The house appraiser services sector across the country is still full of home sellers and brokers complaining about failure to close sales because of low appraisals and full of appraisers complaining about competing with or unfairly compensated by large appraisal management companies owned or contracted by lenders.
Another major point of contention is the full or part ownership of AMCs by major lenders such as JP Morgan Chase which owns Quantrix, Citigroup which owns Finiti and Wells Fargo which owns Rels.
Critics said the ownership of AMCs by lenders violate the key provisions of the new Home Valuation Code of Conduct for appraising homes guaranteed by government agencies. They said the close links of the giant lenders to these AMCs remove the ability of banks to remain independent of the appraisals and provide unfair competition to licensed appraisers.
In response, the large banks argue that their operation of their own AMCs improves their home loan production operations and reduces operating costs. They add that they pass these cost savings to borrowers in the form of lower interest rates and other borrowing fees.
Appraisal organizations complain that AMCs have captured around 50 percent of the appraisal market and that the market share is rising fast. They also charge that AMCs pay their individual appraisal professionals low fees while passing high appraisal fees to borrowers.
Critics add that borrowers do not see the final appraisal costs in their loan documents because appraisal fees are incorporated in miscellaneous or other types of borrowing charges.
Additionally, more and more individual appraisers are leaving AMCs or refusing to work with AMCs despite the availability of appraisal work because of the low compensation compared to their appraisal load. They claim that they are forced to rush appraisal work because they need to complete a number of appraisals in a certain period of time.
Some individual appraisers also claim that Fannie Mae now requires appraisers to complete a market conditions form, in addition to new appraisal requirements.
Another claim against large AMCs is their practice of sending out-of-area appraisers to appraise homes not in their geographic area of expertise and experience. AMCs usually argue that they instruct their out-of-area appraisers to learn thoroughly first the residential market in the area, but in reality, AMC appraisers do not have adequate time to study the local market before doing the appraisal.
In the latest HVCC updates provided by Fannie Mae, Freddie Mac and other government agencies providing home loans, these agencies now require appraisal experience in the market area where the subject property is located.
