[AMC Factory] Conservative Appraisers Because Their Client “Likes It”
Posted by Jonathan J. Miller -Thursday, August 18, 2011, 9:59 AM
1 Comment
actual AMC (car) factory
AMC Factory For a year and a half, our firm tangled with the bureaucracy of Landsafe, the poster child for the appraisal management company (AMC) industry. While not all AMC’s are bad, their relationship to the mortgage process is fundamentally flawed. The estimation of market value of mortgage collateral to enable lenders to make informed decisions has been commoditized to the point where most mortgage appraisals are generally not worth the paper they are written on. This series is from an appraiser’s perspective, about a profession left to die by the side of the road.
Conservative Appraisers Because Their Client “Likes It”
Here’s one broker’s experience:
A client…received an offer from an out of state office of their lender whose 5-year interest-only loan was soon to expire and agreed to allow an appraiser to visit the apartment; the appraiser told the client:
I measured the dimensions and also I can see from the floor plan done by the architect in 1939 that the apartment is 950 square feet but I am going to tell the bank that it is 850 square feet because the bank will like that
The (My) client refused to proceed and ultimately the bank automatically converted the loan to 30-year fixed at a rate of 2 points over LIBOR at the time which turned out to be 3.75%, with no appraisal and no new application and no costs or fees.
My thoughts
Since when are appraisers supposed to take it upon themselves to modify the physical characteristics of the property? We are supposed to be the eyes and ears of lenders, not part of their sales force or underwriting team.
This appraiser’s behavior sickens me.
I’m sickened as well. Actually I’m sick more than not nowdays, but may I inquire as to the source of that oft repeated phrase (almost said well-worn) that appraisers are the “eyes and ears” of the lender? Sounds like something less than independence to me.
Interesting how appraisers came to be hired by the sales force and criticized by the underwriters. So much for the eyes and ears. I heard an instructor describe the current appraiser training to be something like the lenders swatting the dog with a newspaper.
Are you sure somebody out there still wants eyes and ears or is thyat nostalgia? Has anyone out there ever been hired and well paid by a lender to tell the absolute truth? It sort of looks to me like the spin doctors among us have it.