Validity Of Appraisal Management Companies (AMCs) Are Being Questioned

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Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut NMLS #65149

The Validity Of Appraisal Management Companies (AMCs) Are Being Questioned.  Congress seems to have taken an interest in the present appraisal process, especially as it relates to Appraisal Management Companies (AMCs).  AMCs have taken on a bigger and bigger role since the creation of HVCC.  In that short time AMC's grew from controlling 15 percent of the Appraisal Market to any where between 60 to 80 percent.  That is a huge growth in such a short period of time, and along with the growth there have come several issues.

AMC's defend there existence by claiming that they provide a buffer between Lenders and Appraisers, and prevent Lenders, Brokers, and Loan Originators from putting pressure on Appraisers to fudge appraisals. While there is some truth to that, the cost and problems that have come with that buffer out weights the benefits in my opinion.  Here are a few of the issues in my opinion that came into existence with the creation of HVCC and the Dodd/Frank bill.

  • Cost to Borrowers went up because the AMC needs to be paid for their services, yet the fee from the Appraisers remained the same.
  • Appraisers are assigned by AMCs to do appraisals in areas that they have very little or no knowledge of.
  • Appraisers being assigned by AMCs to do appraisals based on which Appraiser has the lowest fee, yet the overall fee from the AMC remains the same.
  • Appraisers are taking on a "you can't touch me attitude" (not all but enough for this to be a concern), and refusing to look at Comps that they may have missed or overlooked.  As a result properties under appraising, and adjustments are being made, that were not made before HVCC

HVCC came into being, and later much of it was adopted by the Dodd/Frank bill.  These guidelines came into being with good intentions, but the good intentions have created the issues that I mentioned above as well as others.  A modification of these guidelines needs to take place to allow  Loan Originator to be involved in the process again. The AMCs claim to be a barrier between the Lender and the Appraiser, but the reality is that they have eliminated the checks and balances that previously existed. 

In an effort to try to eliminate one monster, a new monster has been created. The pressure monster has been replaced by a much more dangerous monster,  the you can't touch me so I will do whatever I want monster. 

I for one am glad that the Validity Of Appraisal Management Companies (AMCs) Are Being Questioned, and hope that new guidelines are establish to create a middle ground between these two monsters.  Until that happens, or the present guidelines are eliminated, the Borrowers that the present rules were intended to protect, will continue to be the victims of the rules that were meant to protect them.

What we have today is a perfect example of the "Cure being worse than the Disease".

 

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Who To Call For Your Mortgage Needs In Connecticut:

George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308  gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.

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Show All Comments
Rainmaker
1,066,568
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

You raise a lot of very good points.  I think that folks had good intentions, but it is evident that this legislatiion needs to be tweaked to make it work the way it was intended.

Jul 11, 2012 06:04 PM #1
Ambassador
1,844,923
Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

George

I, for one, am glad they are taking a closer look. While the premise of AMCs is a valid one it does not appear to be working in the manner intended. The issue of cost is huge, as is the validity of the appraisals by non-local appraisers who have no clue about the area they are appraising. So much for expertise. It will be interesting to see where this leads...oh, and how much this investigation is going to cost.

Jeff

Jul 11, 2012 09:43 PM #2
Rainmaker
937,908
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

There are sure plenty of reasons to question the present system that we have in this country. The first problem is government involvement. The second problem, all of Dodd-Frank needs to be repealed, but there is not enough conversation about this possibility as yet.

Jul 12, 2012 03:12 AM #3
Rainmaker
1,018,656
Nick T Pappas
Assoc. Broker/Broker ABR, SFR, e-Pro, @Homes Realty Group, Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

George, I'm 100% with you on this.  All the points you raise are spot on.  In my opinion it's the buyer and or seller that are being harmed.  As for the "you can't touch me" attitude...I'd like to touch any organization with that kind of arrogance up side the head!  Suggested

Jul 12, 2012 03:33 PM #4
Rainmaker
1,086,870
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

George, I have one going on right now on an appraisal I just shake my head, AMCs grew too much too fast and are not always reflective of the given area with the appraisers used...better oversight is needed but I'm tired of these costs that just add to a buyers costs too.

Jul 13, 2012 03:25 AM #5
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