Beware Deadbeat AMC, The FBI Wants Information

In the wake of appraisal management company JVI and most recently ES Appraisal closing up shop and

leaving appraisers unpaid estimated millions across the country it appears the FBI is preparing to take action.

Ivor Hill has been working with the FBI collecting documents with regard to JVI and appraisers who are

owed money. He has asks that we all share and ask our readers and friends to share as well.

So here's the scoop.(Paraphrased from Appraisers Blogs Post)

The FBI is interested in gathering information on ES Appraisal and any other AMC that has gone out of

business without paying for appraisals. Appraisers are advised to Contact Ivor as he is working with the FBI

gathering documentation for the FBI investigations.

Here is what's happening for all non appraisers.

Here is the condensed version; after Dodd-Frank Wall Street Reform and Consumer Protection Act

changed the processing guidelines for loan appraisal orders many lenders decided to

outsource their appraiser panels to appraisal management companies aka AMCs. These companies were

previously unregulated by state, federal, banking/finance/appraisal regs or laws and have notoriously been a

source of  contention depending on who you speak to. Historically an appraiser would run their

business like any other business; marketing themselves, their company, their skill set and fees to a

prospective client. After the law changes the appraisers who had been providing long standing quality

appraisal service to lenders, mortgage brokers, homeowners and credit unions all started seeing their regular

clients (who paid fair market fees) switch to AMCs.  The AMCs make their money by charging a

portion of the appraisal fee to assign appraisals, follow up on status, and handle value dispute forwarding.

They subtract their fee from the fee the lender has considered reasonable in the market for an appraisal

service. To be fair there are a couple of good AMCs across the country (typically owned by an appraiser);

they pay the appraiser's current market appraisal rates, allow and support the appraisers requirement to

follow USPAP , and pay the appraiser on time for every product the appraiser completes (avg 7-10 days).

The best practices AMCs add their fee on top of the market appraisal fee as a surcharge to the lender for

"management" service they are providing the lender.  This management service in no way decreases the

appraiser's workload or assist the consumer; the two parties who are directly and negatively affected.

Unfortunately many AMCs have earned a poor reputation by requiring unreasonable turn times, paying lower

than standard fees for service, increased scope of work creep, improper rating & blacklisting of appraisers,

floating the prepaid appraisal fees by paying appraisers late (30 days to 12 mos) While lenders and

credit unions paid the appraiser within one to two weeks after receipt of the appraisal product. If you have

had an appraisal recently you most likely paid $550-850 vs $375-500 on a non complex appraisal.

While AMCs have been assigning that same work to appraisers for 40-60% of the paid appraisal fee.

Compounding matters appraisal business expenses rise just like any other business and a 40-60% cut in

income can and has put a lot of experienced appraisers out of business. Let us now consider the AMCs

 that are collecting the appraisal fee then contracting appraisers for the appraisal service and closing their

doors leaving millions in fees paid by consumers to lenders who have already paid the fee to the AMC.

The AMC then "floats" paying appraisers until the AMC closes their doors leaving appraisers across the

country going unpaid. Hopefully this investigation will wakeup the AMCs  and get them to take

a lesson from their best practices counterparts before their poor practices make the business model illegal.

A positive recent change shows, lenders are catching on to the quality and AMC issues appraisers warned

about and are beginning to take some appraisal processing and appraiser panel management back in house.

One can hope that lenders have determined this is a safer and more reliable method of appraisal management

than outsourcing to AMCs.

Try to wrap your head around the idea that AMCs have increased cost to the consumer under the guise of "Protecting the Consumer". While in a free market a bad appraiser would lose business because they provided poor quality work and a good appraiser would increase business because they provided quality work.  With AMCs we are seeing good appraisers lose business, decreased income and more appraisers closing their doors every day. AMCs can now add millions in stolen appraisal fees to their reputation.