“The Appraisal Management Company System is Broken”
There
was a time that we could hire appraisers that knew and understood an
area and would make sure that there was a good and honest appraisal. The
mortgage lender could choose the best person for the job but that all
changed with a lawsuit that was brought in the state of New York. That
lawsuit was brought against a couple of major lenders that were using
“their own” appraisal companies.
The
lawsuit had good merit and the practice was stopped. As a result of
this lawsuit, the Fed got involved and created HVCC and the beginning of
Appraisal Management Companies. What happened? The cost of appraisals
nearly doubled and the quality of the appraisal went down to say the
least.
HVCC
was damaging enough and then we eventually got the Dodd-Frank Act which
incorporated the appraisal process and made it even worse and the costs
increased even more. Two examples of why Dodd-Frank and government
regulations do not work:
One
of my clients was charged $950 for an appraisal for the purchase of a
condo in Vermont at a ski resort. The appraisal was 60 miles away from
the property. When asked why the cost was so high, they said it was
because of the distance the appraiser had to travel. I went online to
check if there were any appraisers that were any closer and a dozen came
up within 10 miles. The AMC told our lender that they would look into
it, you bet they will.
Another
one of my clients were buying a second home in New Hampshire. The cost
we could live with, it was “only $550”. The problem was it took nearly 4
weeks before the appraisal was acceptable to the lender. It was a real
mess. 9 days before the appraiser viewed the property and 8 days before
the appraiser sent the appraisal in. Then all the crap started, nearly
two weeks of corrections before it was satisfactory to the lender.
Fortunately
this stuff doesn’t happen all the time, but it happens too often. Many
outstanding appraisers have left the business and very few have any
interest in a career as an appraiser. Can we blame them?
I
read recently that the average age of a Realtor in this country is 58,
loan officer 52 and appraiser 56. Regulations are a killer when it comes
to business growth, if these policies continue these average ages will
continue to go up.
Image courtesy of stuartMiles/freedigitalphotos.net
