California adopts rules for AMCs
States moving to regulate appraisal management companies
By Inman News, Thursday, October 15, 2009.California has become the sixth state to regulate appraisal management companies after Gov. Arnold Schwarzenegger signed into law legislation establishing compliance standards for the firms and requiring them to register with the Office of Real Estate Appraisers.
The Appraisal Institute, an industry group representing appraisers, issued a press release lauding California's law, saying it will protect consumers and appraisers while providing "positive effects" to the state's real estate market.
Arkansas, Louisiana, Nevada, New Mexico and Utah passed similar bills earlier this year, the group said, and as many as 20 other states are expected to consider such legislation when lawmakers reconvene in January.
New rules for appraisals adopted May 1 by Fannie Mae and Freddie Mac have led to an increased use of appraisal management companies, which critics say often don't give appraisers adequate time to complete their work, and assign them to neighborhoods where they lack experience.
The appraisal rules, called the Home Valuation Code of Conduct, were adopted after New York Attorney General Andrew Cuomo launched an investigation of mortgage origination and securitization practices during the housing boom.
The rules were designed to protect appraisers from coercion by lenders, but critics say they've derailed many home sales -- often because inexperienced appraisers have allegedly used distressed properties as comparable sales without making the necessary adjustments.
Some appraisers say the rules aren't perfect, but that market conditions are often to blame when a valuation doesn't support a proposed sale price. ...CONTINUED
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Submitted by Barry Noble on October 15, 2009 - 7:35am.
The fact that a number of AMC's are owned by the very lenders they service makes a mockery of the idea that AMCs are supposed to keep the appraisers anonymous from the lender.
AMCs can be helpful but their fees should be seperate from the appraisers, listed as such and the appraisers should be paid their normal fee if appropriate for the area and type/size/difficulty of the property. Having an AMC cut the appraisers' fees then show the combined Appraiser and AMC fees as the Appraisers' fees is misleading and unfair to the appraisers.
I have 'repaired" problems caused by out-of-area appraisers and those who are not qualified, including a good example, providing a second, new appraisal that came in at just over $300,000, when it earlier had been submitted by another appraiser to an AMC, as a value of $640,000 by comping it with another, (different but adjacent) high end city as comps for the subject moderate valued tract, the correct value - around $300,000, so it works both ways, too high or too low when the appraiser is not the. This example, one of several lately, the first appraiser had come down from Mid Coast California some 200 miles away, using the appraisal as an excuse to "See what the City of Palm Springs is like."
I would be very happy to be an AMC review appraiser, but seldom get any AMC calls any more, for mortgage loan appraisal work.
22+ years of experience and accurate Certified Residential appraisals in my "local" area - Palm Springs abd the other 7 desert resort cities of Southern California - now that experience going to waste, except for Estate,Tax, Divorce and other legal appraisal work.
There are many, highly experienced, totally ethical and accurate "local" appraisers out there, just begging for work now, and some may be weeks, not months away from having to give up,roll up their tape measures and call it a day as they seek other work. This is going to be terrible for the real estate industry and the home sellers and buyers.
Barry Noble
www.MyPropertyIsWorth.com
Certified Residential Appraiser & Broker
Palm Springs, CA