NAR Adopts Policy to Regulate AMCs at Midyear Legislative Meetings

On Saturday, May 16, 2009, the NAR Board of Directors adopted policy that supports the regulation of appraisal management companies, primarily through FIRREA and the existing appraisal regulatory infrastructure. NAR President Charles McMillan hinted at such a policy in March when he testified before the House Financial Services Subcommittee on appraiser independence.

NAR’s Policy: That NAR supports the empowerment of federal mortgage regulators to adopt standards for real estate appraisal management companies and promulgate licensing requirements of said companies to the states through the Financial Institutions Reform and Recover Enforcement Act (FIRREA) and other similar legislation.

NAR’s Rationale: Appraisal management companies are not currently regulated at the federal level and regulation at the state level varies. Regulation would ensure that AMCs operate within the same basic guidelines and standards as independent appraisers. Further, this allows AMCs to be regulated within the existing appraisal regulatory structure, which avoids the need to create additional layers of government bureaucracy.

  1. This is outstanding! Of course, it makes me a little bit more aggravated that I missed this meeting, the debate, the crafting of the policy and the opportunity to speak for it at the Board of Directors meeting.
    My hat is off to the Appraisal Committee and the Chicago and DC Staff. Way to go!

  2. This is something that must get completed.

  3. Lee Aldo

    I am a member of NAR and also a state cetified residential appraiser in the state of Florida. The AMCs have all but killed our appraisal business. Everyone will see the problems caused by these things in the months to come. The HVCC and the AMCs must be exposed for what they are in actuality; a maneuvering by the big business banking conglomerates & their partners, the major Title Insurance companies to monopolize control of the appraisal industry & eradicate the mortgage brokerage middle men. Last month, the mortgage brokers yield spread was effectively outlawed. This will effect your business as well!! Do everything to abolish the HVCC!

  4. Kate Crawford

    It would be better if they got rid of the AMCs. Most are owned by the banks and pure conflict of interest.

  5. I think it is great for there to be stricter guidelines for the appraisal process. What I find to be a very big problem is to use appraisers from a rotational list who are State certified but to send them into a different county than where they are from to do an appraisal where they are not as familiar. A prime example of this is sending a Miami based appraiser to appraise a home in Broward County like in Plantation. I recently had two such appraisals that both came in under value. There has to either be a requirement added to the assigned appraiser that they be from within the county and there also has to be a better dispute process where the additional information provided to the third party appraisal company via the mortgage company would be reviewed by another neutral appraiser not the same appraiser who submitted the original appraisal that came in under value.

  6. dan


  7. AMC,s can be a good thing, yet I see many issues already. As a real estate broker I see that side, but as an appraiser I see this other side. Good experienced appraisers are not willing to work for half pay, which is what most AMC,s want to do. They collect $350-$400 from the client but pay the appraiser only $275. That leaves the inexperienced, willing to work for less appraisers to do the job. I think this is just asking for future issues of a different sort. The other issue is finding out how to even get on the AMC’s. Seems they do not have applications or information on most of the web sites, if you can even find them. That is not allowing willing able experienced appriasers the opportunity to sign up. Whats up with that??
    Somebody needs to watch and keep an eye on this very closely. I’m all for regulations, especally if they are enforced. Hats off to the realtors keeping an eye on the industry changes!!

  8. Barry in Southern California

    The ownership of AMCs by Lenders, (Banks or otherwise)or their subsidiary (blind) companies should be the first Ban by Federal regulators. Not only does it make a mockery of the reason for AMCs – a way to keep appraisers annonymous and thus not influenced by the banks, but it allows the banks (or their subsidiary companies) to, through the AMCs, take up to 1/3 or 1/2 of the appraisers’ fees and allows some to “fine” appraisers for not meeting sometimes unreasonable time constraints or to “fine” the appraiser for not making changes to the reports after submission, to alter the value or description of the then-true market conditions.
    I am still waiting for a fee to be paid after getting a “review of my work” approved by the loan broker – and no one at the loan broker’s office “knows who is in charge of payment”???? (To add icing to this very sour cake, the AMC intermediary wants nothing to do with stepping in, to help the appraiser get paid).
    What a mess – the purchase or refinance clients will equally suffer.
    This is another horrible plan gone wrong and sinks to the depths of such as the Savings And Loan debacle of the 80’s and the problem is in its infancy. Save it and the appraisers and the home buyers and sellers NOW.

  9. Pete in Southern California

    I’m all for regulation, but having these AMCs (thugs) keeping a major portion of the fees is not acceptable. If anything, they should charge about $10 per appraisal order. Maybe just have the OREA run and be in charge of distributing the appraisal orders in the entire state; at least, I hope, they will be fair and the fee (assuming $10) would go to benefit the state, not some AMC crooks.

  10. Kunal Khanna

    I am a Senior Loan officer and I already have a plethora of HVCC issues proppping up.
    1. Have a purchase, sent appraisal order one week ago, client and Listing Agent still have not been called yet! 1 week and no call, before I would had the appraisal in hand easily by now. So now you have to do longer locks which means higher rates and fees and more aggravation.
    2. If a client needs a 1st and 2nd, now they may have to order two appraisals because I cannot port one appraisal to the lender
    3. Local appraisers who the local knowledge required to do the appraisals are not getting the jobs at all, they are going to someone who will accept the low price that is given to them. The consumer is going to lose out and so will everyone else involved in the deal.

  11. Tim

    This AMC fiasco has always been troubling to me. Comming out of the S & L crisis we had FIRREA, TITLE XI. All the things in the HVCC are pretty much an enforcement of those regulations. The difference is that this time we are actually going to have strong enforcement. The HVCC, for the most part, is not anything “new”. In 1990 lenders had to maintain quality control, hire and train staff, review and be responsible for faulty valuations. Audits were completed. Underwriters actually completed the appraisal 101 intro course and knew how to read an appraisal report. Strong underwriting helped keep appraisers independent. Appraisal fees were paid at the time of assignment not as part of closing. Appraisal reports were not ordered out at the last minute and there was no push to get the appraiser to make the “deal work”. The idea then was to get the appraisal done and see what the borrower has to work with. The breakdown started when we regained some footing after the crisis and interest rates came down. Some refi business popped up and the lenders saw a chance to make some quick money. The profit margin became increased when Desktop Underwriting (automated) came in to fashion and the use of cheaper “Underwriting” Tech’s” working under a small undwerwriting staff helped increase the bottom line. Then the internet and pdf emailing of appraisal reports. Smaller lenders could compete with the big banks using technology. But at what point does turn around time for valuation decisions actually benefit anyone ? Can a borrower actually give notice at the apartment complex and move in 7 days ? Can a seller actually pack up their stuff and move out of a house in 7 days ? This nonsense of schedule in 24hrs, inspect in 48hrs and deliver in 72hrs is nothing more than AMC’s competing against each other for bank business based on a Wall St factory type metric that has shown to be a severely faulty system and most likely a large contributor to the melt down.
    Going foward lenders will have to conform to the same regulations they ran over in the 1990’s whether they use AMC’s or not. They are responsible for hiring, training, quality control, ect, ect. Outsourcing to an AMC for some percieved compliance is an error. Actually those lenders who do this then will take on the liability for the actions of that AMC. (See Countrywide). What lender in their right mind would do that ? The HVCC is finally putting some teeth into the FIRREA and TITLE XI code through strict regulation. Hopefully greed will not overcome prudence again going forward. I don’t see where there is a place for AMC’s in the process anymore. Disclosure to the borrower for fees should have always been there. Out of state, sometimes unlicensed review, should have never occurred. Automated valuation reliance for the sake of saving a buck should have never happened. AMC’s use of cheap and fast valution products or services and Wall St mortgage security hedge fund traders, rewarded on large profit with downside, are an example of what happens when you ignore a very old, tested and true business rule.
    “Inapproriate compensation structures always lead to manipulation and fraudulent behavior”
    There is no good reason for the AMC system and structure to continue. There are much easier “portal” type assignment and delivery methods available that cost is only a few dollars. My guess is its not all about the appraisal fees but more likely the relationships the lenders have with giant title service providers and their joint ventures which collect DATA. Information contained in an appraisal report can be sold over and over again generating future profits long after a mortgage loan was made. I have to also wonder when digital medical records will be used in a new type of credit report format. Soon that also will be available to anyone who has the cash to buy the subscription. If you think that lenders won’t consider the health of a borrower when making a mortgage loan in the future ask yourself “what interest rate could the bank charge on a 30 year mortgage knowing the borrower has a chronic condition ?” The answer would be INCREASED. Anything to make an extra buck.
    Banks need to get back into the banking business and out of the information services business. Let appraisers appraise and let Realtors represent buyers and sellers without manipulation of the process. Let consumers have some transparency into the process when making (probably)the largest investment of their lives.

  12. Richard A Zaikovsky

    The AMCs need regulation. They are there to insure we appraisers are not “hitting the number”, but think about it. They are in business too and have competition. So if they hire a qualifed, honest appraiser who comes up “short”, rather than lose their customer (the lender) they will find another appraiser who will “work” with them. The whole thing is a scam. All it does is take part of our fee and nothing is fixed.

  13. Richard A Zaikovsky in Indiana

    The AMCs need regulation. They are there to insure we appraisers are not “hitting the number”, but think about it. They are in business too and have competition. So if they hire a qualifed, honest appraiser who comes up “short”, rather than lose their customer (the lender) they will find another appraiser who will “work” with them. The whole thing is a scam. All it does is take part of our fee and nothing is fixed.

  14. Mitch

    When investors or banks wont to know a true value, they will order a true appraisal. $300-$400 appraisal. While they are documenting their file and passing on the loan with no strings to it’s viability, they will order what they get now. A half ass appraisal from a appraiser willing to whore out their license for a couple hunderd bucks. Where are the next generation of appraisers coming from? In my state an appraiser needs a 4 year degree, work for someone for 2000 hours. What college grad is willing to pay 4 years of schooling, work for someone getting at best half of the appraisal fee for a minimum of 2 years. So they can go at it alone after 6 years and now able to earn $125 drive-by, $225 full appraisals? I can think of many 6 year degrees that are more rewarding.

  15. Mitch

    We need all good appraiser to stand their ground. Don’t work for AMC’s at their price. Appraisers need to take back control of the process. When the industry finally needs a true value, they will pay a true fee for the amount of work needed to be completed inorder to arrive at a fair and accurate value.

  16. Jim Miller

    It all boils to three things that the AMC’s will never offer:competency, indepence and fee.
    It’s too bad that those who suffer the most are the appraisers (who do all the work) and the borrower (who sufers and has a lot to lose as well).
    Certainly not the AMC’s

  17. Greg

    As a producing manager of a mortgage bank who is using an AMC…I could scream. I don’t have issue with HVCC. For way too long loan officer and realtor alike have had too much influence over the process which have removed the value of a “disinterested” third party. Secondly appraisers have been allowed to be sloppy and lazy with there work and banks have accepted it with no recourse. I recently received a 1004 appraisal for a refinance that was done by the same appraisal company that did the purchase and the appraiser never even went to the house. They used the interior photos from the purchase. Guess what this is not and isolated case. I just happened to catch this one because I had been in the home the week before and I noticed the paint color wasn’t right in the appraisal photos. We regularly get told the appraiser never showed up or was only here for 10 minutes
    Look…I hate…HATE AMCs. As a lender I would rather see a black hole system for conventioal and FHA like we have been using for years with VA. At least the appraisers are getting paid and we know it works 95% of the time without issues.

  18. Robert S. Leon

    We’re feeling the effects in El Dorado and Sacramento County also. Very negative feelings in regards to HVCC. Alot of this from a unqualified person like Cuomo who started this fiasco. He should take care of his state first and then worry about our industry throughout the US. All the people I know in the Appraisal and Real Estate industries in Northern California are law abiding, honest, knowledgable, educated and professional people who don’t deserve the lack of respect from these AMC’s who are not regulated. My 2 cents…

  19. Paulbo

    How about the e-AMC owned by First American? They two or three times a day post an appraisal order to a number of appraisers for $180.00; I just delete them but I guess someone is doing them for that, or they would raise their offering price.

  20. Good WOrk!

  21. Tim

    See above;
    “inapproriate compensation structures ALWAYS lead to manipulation and fraudulent behavior”.
    If the appraisal firm is paid $225 out of the $400 or $500 collected from the borrower and then the actual appraiser is paid a percentage of that the result is a $150 – $175 valuation product. Again that appraisal company (while I am in no way defending them) provided exactly what you asked for;
    The highest quality valuation product available
    (in your price range).
    I must point out, as I am sure you are aware, you are as responsible for that valuation as much as that appraiser. Under FIRREA, TITLE XI, and HVCC the whole structure is a system of responsibility and accountability. The LO is an extention of the Bank, the AMC is an extension of the Bank, the Appraisal Company who did the assignment is an extention of the Bank.
    The Bank is, of course, an extention of FNMA/FHLMC, HUD, VA, ect. In this case I can only surmise that would suggest to managment to change valuation providers, or use the best solution and hire and train staff, maintain QC in house and develop a system for secure ordering and delivery of valuation products. Unless of course there is another unknown agreement that mandates use of that particular AMC. Perhaps they provide a little “extra” data collection service on the side.
    Until the lending industry realizes that compliance with the regulatory structure is going to cost them in increased overhead and bite the bullet and do it we are going to hear more and more stories just like the one you expressed here.


  23. Anonymous

    We can see the same thing in so many of the foreclosure listings costing the listing broker/agent HIGH referral fees + portal usage fees out of their commission. We do all the work and provide all our knowledge then some Asset Management company takes a huge chunk of the fee — And for what? Assigning the listing and forwarding records, etc to the banks + rarely responding to the listing agent’s concerns.
    I agree that it’s time for the licensed professionals to take back control. Why should we pay to get listings? Well, we should not be asked to do so. Let the banks pay the a/m companies and pay the licensed professionals properly!

  24. Someone should send these comments to Attorney General Cuomo. HVCC was a huge mistake and has backfired to the nth degree.

  25. mel

    So what will this regulate? Will it it do anything about the very low fees offered or ridiculous trun times required? What about how we get paid? I make more collection calls for payments than I ever have before.

  26. I too have horror stories that even include appraisers lying about FHA/VA/HUD appraisal requirements and “things builders are not allowed to decks???” So, my question is easy…who do we report these idiots to? I have a couple that definately need licenses pulled.

  27. David

    Here is a novel thought:
    Why not create BMCs (bank management companies) so the appraiser can take 40-60% of the lenders closing fees. Seems fair enough…and quite profitable. Since the banks (AMC owners) feel that they need to manage us…why not take on the responsiblity of managing their affairs. God knows Congress doesn’t seem to want the job.

  28. I think there will be a shortage of appraisers in the future as we realize how much more difficult it is to make a living with ridiculous fees and the extra work that is being requested for free. I dont work for the major banks with the $125 fees being offered. One appraiser in our office was rejected on an application for an amc due to not being certified for 5 years this rejection is being shared with other amcs(amc company name sounds like stagbar) thus creating an unofficial blacklist when there is no USPAP violations or compaints ever about this appraiser.

  29. I think there will be a shortage of appraisers in the future as we realize how much more difficult it is to make a living with ridiculous fees and the extra work that is being requested for free. I dont work for the major banks with the $125 fees being offered. One appraiser in our office was rejected on an application for an amc due to not being certified for 5 years this rejection is being shared with other amcs(amc company name sounds like stagbar) thus creating an unofficial blacklist when there is no USPAP violations or complaints ever about this appraiser.

  30. mel

    You think a buyer would be happy if they knew the appraiser was really being paid $200 of the $400 dollar fee they were charged? And being rush to come up with a value in 1-2 days on the biggest investment in their life? Maybe its worth 350k or 400k. The AMCs dont care just get it done in 24-48hrs. And remenmber, DO NOT discuss any fees with the borrower because we dont want to disclose any of this to them! Funny how they can dictate all of this!

  31. Skip Swicegood

    AMC’s have ruined the appraisal profession. The have taken 1/2 of the fee as profit for the Bank-Title Co. owners. They must be stopped.

  32. BobMarche

    Thanks for the useful info. It’s so interesting

  33. James Gross

    AMC’s complete review of apprsl reports, however, have exempted themselves, or have been allowed to be exempted, from review standards. Many states would regard this as unlicensed activity, however, all review practices should be subjected to federal law USPAP standard 3. Where are the regulatory controls?