Revised HUD-1 form to shed light on “appraisal charges”

As a Mortgage Banker (25 years) I can tell you the “Government Loans most of us use like FHA, VA and the First Time Buyer DAP helps were all documented loans. Documented income and money to close were in place then and now. Yes FHA and VA loans are part of the problem now but only after the big banks started using the credit score to approve their loans and not documentation of income and money, along with loan programs that started out with qualifing off a 1% interest rate only to jump to rates the buyer could not pay for in two to three years. Stated Income with monthly payments that does not even cover the monthly interest is crazy. Making loans to families who would never qualify if they were required to bring in 2 years of documented income and current pay stubs was so wrong. Three years latter the same buyer is now bringing in their tax returns and pay stubs and buying new homes at 1/2 the price of the home they lost. The problem in this market did not take place with FHA or VA home loans, however even FHA & VA buyers took to walking away from their homes when values of homes around them dropped to the point that these home owners could not sell when needed due to lost income or family changes that took place where a new home was needed. A friend was forced to move to TX to keep his job. He was forced to walk from his VA loan as his loan was over $300,000 with a current value now of only $160,000.00. Some of the stated income loans were up side down with in months due to the added interest being added to the buyers loan amount starting with the 3rd month in some of these loan programs.

Lenders used to select appraisers who had experience and competence in a particular area and property type. Now the AMC’s seem to choose appraisers based on lowest cost to them (giving them a bigger portion of the fee). Frequently I have to dispute shoddy appraisals done by out of area appraisers. A waste of everyones time and money and bad for the lender and consumer.

The whole idea of creating a “middle man” between appraisers and banks was sheer idiocy. Whoever comes up with these ideas should learn the business before they make these rash decisions. I was an appraiser BEFORE appraisers had to be “licensed.” I had taken many appraisal courses and enjoyed working for myself. When the licensing came into effect, (another attempt to protect the public!) I dutifully did what was required, studied, took the test and obtained my “Trainee’s License.” During that period of time I could not find even ONE appraiser who would sponsor me, ok my work, etc. Consequently all my time and effort and money was wasted. However, I do know how appraisals are supposed to be done, and now with the addition of AMC, I think it is overkill on the part of the “government” who thinks it is protecting the citizens. In the past couple of years, I have seen an influx of out of town realtors and appraisers who don’t know the areas. They are turning out stuff that is bogus…You gotta know the territory, and with AMC they are liable to send someone who has no clue. Now the Feds have gotten into the act with loans and created NMLS – another load of you-know-what. The government needs to stop protecting us from ourselves. In my opinion, the “government” is who created all the problems to begin with by coming up with programs that encouraged “the poor” to buy homes with little or nothing down.

My experience is that appraisers are doing lazy, innadequate appraisals and are low-balling the appraisals way under market value. I recently saw a 3BR condo that had been appraised 2 months earlier at $396K appraised for $315K. The appraiser used two 2BR’s and one 3BR, all with less square footage, as comps. Each unit backed up to a major (noisy) street and had patios (the unit being appraised has a large yard comparable to an SFR, plus a choice location). The appraiser used the same price as the lowest priced 2BR and it ended up costing the borrower .25 points on his rate, despite and 792 FICO. The customer told me they would not pay for the appraisal and said they were no longer interested in refinancing.

An appearance of neutrality does not mean that appraisals are not biased. Anyway you look at it , it is the Lender that subscribes for the appraisal. Even though through a third party, the pressure for lower results is still there. An appraiser that consistently returns higher values will not be popular.

The third party is simply the Fox putting the pressure on the chickens.

The HVCC is a farse. It clearly states that lenders can not have an interest in the AMC. I raised this question when this idiocy first started. Wells Fargo owns Rels, BofA owns Landsafe, etc. NOBODY cares.
This is just another bad idea by the fools on the hill.

Really nothing new here. The law to require AMC’s must have been initiated by the people who wanted to open the AMC’s. They added nothing to the appraisal process and drove up the cost. Some crooks in the business took advantage of the old system and obtained bogus appraisals and perhaps the AMC’s have helped that, but for a guy like me, who can review an appraisal, they just added costs for the buyer/borrower, and in the beginning added more turn around time. Also, out of area appraisers are being used more now than before. Not a good thing.

Geographic competency was never an issue before HVCC or Dodd-Frank. Appraisers had clients that provided them assignments in their areas. There no need to accept work that was too far away because you had plenty of work nearby. Now with the advent of AMCs you get appraisers coming from who knows where. The appraiser no longer has control of his/her client base and has to take the work where they find it.
We have to get rid of the AMCs. Well how do we do that? I say, write/email your local and state representatives. Write/email the CFPB. Join a local or national coalition to promote the appraiser lobby. Most important is to network and urge your peers to do the same.

This article states that appraisers are getting less pay for the same work? How about less pay for more work!!!!!!!!!!!!

AMC have stolen the appraisers right to market themselves and stolen half of their income. What if the same senario was getting your car repaired in a government auto repair facility. Your mechanic would chosen by the government and forced to work for 1/2 their usual pay. Automobile owners could only go to government auto repair facilities for repair work. While the mechanic is paid a lower fee for the work the government takes half the labor costs and pockets the money in the government pockets.

This is the same situation in the Appraisal Industry and it make me sick. All the education and years of experience mean nothing which is why I can not afford to remain in the appraisal profession. Realtors have not taken a cut in commissions, therefore I will return to real estate sales and look at disgust at what the government has allowed to happen to the appraisal profession.