's are dangerous valuations at 55 mph.