Appraisal Compliance is a must for all lenders doing mortgage business today. With the HVCC, FHA appraisal Compliance, OTS and OCC regulations there is simply no way to get around not ensuring an arms length appraisal transaction. Over the past few months appraisal management software companies have sprung into action trying to get lenders to manage the process themselves and bypass appraisal management companies. The selling point is that if you take control of the appraisal process internally that you will have a better overall appraisal process and can still hold on to some control. This may reign true in some cases however generally speaking the idea of self managed appraisal process is not ideal, nor should it be looked at as a long-term option for a company geared towards growth and on good terms with an investor.
The industry has made a major shift over the past year and the vast majority of loan officers, processor and other interested parties are honest people and do not want any collusion or misrepresentation on their appraisal. However, even with all good intentions over time things will tend to relax and it would be very easy for a loan officer or other interested party to walk over to the appraiser department and ask for a favor. The HVCC and FHA appraisal compliance requires that “all mortgage companies must establish, maintain and enforce written policies and procedures that are designed to reinforce independence” and Dave Stephens was indicated that a lender must show “absolute lines of independence”. The practicality of a small regional lender or national lender establishing “absolute lines of independence” is not realistic without setting up an entire new office with a staff appraiser, manager and processors to ensure compliance. Most mortgage companies who have decided to risk the “in-house” process are not nearly as equipped or trained as the code requires and have typically moved a processor to order appraisals for a period of time. This has not been as much of an issue currently as most lenders have not gone through their audits with FHA, OTS and investors. However, when this does happen how are they going to convince to the investor “absolute lines of independence” when the appraisal department is in the same office as the processors and production staff who are interested parties?
By moving the appraisal process to an independent third party you not only add an extra layer of protection against collusion but also increase investor confidence, reduce cost and enhance the productivity of the loan processors, and loan staff as its handled off site and out of mind.
Besides all of these other benefits when appraisal services were handled in-house, overhead costs get higher with production and when volume dips layoffs will be apart of the process. If volume spikes companies would be forced to rehire and could be forced to just “assign” the appraisal rather than get the appraisal done right.
The best part is about moving the process to an independent third-party is the cost is usually free to the client or at a heavily reduced cost due to most appraisal companies having economies of scale and can process more orders, faster and more efficiently than any in-house process.
By outsourcing your appraisal process, your quality, turnaround time as well as cost will remain consistent regardless of volume. Conflicts of interest will vanish and variable costs will turn into profits. Any investors questions will be easily answered by your third-party and any errors will be covered by the third-party and not your company. By adopting a truly independent appraisal process you ensure the long-term success of your company, future growth and keep on the good side of the investors.
Brian, do you actually believe the crap that you write? Seriously, your propaganda is mindless drivel at best. Maybe you should spend more time writing appraisal reports or taking a deductive reasoning class and leave the attempts to justifying your existence to TAVMA.
It appears that your referring to the, “double-blind,” ordering system presently offered by Alamode. You speculate that loan production staff will, at some point, wander over to the appraisal ordering department and corrupt the process; thereby not ensuring strict adherence to the separation of the appraiser from loan production/processing staff. This is purely speculative and you know it. Actually, why don’t you write about the real problem(s) facing your AMC and the others like it? Here, I will speculate as to why you don’t like this new software: The real problem Coester and other AMCs have is that the double-blind ordering system, “debunks the myth,” that it costs in excess of 1/2 or more of a typical residential appraisal fee to 1) receive an order from a lender, 2) locate your lowest-fee vendor within a 250-mile radius, 3) send said appraiser an e-mail order or broadcast it to the other lowest-fee appraisers within the same parameters so they can fight over it 4) call/e-mail them constantly regarding status 5) receive the report in 24 hours 6) spell check it, and 7) send it to the lender. What these new technologies actually do is provide an honest, “value-added,” alternative to the present AMC model and apparently it does not cost $175-$250 (1/2 of an appraisal fee) to do so. I surmise that the $14 or so that Alamode charges for delivery is more in line with the true cost of separating the appraiser from the loan production staff, which completely, “debunks the myth,” that an appraisal management company should be allowed to bill a borrower in excess of $500 for a typical appraisal and then shop that fee for $150-$200.
Furthermore, I suspect that most mortgage companies employ people with slightly higher IQ’s than some of the, “QC,” reviewers that are busy at work tearing apart appraisal reports right now for things that have already been addressed in a report.
The AMC model is parasitic and the largest stakeholders like you know it. Otherwise, you would not have to constantly write this crap and publish meaningless and poorly analyzed survey results in order to support your claims that you exist for a reason other than to collect 1/2 or more of a typical, documented appraisal fee. The present AMC model of cheapest and fastest is the financial equivalent of an appendix; an evolutionary dead-end that is no longer needed once it goes bad as it may poison the entire system.
Who wrote this piece of propoganda? TAVMA?
This is a lye, lenders DO NOT have to use amc.
Frightening others; my what a great tactic to stave off the bright idea! AMC’s have increased appraisal fees and reduced the fee paid to the appraiser in manic proportions. Prior to AMC’s residential appraisal fees ranged from $300 to $400 per assignment depending on the difficulty. After AMC’s the appraiser’s fee paid was reduced to $200 or less and the charge to the consumer went up to $600. The difference for this efficient system was an exhorbitant profit to the AMC on the backs of the consumer and taxpayer. If software management is so bad why don’t you try doing your job manually for 60 days, reduce your fee by half and then get back to us. Your screen Mr. Wizard has been pulled back by Toto. Thank you Toto.
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by letting an independent loan processing company order the appraisal don’t you get around the reuqirment for a AMC.
There is NO REQUIREMENT to use an AMC. It’s just one way to independently order an appraisal in an HVCC compliant manner. Many lenders are able to still order Fannie, Freddie and HUD appraisals without using an AMC
AMC’s Killed MY….. is absolutely right. But here is the other problem with all the mess, people like STAN don’t take the time educate themselves and therefore the inaccuracies and for that matterr, AMC LIES are perpetuated. The lenders that I know that are the happiest and have the least amount of appriasal issues are the ones that take the process into their own hands. Don’t believe the lies, like the ones in the article above.
Me thinks though dust protest too much. If I was a lender and my choices were to manage the process myself vs puuting the process into the hands of others it is a no brainer. I want to control all aspects of the process to insure I provide a quality service. Handing over the appraisal ordering to a 3rd party only opens up the opportunity for things to go wrong, ie giving an order to an appraiser in Phoenix for an appraisal in San Diego. And when that happens my only recourse is to order another appraisal, (if I can even do that), at my own expense. If I manage in house, I can assure that won’t happen. And if there is software out there to help me avoid the out of area, poor quality appraisals from the AMC’s then I have recouped my cost. Anyone that thinks that the AMC model is more cost effective than managing in house needs to ask themselves one question. Why are the AMC’s and their associations trying so hard to get the states to not regualte their so called industry?
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Those that are complaining about appraisal management software are worried about their own business model being in jeopardy. With affordable AMC software like AM 24/7 (www.spurams.com) appraisers have a fighting chance.
Using our software, appraisers can start their own small AMC, comply with the HVCC and continue to work with their existing lenders. Visit http://www.spurams.com for details.