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Editor’s Note: This story is taken from the upcoming print edition of Working RE, mailing now. Am I a Subscriber?
Blacklisted for Refusing Low Fees
By Isaac Peck, Associate Editor
Here is another customary and reasonable (C&R) fee story to make your blood boil. The question is: who is listening? Since the Home Valuation Code of Conduct (HVCC) morphed into Dodd-Frank, many believe the industry is better off and headed in the right direction—greater appraiser independence, higher quality appraisals, better protection for consumers and the banking system. Appraisers like Jane Dawson tell a different story.
Dawson (quoted under an alias because she fears retaliation), tells a story that many appraisers can relate to. She says she was blacklisted for requesting what should be protected under law—her right to customary and reasonable fees. Dawson is different because instead of being secretly blacklisted and left to wonder why she stopped receiving orders after requesting a fee increase on an assignment, she was formally removed from an AMC’s panel after insisting that the AMC’s fee was not customary and reasonable.
Client for 18 Years
Dawson is a Certified Residential Appraiser in Florida with over 30 years of experience as an appraiser. Until recently, she had a strong 18-year relationship with a local credit union that she performed appraisals for regularly. For the last five years the credit union paid her a standard fee of $375 per appraisal order. There were never any complaints or quality issues. Dawson says it was a mutually beneficial relationship: the client received quality appraisal reports and Dawson received what she considered a fair fee for her services.
Recently, however, her client began using an AMC to manage the appraisal process. After an 18-year relationship with a quality client, Dawson found herself dealing with an AMC that wanted to pay her considerably less than her standard fee. Dawson says the AMC wanted to pay her $290 for an appraisal. “For five years my standard fee with my client was $375. They decide to go through an AMC and now I’m expected to accept a fee of $290 for the same work,” says Dawson.
She discussed her concerns multiple times via telephone with the AMC. “I told them that I would not accept a fee of $290 for the same appraisal that my client had previously paid me $375 for. Their fees are unprofessional and not in the spirit of Dodd-Frank. One girl just laughed at me on the phone because I wouldn’t take $290. She told me they didn’t need me because there are plenty of other appraisers who will do it,” says Dawson.
Formal Removal
Dawson was removed from the fee panel for “Unprofessional Conduct – Derogatory responses to communication from Nationwide Appraisal Network,” according to a document supplied to Working RE . Dawson says it was her pushback on fees that led to her removal, which followed her sending the AMC an email pointing out that the C&R fee established between her and her client was $375, and that the fee offered by the AMC was neither customary nor reasonable. The return letter from the AMC concludes: “Due to the issues we have experienced with your conduct… you are hereby notified that you are being removed from our approved appraiser list.”
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Many would agree with Dawson that the AMC’s conduct is outrageous. “This shows how the AMC is distorting the principle of customary and reasonable fees by taking its profit directly out of the appraiser’s fee,” Dawson argues. “Not only do they expect me to do the same work for almost 25 percent less than my client was paying me for five years, but they are asserting that even bringing up C&R fees is unprofessional!”
AMC Responds
When contacted for comment, Joni Pilgrim, Founder of NationWide Appraisal Network, contends that Dawson’s removal had nothing to do with C&R fees. “The appraiser was removed after several emails which contained derogatory comments and ended in a threat to take action by contacting a client in an effort to destroy our business relationship with our client,” says Pilgrim. “We take panel removal very seriously and exceed the legal requirements in every state. We also provide a rebuttal process. The appraiser never made any effort to rebut the process.”
When asked whether Dawson’s original fee of $375 was an overpayment, Pilgrim responded, “I wouldn’t necessarily say it was an overpayment. I would just say that there are costs that AMCs have to incur as well, such as compliance, support, and managing the whole process from the beginning to the end. There’s a lot of value-added services that our AMC provides.” Pilgrim admits that the appraisal fee paid by the borrower is split between the appraiser and the AMC but contends that what the appraiser is paid by her AMC is customary and reasonable.
When calculating its appriasal fees, Pilgrim says that NationWide runs historical reports on the fees it has been paying and examines trends for all the report types. “We look at our own trends in combination with industry surveys. In certain areas where appraisers are asking for additional fees, if it’s a common trend we make adjustments. If one out of 20 appraisers object to the fee we are paying, does that necessarily mean that the fee isn’t C&R?,” says Pilgrim.
Pilgrim provides insight into how AMCs view situations like this, insisting that NationWide surveys the national market when deciding what fees to pay. “We understand her concerns when she is talking about one fee for one appraisal product from a single lender to one particular appraiser. However, that approach is like giving a home’s value using only one comp. As an AMC we are able to take a broader look by analyzing fees from many lenders, appraisers, and products rather than looking at one in isolation. This ability to see the overall market is a major advantage to partnering with an AMC. For that particular lender, we also received no other comments from the appraiser who did accept the order,” says Pilgrim.
When asked what additional data NationWide considers, Pilgrim cites a la mode’s Appraisal Fee Reference (AFR). The AFR states that it is the “authoritative guide to median and average fees observed between clients and independent fee appraisers when specifying the Uniform Residential Appraisal Report, or URAR. It provides statistical data on hundreds of thousands of URAR transactions at the national, regional, and state levels, covering all 3,221 counties and local administrative districts in the
fifty United States.”
When last published in February 2010, the AFR indicated that the median fee for a basic 1004/URAR appraisal was $350 in Florida, and $375 in Seminole county, where Dawson lives and works. Accordingly, $375 is precisely the fee that Dawson was being paid by her client for five years prior to NationWide contracting with the client. It is the fee that Dawson contends is C&R in her area.
Working RE ’s C&R Survey, which received input from over 17,000 appraisers nationwide from late 2010 to 2011, shows that the majority of appraisers in Dawson’s area reported the C&R fee for that area to be between $350 and $400. (Click here for the C&R Fee Survey Results in your area). The effect that low fees have on appraisal quality has been widely noted throughout the appraisal community.
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Dawson says that the AMC taking part of the appraisal fee paid by borrowers is a pay cut for appraisers who, in many cases, have established long-standing relationships with their clients. “To take the difference out of the appraiser’s share and expect the same quality product is disingenuous and a violation of Dodd-Frank. You have to ask, do you really think the appraisers who are accepting these lower fees are doing the same quality appraisal? But nobody cares about appraiser quality anymore and the bottom feeders are getting the worm every time,” says Dawson.
What the Regulations Say
Richard Hagar, SRA is a consultant for banks, regulators and others on lending and appraisal guidelines. He points out that the Appraisal Interagency Guidelines specify that the fee paid to an appraiser must be “reasonable and customary in the geographic market where the property is located” and the fee should be “reasonably related to recent rates paid for appraisal services in the relevant geographic market.”
According to Hagar, Dawson’s case is a clear violation of the C&R fee provisions under Dodd-Frank and the Interagency Guidelines. “The customary and reasonable fee is the normal fee that the appraiser would charge a credit union client. The fact that she was being paid $375 for five years is a perfect example of ‘recent rates’ paid for appraisal services in her market. I personally think $375 is a little low but she accepted it and there was an agreement between the appraiser and the credit union about what a C&R fee was for that assignment. Then an AMC comes in and tries to pay her $290. That is clearly not the C&R fee; I don’t care how the AMC tries to spin it,” says Hagar.
This case is an obvious violation of the law, according to Hagar. “The AMC is taking over a banking function that the bank previously had to pay for. If the AMC is helping the lender, then the lender should pay a separate fee to the management company. The AMC should not be paid directly out of the appraiser’s fee. In this case, the lender and the appraiser established over a period of years what the C&R fee is for a given appraisal in a particular geographic region. This is also a similar rate that she was charging other clients for the same work. The AMC is clearly taking a significant portion of the appraiser’s C&R fee and the credit union is no longer in compliance with the C&R fee provisions of Dodd-Frank and the Interagency Guidelines,” argues Hagar.
According to Hagar, just because other appraisers are accepting a fee of $290 does not mean that the AMC and lender are automatically in compliance. He explains that lenders and AMCs are required to select the best appraiser for the specific job through a process that considers the appraiser’s experience, quality of work, professional designations and specific qualifications for the job. In fact, the selection of appraisers solely on the lowest fee or turn time is expressly prohibited by the Interagency Guidelines, which state: “An institution should not allow lower cost or the speed of delivery time to inappropriately influence its appraisal ordering procedures or the appraiser’s determination of the scope of work for an appraisal supporting a federally related transaction.”
Hagar says that some lenders try to argue that the appraisal fee paid to the AMC is the appraisal fee and therefore, the lender is paying a C&R fee for the appraisal, even if the appraiser is only receiving part of the appraisal fee. Hagar disputes this. “It is not correct for a lender to say that they aren’t responsible for what the AMC pays the appraiser because they paid the AMC a C&R fee. Whatever rules or regulations a lender is held to under federal law also apply to the lender’s agent, so if the AMC is operating as the lender’s agent and is paying an appraiser a fee less than C&R, then the lender is responsible,” says Hagar.
Hagar says this is a clear cut case and he advises Dawson, and other appraisers in similar circumstances, to file complaints with every agency they can, including your state’s appraisal board, the Office of Comptroller of the Currency, and the Consumer Financial Protection Bureau.
Looking Forward
Dawson says she had planned to file a complaint with the Florida Appraisal Board but was told not to bother by a member of the Board. “There are individuals on our Board who believe that the lowest price equates to a C&R fee, and that C&R is determined by the free market. I also believe in the free market but this is not a level playing field. To believe that C&R is the lowest fee an appraiser will accept doesn’t take into consideration the quality of the appraisal or the product that’s being delivered,” reports Dawson. “I may end up filing the complaint just so they have it on record.”
Dawson says she greatly supports the recent legislation passed in Louisiana that allows the state appraisal board to ensure that C&R fees are being paid in the state (Victory for Customary and Reasonable Fees in Louisiana). But such statebased solutions will not work in every state, according to Dawson. “Virginia is right behind in trying to implement C&R fee enforcement but unfortunately I don’t think that approach is going to work in states like Florida. Two members of the Florida Board are representatives of AMCs and I have been told that any such legislation would be opposed by the Board,” says Dawson.
Going forward, Dawson says she is doing very little AMC work because the fees are so low. “I do mostly litigation work, a lot of bankruptcies and a lot of divorces. I’ve also found a niche in Fannie Mae REOs, Fannie Mae reviews and relocation appraisals. Occasionally, I do reviews for the state of Florida and sometimes they hire me as an expert witness,” says Dawson. “I’m close to retirement and have been outspoken about the practices of the lending, appraisal and AMC industries for over 30 years but to no avail. Because of the profits involved, the players will never change, only their tactics to give the appearance of regulatory compliance. My plan is to get out of the business but I still have about five years left so I’m speaking out under an alias so I don’t get blacklisted out of business,” Dawson says.
We’re always listening: Send your story submission/idea to the Editor: dbrauner@orep.org.
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by Alexander Schwartz
From what I can tell AMC’s are cheapening the industry as well as the quality of the work product. One must question whether they actually benefit the end user of appraisals or not? I believe the answer is a resounding no!
-by Bruce
Yes! So true. AMC’s in general are price gauging consumers but this one especially is incredibly aggressive towards appraisers who don’t comply . I received nearly the same experience as Dawson & I too have a few more years to go before retirement. So I’m constantly wondering if I should go through the anguish of reporting them because I’d rather save my time for more positive things! However, if anyone is starting a Class Action Lawsuit against this AMC in particular, make sure that your Attorney sends out letters to every Appraiser because there’s going to be a lot of Appraisers involved! I’ve saved every bit of my evidence, just in case.
-by realtecto@aol.com
My fees have progressively gotten lower. The only company making out is the AMC’s. The borrowers are now paying more for their appraisal. I have had several companies send me orders which I set up the appointment right away, and 10 minutes later take the assignment from me. When I inquired to the AMC they flat told me we can get someone cheaper than you. I told them to take me off their appraiser list as they have done that to me a few times. I had a reviewer (Katherine Escheri) call me and ask me why I didn’t use a particular comparable. I told her the house sold 98,000 higher than the subject and that in a years time the owners of the subject did no improvements other than paint 2 rooms. She told me she wanted it in the report. I refused and she told me she would be reporting me to the state. She did. $5,000 fine plus $1,500 to the state reviewer. They came up with things I never knew of or was taught during my apprenticeship. They can come up with anything on anybodys report. In addition to the fine my E & O went from $600 a year to $1,542, I had to take 45 hours of continuing educ. and because of it I was dropped by several AMC’s. If I would have changed the value the call would never had been made. The reviewer was with Trimavin but now is in a lawsuit with them. She has the reputation of doing this to numerous people. Beware
-by A Gatta
AI that’s an even bigger joke than the AMC’S , where are they with C&R …… we need representation of some kind! !!!!
-by James Edward Sturm
Appraiser’s are like pussy cats and you cannot heard cats making representation almost impossible.
-by Bruce
Definitely! We are left in the dust! We truly do need a way to band together like NAR!
-by Mikey
This issue is not complex. The fees today are significantly less than they were prior to the HVCC. You know this. You also know that AMCs are charging more, and Borrower’s are paying more, than the typical appraiser was charging prior to the HVCC. You can argue what you want, but the meaning of the word “CUSTMOARY” has not changed. I like most appraiser’s can show you detailed receivable lists, and I am sure there are many dated loan docs, which will show that fees are down across the board from over ten years ago.
-by Mikey
This is a shame. In my State, the State’s (appraiser and AMC licensing) website has an easy link built-in for a consumer to file a “complaint against an appraiser”. I saw this recently and contacted the state to ask if there is a mechanism so that an appraiser can file a complaint against an AMC for not paying customary fees. The State replied “no”. I recently was punished by an AMC for not being “fast enough” in completing orders. All of my existing orders were “cancelled”. Mind you I was busy completing their orders. The week prior I was working on a refinance appraisal for this AMC. At the inspection the Borrower stated she and her husband were getting a divorce. The wife stated that she was refinancing and would “cash out” her husband half the equity, based upon the appraisal. I informed her of the purpose of the report and that I would always advise to get two or more appraisals done in similar situations. She stated she understood but could not pay another $550 for an additional appraisal. I was paid $300. This is a well known and large bank owned AMC. I have children and expenses, and have no quality of life due to these fees. I cannot understand the fairness or lack of regulation in this area. This has been brutal. I have been appraising for many years and the fee for this assignment from over ten years ago would have been $400. I am currently looking for a different profession. I have a strong inclination that my State (WA) regulators have a conflict of interest . How could they not include any fee language in the AMC laws? The regulators do not represent the appraisers. I believe if they took the time to correspond with those they regulate, they would learn what the issues are. Unfortunately these regulators are appointed. It is my belief that they should be elected by the peers, and the current lot of them should be removed from any regulatory duties.
-by Brian Cadieux
great article- finally tells it all as it is. however- we are missing the boat:
-1- we did not prep/ licensed to be our own lawyers- plural! the ‘art of appraising/ valuation’ has been smeared by the great white/house sharks!
by Bruce
Yes!! This is a great article!! Finally the truth is coming out but Appraisers are still not protected in any way. This profession has given me more grey hairs than I can count.
-by Jerry Morgan
One thing keeps coming to mind whenever talk of more restrictions and less pay comes up… Who will value property when all the Appraisers have been driven out of business?
-by Dont Trackme
The goal of HVCC has ALWAYS been for AVMs to take over our industry after Appraiser’s finally “give up”. Time and again AVMs are proven to be flawed, so instead they decide to take over the valuation industry another way? That’s the progressive/left way to do things, right! Remember it was Goon Cuomo who knew Fannie & Freddie was cookin their books and is how he got them to cave-in to HVCC to avoid his investigation back then.. and now he’s chiseling away at NY. The entire industry knew timeshare salesman becoming mtg brokers finished pushing the envelope too far. NMLS mostly resolved all that and many believe going back to the previous model would be fine now with the NMLS system in place.. would likely solve MANY THINGS we’re dealing with on both lender/valuation sides of the fence. Except over regulation is the name of the game in Fed gvmt these days.. or at least until the currency crashes, then AVM’s will have to take over anyway cause “but there’s not enough appraisers left to do all this work!”
Many agree it’s always been about anti-fair trade against Appraisers/valuation professionals and if we could compete on a level playing field with AMC’s again for valuation services like pre-HVCC and let the chips fall.. most Appraiser’s would likely regain much of their previous market share directly with Lenders. A VERY interesting point AMCs keep forgetting is once AVMs take over, AMCs will be out of business too!
That may eventually cause AMCs & Appraisers to become “strange bed fellows”, but no time soon. So for now, we’re in an untenable position with the tide obviously bigger than us, so fkit… most of us will retire soon anyway and spend our days fishing! ;)
P.S. Unless something happens to get every single appraiser licensee nationally to join NAA or another organization so we have the clout as an entire industry to stick up for ourselves.. I doubt things will change.
It’s really sad but so goes what’s happening to our country, so goes Appraiser’s, the most independent profession in the land. I always have seen the correlation between the two. : /
-by Truth Hurts
NAA? Come one now. They have no interest in appraisers. They are Another organization run by AMC people. Many of the big name people work for AMCS including the current president. That’s a conflict of interest right there.
-by Bruce
Great point! I’m hoping to see that day!!
-by Seth
Matthew, not to belittle your efforts on this issue but “discussing this openly at our board meetings for at least two years”? While I believe that you are sincere in trying to effect a change, let’s think about the real world where an appraiser has familial responsibilities and financial obligations that must be met. Now. This month. Next month. The appraiser has to make decisions in the present so that he (or she) can try to keep a roof over his head and provide for those who are important to him. The rules are already in place. They just need to be enforced.
Fastest and cheapest sounds like a cliche but it is THE reality. And, it is how most of the major national (and many of the smaller regional) AMC’s determine who is qualified to complete the assignments that they have been entrusted to oversee. The rules clearly state that “fastest and cheapest” is not to be used to determine the appropriate appraiser. That decision is to be based on competency. And I have been told directly by several AMC representatives that they are aware that they have appraisers on their panel who provide substandard and deficient appraisals. Yet those appraisers are allowed to remain on their panels and are awarded assignments provided they are the first to accept the reduced fees and inadequate turn times being offered. Their ratings have been lowered due to their poor history yet they are still being sent the solicitations. The assignment is offered via email (and SMS) blast and the first appraiser to accept the terms gets the assignment. Regardless of competency for that assignment. And, apparently, regardless of their history of deficient work. Any request for a fee increase is considered a bid and bids are only looked at in the event that no other appraiser accepts the assignment at the offered terms. So, as an adult with responsibilities, the appraiser is faced with the choice to either: 1) accept the assignment at the terms dictated to him by the AMC; 2) request an appropriate fee but see the assignment go to those who are less qualified; or 3) look for a different line of work. Interesting note: one of the largest national footprint appraisal management companies will actually post a history of the assignments for which you requested a higher fee including not just your bid but also the fee at which the assignment was accepted by the “winning” appraiser. Strangely enough, in EVERY single case, over an eighteen month period, the “winning” bid was an exact match of the terms originally offered! That is the reality.
By forestalling enforcement of the rules and laws that are already in place, we continue to undermine our mission of serving and protecting the public trust. I’m sure that I don’t understand why new laws need to be discussed at length, voted on and put into effect in order to enforce those that are already in place. As appraisers, we are not afforded the luxury of hiding behind vagueries. Yet our business partners are. And, while in most professions you are able to choose your business partners, that is yet another luxury not afforded to the typical appraiser. The typical appraiser, in order to engage in a share of the significant volume of lending related appraisal work, has been forced to accept these disingenuous operators as his business partners. Of course, that’s not exactly accurate. Partnership implies an arrangement in which both parties agree to cooperate to advance their mutual interests. It’s not really a partnership when only one of the parties has a say. That is not the way it is supposed to be.
Matthew, with all due respect (and I do respect all who serve on any of the state boards and the effort they put forth) we don’t need new laws or rules or guidelines. They’re already there. We just need to enforce them.
-by Bruce
Definitely! Where’s the enforcement throughout the Country??!!
-by Kaleem
Again, another appraiser being abused! Nothing New & Nothing would be done about it! Everyone bitches & moans, yet nothing is done. Mr Hagar & others like Alamode only capitalizes off of appraisers. Not only have fees been cut, now everybody is charging you to either accept an order like Mercury or charging you to upload the report like Appraisalport & Appraisal Scope! I lost my license to the GREAB over some b/s, spent $5k on an Attorney b/c I didn’t do anything wrong but ended up with a Dumb Ass Judge Who knew nothing about appraisals and lost my livelihood! This is abuse, to be placed in front of a judge with zero knowledge of the subject and my Attorney was told to “speed up his argument” during our presentation after the state presented for an entire day. The Investigator wasn’t an Appraiser but told my Attorney “I took some classes”. She even asked me if I inspected the interior of the comp houses to which I laughed. The profession sucks! The process is stacked against appraisers from AMC’s to Appraisers Boards who EXTORT appraisers with Fines & Suspensions! I was originally offered a 5k fine & 1 year Suspension in which I refused b/c I didn’t do anything wrong & wanted to prove my appraisal report intentions were with Integrity but found out that these boards WILL NOT LET YOU WIN! If I was such a bad appraiser, why offer me a fine & suspension? This supports my EXTORTION comment! If I was that bad of an Appraiser, but paid the fine, you’d turn your head & let me continue in the profession? Many GA appraisers have similar stories but nobody to help you fight the battle. I had a Great Mentor, I trained 6 Good appraisers to the profession, mentored 6 other appraisers and would let anyone interested in the business ride along for a week or so to see if they wanted to be in the profession but it was all taken away by Judge Oakley who even asked me her own personal questions about the profession for 20 minutes while on the stand then Told me “Good Luck” knowing she was going to strip me of all I had worked for within 8 years. Screw Her!
-by Tony
Apparently the only parts of Frank-Dodd that are enforced are the parts that benefit lenders and negatively impact appraisers. Remember, HVCC and Frank-Dodd confiscated clients and business from one group (appraisers), and handed it over to AMCs. In order to discourage appraisers from asserting their fifth amendment rights to compensation for seized property (yes, businesses are entitled to this too) the customary & reasonable provision was added to Frank-Dodd. But has we can see, lenders and AMCs have worked hard to make this part of the law unenforceable. The only solution is to bypass state regulators and get as many cases in front of judges as possible. States like Florida, where the rich special interests managed to add 2 AMC members in order to derail any enforcement of the law are good examples why this is necessary. I appreciate your work Matthew, but with the Florida board stacked with AMC /Lender members who were put there primarily to prevent any enforcement of laws that might negatively affect AMCs, I have little faith that anything will change.
-by Jeremy Hall Appraisals - Colorado
This kind of violation of C&R fee rules which are NOT to take into account amc fees, are supposed to carry a $10k/$20k daily fine. Show me a lender which is paying $290, absent of an amc. That’s the only defense. Being removed for not accepting amc’s discounted fees is a common practice. Appraisers accept the fees, because the amc will literally send all the work to one appraiser who accepts the fees, and leave everyone else out of rotation or kick them off panels. Comingled amc fees and appraisers fees results in a financial incentive to drive down appraisal fees for variable opportunistic profit. Nothing short of forcing separation of the fees will solve this issue. It is not the appraisers responsibility to accept less, in order to fund the amc’s service costs. If nobody enforces the law, I guess everyone is free to break it. Just because you can circumvent the law, does not mean you should. These are the people trusted to bring increased fraud protection?
-by Ramir@boggs.net
Think STATE/FED. ATTORNEY GENERAL!
-These are law-breaking cases. They need prosecuted.
The AMCs are not abiding by the customary and reasonable
clauses written into the law. Appraisal boards need to go after the
chief appraiser at the AMCs. But, they won’t. This case needs prosecuted.
by Mike
Good article but just another example of regulations without teeth. My guess is that the AMC will not be sanctioned by any regulatory agency. Additionally, there is not a reason for any AMC to comply until one is negatively sanctioned for not paying C&R fees. I still get plenty of offers to do 1004’s for under $200. Someone must be accepting that work.
-by Tim In Fla
Mr Simmons,
Seriously,….. two years in “discussion” ? Florida AMC regulations are one of the most lax in the country. I’m sure you aware of the current level of certified appraisers in the state and the level of new applications for entry level appraisers. There is a reason for the decline in both respects. Indemnification agreements, one sided engagement agreements and lengthy times for payment of appraisal fees all still exist. Florida appraisers view the FREAB as more partners with TBTF banking and AMC lobbyists. Out of state AMC operations that take large chunks out of the appraisers pockets are being spent in other states. Think if a good portion of those fees were actually paid to the appraisers here in Florida, who spend money on good and services here in Florida, pay taxes here in Florida and pay dues that help fund regulatory boards. Our economy would be much better. Thousands and thousands of dollars are flowing out of our state.
As a side note, a similar thing happened to me in reverse. I was on a panel of appraisers that was formed right after the financial crisis. Fees were lower as there was not that much work and also not the increased amount of reporting we have now. I had a steady flow of business and never a problem. This last year the appraiser panel manager left and a new one was hired. They used the Mecury system which indicates C & R fees when placing an order. The new manager used this as a guide and the panel members received slight fee increases (which were long overdue). In short order the origination branches (loan officers, mortgage brokers) contacted appraisers directly requesting they lower their fees back to the old levels as these fees gave them a “competitive edge” in the market. Those who refused were not blacklisted or removed from the panel (that would be illegal without due cause) they simply were just dropped in rotation. So even right now commissioned loan officers and mortgage brokers have an effect to appraisers compensation levels. The AMC’s do as their loan originators instruct them, the loan originators do as their Realtor clients instruct them. Nothing has changed in the end result. Cheap and fast with no property issues will get you a ton of work. By the time any meaningfull regulations, if any, come about we most likely will be another unsustainable market appreciation and subsequent dive. Just like the last time.
-by Jeff McMurchie
I would say the only effective way to deal with this particular AMC,is to boycott Nationwide, because the government and regulatory agencies are not going to help.. I will tell every appraiser I know this story. A good forum to do this is in a continuing education class where sometimes you can reach up to 30 appraisers at one time. I served on the Appraisal Board for the State of Minnesota and believe me I was powerless to do anything about something like this and I am sure it is that way for most states. The Dodd-Frank has no enforcement, so we are on our own.
-by TC
One phrase in this article struck me –
“Many would agree with Dawson that the AMC’s conduct is outrageous”
I thought the use of the word “outrageous” was a little comical – “commonplace” might be a better word.
The only outrageous thing about this story is that this particular AMC chose to announce in writing what EVERY other AMC does as common practice, which is direct workflow to the cheapest and therefore most profitable providers as the sole driver of the selection process which quietly does exactly the same thing.
This is not shocking at all it happens thousands of times per day every single day.
-by Emjay
They don’t care…plain and simple.
-by Emjay
Exactly…
-by Emjay
Delete your comment Judith; your name is on your reply
-by Emjay
Interesting that the worst AMC’s out there all have found a home in Florida…hmmmm
-by Emjay
If everyone who reads this article over the next week calls into Nationwide and asks to be removed from their panel as a direct result of this story, it would be a good thing..that’s what I did. Nothing changes if nothing changes; we are alone in this; the AI does not care to lift a hand in this matter…disgusting what is happening in our industry over the past 5 plus years; heartbreaking to hear the stories like this one.
-by roy
Well is there any lending appraisers out there, that is really surprise at this article????? Nothing new here. We all know the amc business model is not a friend of the lending appraisers. What it has done is made all or most lending appraisers operate under a split fee agreement, increase the appraisal reporting demands and if the lending appraiser does not comply he is blacklisted. The “independent, impartial and unbais appraisal process has disappeared. The lending appraisal process is all about “fast and cheap” service and not about improving appraisal quality. Lenders/amc and lender interest groups know they can get away with this unfair amc business model because the appraisal professional is a very splintered professional group that has NO representation to stand up to these unfair business practices.
-by Charles Thomas
I had major confrontation with owner of OneStopAppraisals (also appears to be known as Nationwide Property & Appraisal Services and AppraisalScope) yesterday after I complained that I did NOT want to recieve any orders that were not customary or reasonable fees. Rather, than direct me to website area where I could enter fees, he proceeded to email me stating I was “dishonest about your interaction” “using intentional and slanderous lies,” and I have “have limited computer skills” and that I was complaining the whole world was out to get me??” and I am obviously an angry man” . Guess what, I AM angry about how our profession is being viewed. This owner has threaten to turn me it to my board and sue me. Know how you are dealing with and just learn to say NO!!
-by Matthew S. Simmons
I’m on the Florida Real Estate Appraisal Board and serve as the 2014 Chair. The ‘Jane Dawson’ story is of particular interest to me and something I’m currently working on in rule-making.
I’d love to be a resource for your publication and disagree regarding the characterization of Florida’s willingness to act. We’ve spent the past six months openly discussing this issue in hearings, and just last Monday in our open hearing reviewed Louisiana’s study regarding C&R fees. We’re also discussing legislative options for the upcoming 2015 session.
The issue is very complex and there are several state level and federal stakeholders addressing AMC’s. Creating an effective regulatory framework for addressing AMC issues (including C&R fees) is a measure twice cut once proposition. It’s just important to me that folks know that we are not tone deaf on this. Florida has been discussing this openly at our board meetings for at least two years. Always appreciate Working RE’s publications and I’m happy to be a resource. Thanks.
-by Emjay
There are no words…I removed myself from their panel today…sorry for this woman.
-by Eric
They get $290 because appraiser’s have to feed their families. Because fees are $290, nobody is entering the field, and for good reason. So yes, it is customary and reasonable solely for the reason that appraisers need to feed their families. But other than that, there is nothing customary and reasonable about it. Wonder what will happen in 10 years if there is a refi boom, many appraisers (25%?) have retired, and nobody is entering the field.
-by Bob
Easy fix. Boycott Nationwide Appraisal Network. If no one does the work they either pay the piper or go out of business.
-by endoftheroad
“The question is: who is listening?” Based on my own experience with the complaint “process”, the answer is: no one…particularly at the State or Fed level. Most AMC’s suck and many lenders are idjits.
“Two members of the Florida Board are representatives of AMCs and I have been told that any such legislation would be opposed by the Board”. Typical fox guarding the henhouse scenario by special interest. Sorry folks, it’s a no win for appraisers.
Get another client or better yet, get out of the biz altogether.
-by Charles Nielsen
A al mode pays $240 for an appraisal in Riverside, Ca. your chart shows 0%. San Bernardino they pay $280, your chart shows 0% 2 ……the majority shows 48% @$400.
-the overall chart shows approximately $350-$450. ………..They do not have a rotation system…….they have a fee list……..they keep everybody’s name as an active appraiser …..they just don’t get any work….What can be done to correct this abuse??????
by James Kerr
Sadly the appraiser is not alone. We have been in business in S Florida since 1980 and have seen a steady progression of lending institutions dropping their panel of local appraisers to use AMC’s to perform the work. All they ever ask is how fast and how cheap can you do it, forget the level of expertise of the appraiser. If he/she is breathing and has a current license, they are automatically qualified for the job, no matter how complex.
That is the way it is and until the bottom feeding appraisers screw up and get caught for shoddy work, low fees will simply be the norm. Remember, the bottom feeding appraisers are not smart enough to realize that they can make the same amount of $$$ by working LESS and charging MORE – what a novel concept that is.
-by Judith O'Donnell
Please do not use my real name. I had the same thing happen in Florida different AMC when they took over they called and asked what my fee was I told them I was told well your not getting that from us. I said I have been working with this client for 8 years and if that is what they and I consider reasonable why should it change. As a result no work.
-by John Center
Great article. Thank you for sharing your struggles as they effect all of us appraisers. Don’t give up the fight!
-by Carolyn@Bagdad.com
The executives at the Appraisal Institute should be all over this.
-Where is the AI?
by Kim
It’s unfortunate that the federal government can’t get their thick skull around this issue. The Dodd-Frank legislation needs to be revised! I can count about 10 AMC’s that have probably pulled my name off their list (or put it on the back-burner) because I don’t do anything less than $(above 375) per residential report. But then there are times they call me back because they can’t find someone to do a certain job, then the fee definitely goes up. Only on rare occasions do I go below my desired fee. If anything I will raise my fee. The AMC’s will find an appraiser that will do it as low as $200. If all the appraiser’s would just agree to not accept anything below (your) $375 that would be great. All would be equal. We (appraiser’s) are too meek or too much of a lone-wolf to ban together and stop the idiocracy that exist. They don’t really care about the appraiser. If one does a job for $290, writes a crappy report, and gets reprimanded or loses his/her license; they don’t care – “Next”. Who wants work.
P.S. The lender/Client should pay the AMC fee, not the appraiser!!
-by dfabs
”…There are individuals on our Board who believe that the lowest price equates to a C&R fee, and that C&R is determined by the free market.”
The vast majority of people in this country can’t even name their own state capital and yet, somehow, these same folks are supposed to be savvy enough to know the definition of market value to the point where they can reflexively spout off about the “free market” or “capitalism” or any other such nonsense that hasn’t existed in decades when what they really mean is “Hey!, we’ve got a pretty good scam goin’ on here…don’t rock the boat!”
Here’s the deal, if you want to talk about labor related issues, don’t use “free market” or any related term in your argument. It just sounds dumb. As long as there are more people in need of jobs than there are jobs available, then, by definition, there CANNOT be a market transaction as it relates to wages or fees for services etc…
-What you really mean to say is “I’ve got all the leverage, take it or leave it!” which is fine, at least that’s an honest argument, but then, you don’t get to start waxing poetic about the Founding Fathers and free markets when the government steps in to level the playing field, cause that’s what it’s there for.
by George
I had the same thing happen to me a few years ago with Wachovia/Wells Fargo. They paid a fee of $400 when they started using RELS (which they owned at the time – not sure if they still do) they wanted to pay me $295 per appraisal. When I notified them that their own parent company set the reasonable and customary fee when they used to pay a fee of $400 for a standard appraisal and refused to accept the fee, I was removed from their user list.
-by Jerry Morgan
AMCs came on the scene for the sole purpose of Skimming from appraiser fees…no different from Las Vegas skimming. Appraisers were forced to go through AMCs or not get any work. AMCs offer NO benefit to the valuation Process. It’s like paying the Mafia for protection. Many of us refuse to accept assignments from any AMC. So many in fact that there are very few Appraisers around today who are under fifty years old…Older. Experienced Appraisers have left the business. With almost no new appraisers in the pipeline for the future. Who will report property value when there are no appraisers left? Besides the low fees…many other things are keeping away new appraisers. Upward spiraling software cost, E & O Insurance, Realtor Board dues, MLS dues and the appraisal process gets more and more complicated and filled with worthless steps each time the process is updated and fees have been frozen for over seven years because someone along the way crammed AMCs down our throats who now receive the fee increases that were meant for Appraisers. Any future Appraiser will now be required to have a Bachelor’s Degree before being able to accept an assignment for a government backed mortgage…Fannie Mae, Freddie Mac, FHA loan. On top of all that…Appraisers are faced with a TARGET being placed on their back for every report they submit. Anyone unhappy with the appraisal report, buyer, seller, lender and the licensing State all looking to sue or in the case of the State…want to take their license, fine and sentence the Appraiser to prison time. Such a deal. Those $15 an hour McDonald’s hamburger flipping jobs are looking better and better…No pressure.
-by Edd Gillespie
Shame on the AMC, but double shame on the appraisers and regulators who enable this kind of activity. We truly eat our own.
-by Colin Taylor
She is right and they are DEAD wrong. That is that. Why the hell should she pay her original client’s management costs? Dodd Frank is joke and the AMC’s are laughing all the way to the bank. AMC’s are the leaches of the appraisal profession. They seem to forget, without us appraisers, there would be no AMC. Period!
-by Mark Hastert
If the national appraisal organizations really wanted to prove their worth they’d take a C&R case to court and get the issue settled. As the spokesperson for NAN pointed out AMC services add value (and they do) so their fee should reflect the added value. They should be paid a fee separate from the appraisal fee. Then if they want to get into a competitive bidding war with other AMCs it would be at the appraiser’s expense.
-by Free Speech
AMC’s are nothing but maggots on the corpse of a once great industry. They should be illegal and prosecuted to the fullest extent of the law for their extortionist attitudes and behavior.
-by I would like to say
I notice on your survey that my MSA is not listed. I really don’t think you should be putting a survey out unless you have accurate information. How is this helping us? If an AMC looks at this, they will just pick another MSA and then try to tell us these are the customary fees for our area and we will have no way of proving they are right or wrong. If they are using sources like yours, then you need to be sure you are representing everyone and the fees are correct.
-by Woody Fincham, SRA
A colleague of mine in Hampton Roads had this happen to them, as it happened to me. In both cases we were working with Navy Federal Credit Union. They are a pretty big lender in the area. He was clocking in about 25-30,000 dollars a year in fees with them; he’s a USPAP instructor; and many consider him to be a great appraiser. An appraiser’s appraiser if you will. My firm was doing pretty decent work with them as well. Guess what happened: Solidifi. Some executive at the credit union decided it was a great idea to contract out there valuation ordering to an AMC. Where my colleague and I were preferred appraisers with NFCU, we stopped getting orders because Solidifi lowered the fees. I continued to get some work but less and less, as I covered some less populated areas in the region where they didn’t have other appraisers willing to cut corners and lower the fee they needed so they could up their volume, now I get none. Neither one of us were blacklisted officially, but we were blacklisted indirectly.
-by T Mackenzie
We appraise in a rural low density/low comparable sales volume area (covering three counties) where meeting the new additional standards imposed by out of town lenders/AMCs under Dodd Frank are to say the least challenging. We made the mistake in the beginning of registering our “customary and usual fees” with AMCs based on what we had customarily charged local lenders. Clearly the AMC reports require a far wider scope of work and supporting data – not to mention the additional time required after the report is submitted to provide additional information or commentary (no matter how closely you read their multipage instructions, there will always be unanticipated questions from national lenders that are usually applicable to data rich/higher density urban and suburban neighborhoods). So the “usual and customary” now recorded with most AMCs really is not what we have to charge for the additional scope of work involved, for which I usually tag on an extra $150 to $200 or more, say $500 for very high value/complex shore front for example. Therefore I see a huge disconnect between “usual and customary” and what is necessarily required to charge AMCs/national lenders for the additional work up and explanations as to why statistical modeling is inapplicable and possibly misleading, etc etc etc. We have a two tied system for local lenders (who understand the market and require reasonable, not extraordinary support and explanation) and the national banks who truly DO need additional information as they are usually located 1000 miles away and can only truly assess risk by requiring additional information not deemed necessary by local lenders, relevant or not.
-by Bill McLean
I am a Certified General Appraiser and own an AMC, Granite State Appraisal Management, in NH. I’m appalled that an AMC believes that appraisers should be paying out of their fees for services designed to help lenders. We do not ask our panel to bid on work; we do not set a fee schedule; and we do not even mingle our fee and the appraisal fee, which we bill separately to the lender. Appraisers get the full fee that they set within two weeks of final submission. Not all SMC’s are money grubbing from appraisers. And as appraisers ourselves, we have NEVER accepted a fee below our U & C. Once you do, you’ve joined those who constantly complain about low fees and who all too often defend their less than quality work on how little they’re paid.
-by Wayne
Again another story about AMC stealing from appraisers and breaking the law and absolutely nothing is done. I don’t know what’s worse an AMC or an organization that’s sole purpose is to sell products in between articles about appraisers getting ripped of. You guys are always telling the story about an appraiser getting the short end of the stick we get it were appraisers however your just trying to sell us something as evident with the add right in the middle of the article. Tell us what you have actually done to help the appraiser and this Hagar guy please like his father he’s just selling a product when is the last time he did anything for the profession
-by sandunyc
great article- finally tells it all as it is. however- we are missing the boat:
-1- we did not prep/ licensed to be our own lawyers- plural! the ‘art of appraising/ valuation’ has been smeared by the great white/house sharks- the friends of the biggies: BANKERS and associate lender personnel. Have you checked the ration or percentage of ‘appraiser is fined by $$$’ vs ” banks agreed to pay as FINES’ for violating lending rules on the books.