Posted by Jonathan J. Miller -Thursday, August 18, 2011, 9:59 AM
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.
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.