AMC Archives

New AMC – 8 hour turn time!!

By Ann O'Rourke on April 3, 2013 / AMCs, appraisal management company, humor / 6 Comments

An AMC to Keep Pace With?
Q&A with Richard Johnson of Pacer AMC
April 1, 2013
Appraisal Buzz

BUZZ: How will you differentiate your company from the other 500 AMCs?

RICHARD: We have created a unique appraiser scorecard. We have an algorithm that measures the appraiser’s self esteem. We find appraisers who set a low fee, never complain when we are a slow pay, and love challenging assignments. We have no dress code. Appraisers just hate that.

We have spent a lot of time picking the best appraisers for our assignments. We call it dialing for dollars. We reward our processers based upon setting new lows.

Because we are the low cost provider we attract the very largest lenders in the US.. These large lenders too have an algorithm that includes input as to the cost of regulation. They have figured out the risk of penalties and fines is somewhere between slim and none. They have lobbyists to ensure that. We have hitched our star to their wagon.

BUZZ: What is this we have heard of your 8 hour Turn Times?

RICHARD: One of the ways we feel we can stay ahead of our competition is we have instituted an 8 hour turn time. We feel it shouldn’t be too hard to get all our appraisals done the same day they are assigned.

Of course we are not unreasonable though if a property is over 250 miles away we allow an extra 2 hours to submit your report.

BUZZ: With all the transparency, disclosures and Customary & Reasonable laws how do you get away with being the low cost provider?

RICHARD: It is really simple. We know our clients love AMCs because they get our services for free. It is the greatest business on the planet. The appraiser pays for the services for the lender. What a racket. We find appraisers who are willing to drive anywhere and do anything for an ungodly low fee.

We don’t worry about compliance because the appraiser signs an affidavit that certifies we have paid them a customary and reasonable fee. Have you seen the CFPB enforce any appraisal rules ? No of course not. Zero risk for lenders and AMCs.

My comment: be sure to click on the link and read the rest of the articled before you let your blood pressure go way up ;> It was published on April Fools Day!!

http://appraisalbuzz.com/an-amc-to-keep-pace-with

AMC Declares Bankruptcy: What Appraisers Need To Know About Bankruptcy

By Ann O'Rourke on February 13, 2013 / AMCs, appraisal management company, lender appraisals / 6 Comments

Tags: AMC

By Ramir Rodriguez

You received a letter in the mail informing you that your client has filed for bankruptcy. It is this moment you realize that this bad news just became your problem.

Many of us are familiar with the recent bankruptcy filings of Evaluation Solutions and its subsidiary ES Appraisal Services. Peter Christensen, attorney and general counsel to LIA Administrators & Insurance Services, shared in his blog that the total unpaid fees to appraisers, agents, and brokers as listed in bankruptcy documents is $11,048,411.97! This is a remarkable amount. Evaluation Solutions’ bankruptcy documents accounted for $9,349,612.97 of the total amount and a separate filing of its subsidiary was for $1,698,799.

I Received A Notice… Now What?

If you received a notice regarding Evaluation Solutions/ES Appraisal Services’ (I will refer to them as ES) bankruptcy you may be wondering what the next step is to try and recover money owed to you. Yes, a client’s bankruptcy can be costly for you, but most importantly, not adhering to the rules of the bankruptcy process can cost you significantly more.

Knowing the types of bankruptcy, how to play by the rules, and what you can (or can’t do) will help you understand the scope of your problem and ensure you don’t get in trouble.

Types of Bankruptcy

There are lots of information you can gather from the bankruptcy notice from ES to help you understand the nature of this problem. But first you must recognize the type of bankruptcy ES is filing.

Chapter 7 – This type of bankruptcy is the liquidation of remaining assets to distribute among its creditors.

Chapter 11 – This a financial reorganization of a business, which allows your client to function while they follow court ordered debt repayment plans.

Chapter 13 – Similar to Chapter 11, but rather than a business filing bankruptcy it is the individual reorganizing and following a debt repayment plan.

Ideally, it’s more favorable on your end if your client files for either Chapter 11 or 13. These types of bankruptcy give your client a breather until they figure out how to repay.

If your client however files for Chapter 7, which is what ES filed, not only will your chances of getting paid be reduced, but also you may be waiting a long time (even years) for this type of case to be completed.

Take A Number

At this point you are probably frustrated and would like to call someone to attempt to collect your money. Stop right there! Your actions can get you in deep waters. If you attempt to make phone calls to ES’s accounting department, send nasty letters, or try to file a lien (which some appraisers have done in other instances and is not recommended), you will face penalties.

Assuming you do get some money owed to you, you will have to wait in line. This is the second item you must understand. Here’s the payment order:

Lawyers, administrative expenses, and other professional services that are involved with the work of filing the bankruptcy.
Secured claims, including mortgage holders.
Priority claims, including wages and taxes.
Unsecured claims, which is where you as an appraiser may be categorized.
Equity claims, including stockholders.

So curb your frustration because all you can do at this point is wait.

What Can You Do While You Wait

Sure you have to wait for ES’s bankruptcy process to take its course, but there are some things you can do in the interim. Since this case can drag for a long period of time, you can do the following:

Consult with your CPA about taking a deduction on your taxes for the bad debt. If you manage to receive some money owed to you after the bankruptcy case is settled you can claim it as income at that time. See your accountant for more details.
It does not apply in this case, but if you have a future instance where your client files for Chapter 11 or 13 and wants to continue a working relationship, it may be to your advantage. Of course your immediate reaction is to quickly say “no way!”, but understand that Chapter 11 and 13 require debtors to stay current on all accounts moving forward. This means you can add a fee to your appraisal fees to recover what was lost, stricter payment time frames, and maybe exclusivity as other appraisers may not take another chance. Keep in mind that the best way to reduce or eliminate risks is to get paid up front.

Improve And Move On

Now that you’re somewhat familiar with the types of bankruptcy, payment pecking order, and what you may be able to do as the bankruptcy takes its course, it is important prepare for the future. This means assessing your appraisal business and how to prevent this problem from happening again.

First, create a process on how to screen new clients by knowing their payment history. There are many tools and resources you can use online that are free or for a small fee. Second, improve your accounts receivable aging management procedures. Just because they are still “current” doesn’t mean it does not require all of your attention. Current receivables can quickly turn into problems if you don’t pay attention. Last but not least, be persistent and tough but professional with your collections.

If you have an AMC bill in your state, read it and educate yourself on how it can help your appraisal business. There are sections in most AMC bills that require AMCs to pay by a certain time frame. For example, Texas AMC bill requires AMCs to pay appraisers within 60 days.

Also consider resources available to you such as factoring your receivables where the risk of non-payment is transferred to the factoring company. In this case, you can get paid quickly without the responsibility of collecting and liability of non-payments.

No small business is immune to the unexpected, but you can certainly minimize you risks as work towards a successful 2013.

Guest blogger:  Ramir Rodriguez  represents Treasure  Valley Factors
in Fruitland, Idaho. He has  helped real estate  appraisers
understand how factoring can can help their business since 2009.
For more questions about factoring accounts receivables,
please  email him at rrodriguez@treasurevalleyfactors.com
or visit his blog Factoring Helps or
website www.treasurevalleyfactors.com.
Twitter: @RamirRodriguez
"Like" Treasure Valley Factors on Facebook!

ES AMC out of business

By Ann O'Rourke on December 26, 2012 / AMCs / 10 Comments

Tags: AMC

ES Appraisal Services/Evalonline.com/Evaluation Solutions AMC in bankruptcy and is out of business

Another AMC closes its doors. I have been predicting AMCs going out of business for a long time. Why? The cost of starting a national AMC is in the millions. To handle cash flow problems, such as losing a main client (ES and JVI are examples) millions more are needed in cash reserves. There are over 400 AMCs now since HVCC in 5/09. I don’t know how many have lots of cash reserves. I suspect that many don’t. It is very similar to an appraisal business being dependent on one client and then losing the client. Nothing new.

ES is in bankruptcy. Employees and back payroll taxes must paid first. Vendors/suppliers typically don’t get much.

What is surprising to me is how many appraisers keep accepting orders, even though there are many Internet postings about them, often for many months.

A few months ago, in the September 2012 issue of my paid newsletter, I wrote about how to collect from AMCs. It is not that hard. It is not that hard. I will be setting up a special AMC Watch List for my paid subscribers. To subscribe to the newsletter, click the banner below.

I have always known which AMCs were in trouble long before they went out of business. Real estate agents have been complaining for 2007 about BPO payment problems. Appraisers started speaking up in early January, 2012.

In the January, 2013 issue I have a profile of a mid-size AMC including how I evaluated their financial strength and ability to handle a downturn.

Sorry, I can’t give it all away as I spend a lot of time on the research and writing ;>

Why are there so many increasing lender/AMC requirements?

By Ann O'Rourke on December 18, 2012 / AMCs, appraisal, lender appraisals, unusual homes / 8 Comments

Tags: AMC, lenders

Today, lenders are very worried about investors requiring loan buy-backs. I keep hearing about piles of paper minor appraisal errors, such as typos, resulting in buy backs. Of course, many of the loan documents, including appraisals, have been lost.

Is this realistic? I don’t know, but lenders are worried so they tell their agents, AMCs, to increase appraisal requirements. There were much more significant changes in 1989, such as appraiser licensing, that will not be reversed.

AMCs work for lenders, and do what they say. But, if one of an AMCs lender’s require something, that AMC may require that it be done for all of their lenders because it is too much of a “hassle” to send out separate engagement letters for each lender’s appraisals.

This is a short excerpt from an article in the January, 2013 issue of the paid Appraisal Today newsletter, which focuses on AMCs, including background checks and a profile of an AMC that pays well and that appraisers like to work for.

Background checks

By Ann O'Rourke on December 5, 2012 / AMCs, lender appraisals / 15 Comments

Tags: AMC, lenders

man with question mark

fbi badge

Another AMC/client issue is requiring background checks. Some AMCs are asking for them and some are not. If one of an AMCs clients’ asks for a background check, it is easier just to get one from the AMC’s appraisers so that it is in the AMCs files if they need it.

I’m working on an article for my paid Appraisal Today newsletter about this issue, including what the AQB advises and where to go to get one you can use for multiple AMCs. There are some good reasons why clients (and state regulators)

want them. I got a background check when my license 20 years ago and have never gotten another one. And some bad reasons – privacy invasion, cost, hassle, etc.
I’m working on a series of articles on AMCs for my paid Appraisal Today newsletter, including trying to find out about these background checks.

Texas AMC fee survey – disconnect between AMCs and appraisers

By Ann O'Rourke on December 4, 2012 / AMCs / 7 Comments

Tags: AMC

dollars floating The Texas AMC fee survey was taken in August, 2012. In the results, 10% of the appraisers said they received under $250 for 1004s and the AMCs said they paid no fees under $250.

No one really knows why there is such a disconnect. Survey requests were sent to all licensed AMCs and licensed appraisers. Not all responded or could be contacted. Only AMCs licensed in Texas were surveyed. The Texas licensing started in March, 2012.

In this month’s issue of the paid Appraisal Today newsletter I wrote an article “What are AMCs paying now? Fees a

re going up, but some appraisers are still working for low fees” and used various fee surveys.

The Texas Appraisers and Appraisal Management Company Survey is by far the most rigorous and was done by three universities, and was requested by a committee of the Texas State Senate. The survey was done in 8/12 and the report was available in 11/12.
Link to survey: www.talcb.state.tx.us/pdf/Texas_Appraiser_AMC_Survey_Report_2012.pdf

This is the first in a series of articles about AMCs that I am working on.

Here are the other AMC articles I have written rece

ntly:
– November, 2012: Who’s on your “approved AMC” list and why? Dump your bad AMCs! AMC rating grid
– October, 2012: AMC and appraiser liability -claims, blacklisting, lawsuits, etc.
– September 2012: this issue focused on AMC collection – how to collect from deadbeats and get all your billings paid!
– August 2012: AMC fees are going up! Many appraisers are swamped with work! You CAN get higher fees!!Win-win AMC fee negotiation for appraisers
– April 2012: 8 reasons why AMCs ask dumb questions – written by an industry insider

FYI, my first article on AMCs was written in 1994.

AMC asks appraiser to remove photos of black cat

By Ann O'Rourke on December 3, 2012 / AMCs, lender appraisals / 6 Comments

Tags: AMC, lenders

black panther How the AMC (maybe) saw the cat

<—————

Fair lending violations per AMC.

This first circulated on the Internet in September. I finally found the original source!!

This was from the famous/infamous real estate and mortgage news and commentary videos with Frank Garay and Brian Stevens.

I love the “Frank and Brian” video show!! It is mostly about mortgage lending but is sometimes about appraisers. They used to have an appraiser version, but one of the two appraisers went to work for the CA state regulator, so it was discontinued.

Foto of the The Two Guys

Here’s link to the video to see them in action!!!
http://tbwsdailyshow.com/2012/09/18/real-estate-deal-delayed-by-a-cat/

AMCs and confusion about Chase and 30 mile limit

By Ann O'Rourke on November 28, 2012 / AMCs, lender appraisals / 18 Comments

Tags: AMC, lenders

One of my readers contacted Chase after reading my email sent yesterday. The reader said that Chase does not have any 30 mile limit. Per the email from an account executive at JPMorgan Chase in Florida: “No we do not have any such guideline or requirement like that.
Sounds suspect!”
—————————————–
My original source for the info was Doug Smith in Montana, who received an official letter with a letterhead from Equifax stating that Chase has a 30 miles limit. Here is the emailed letter he received on 11/16/12:

“Attention all Chase Appraisers:

Effective orders assigned tomorrow, Friday November 16th, 2012, all Appraisers completing orders for J.P. Morgan Chase Bank must be within 30 miles of the subject property.“

“You will be asked during the assignment call from Equifax Settlement Services to confirm that the appraiser completing the order is within 30 miles. Any assignment exceptions to this requirement will be noted in the Equifax order notes.“

“Please note, for both Equifax and Chase audit purposes it is IMPERATIVE that the appraiser’s address stated on the report is within 30 miles of the subject property address.“

“We thank you for your compliance with this new Chase requirement.“
———————————
Afer inquiring about an order for an appraisal 100 miles from his office (not unusual in Montana), Doug also received an email from Servicelink saying that their contract with Chase did not have that requirement.

What’s happening? I have no idea. The emailed letter sent to Doug from Equifax is very clear.

Chase has a new appraiser requirement – appraiser must be located within 30 miles of the subject

By Ann O'Rourke on November 27, 2012 / AMCs, lender appraisals / 18 Comments

Tags: AMC, lenders

AppraisalPort Poll Results – 5/14/12

In the past 6 months how many appraisals over 50 miles away from your office have you completed?
0 to 5, 3377 votes – 62%
6 to 10, 539 votes – 10%
11 to 15, 296 votes – 5%
16 to 20, 245 votes – 5%
More than 20, 985 votes – 18%

Total Votes: 5,442

My comments: Very interesting results!! Although the poll is for only over 50 miles, I would expect that more appraisers are traveling 30 miles or more. I guess Chase won’t be lending in rural areas or parts of large counties. I am 32 miles from the farthest city in my county. I am in the San Francisco Bay area, and most appraisers who work multiple counties travel over 30 miles one way regularly. Of course, the more time you spend driving, the less appraisals you can complete. Cutting driving time is the best way to increase productivity.

Disaster appraisal form reports – be careful!! – from 11/12/12 email newsletter

By Ann O'Rourke on November 24, 2012 / AMCs, lender appraisals, Uncategorized / Leave a comment

Tags: AMC, lenders

To keep up on what is happening in appraisal businesses, mortgage lending, USPAP, etc. , Plus humor and strange homes, sign up for my FREE weekly appraisal email newsletter, sent since June 1994. Go to Home on the left side of the menu at the top of this page or go to www.appraisaltoday.com
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DO NOT FILL OUT ANY PART OF ANY FORM ASKING FOR YOUR OPINION OF VALUE (INCLUDING DIRECTION IN VALUE) AND/OR REPAIR COSTS. DO NOT INCLUDE ANY OPINION OF MARKETABILITY.

Forms that are being used

1. You are working for a lender who allows you send a letter. That’s what I did in 1999-2000 disaster inspection reports in my area. BEST OPTION.

2. FANNIE FORM 2075 OR FREDDIE FORM 2070. THIS FORM IS THE ONLY APPROPRIATE STANDARD FANNIE MAE FORM. This was used for many years for exterior inspections with no appraisal (comps, value, etc). You can discuss the condition of the home in a comments section.

3. Catastrophic disaster area property inspection report. I have seen these from three software vendors. All were different. Unfortunately, some of them have sections for reporting “cost to cure” and/or opinion of direction in value. You will have to modify them, similar to the discussion below on the 1004D. See what it looks in your forms software.

4. Fannie form 1004D – Appraisal Update and/or Completion Report. available 3/05. This form has been widely used by lenders, starting in 2005. See below. THIS FORM IS FOR AN APPRAISAL, NOT INSPECTION-ONLY. EVERYTHING BELOW THE TOP OF THE FORM (address, client, etc.) IS NOT APPROPRIATE. YOU MUST WRITE UP YOUR OWN SCOPE OF WORK, INTENDED USE, ETC. PUT THE APPROPRIATE INFORMATION IN NARRATIVE FORMAT IN A TEXT ADDENDUM. BE SURE TO PUT DISCLAIMERS ON BOTH PAGES OF THE REPORT IN THE COMMENTS SECTION PLUS THE ADDENDUM See below.

——————–

Fannie form 1004D – Appraisal Update and/or Completion Report. available 3/05. This form has been widely used by lenders, starting in 2005, for appraisals “subject to completion”, typically new homes. These reports are done by the appraisal who did the original appraisal. THIS FORM IS USED BY AMCS AS IT CAN BE TRANSMITTED AND IS A STANDARD FORM.

THIS FORM IS FOR AN APPRAISAL, NOT INSPECTION-ONLY. ALL THE FORM BELOW THE TOP OF PAGE 1 IS INAPPROPRIATE AND MISLEADING.

Below that section, the only item that can be used is the Intended user. YOU MUST HAVE AN ADDENDUM DISCUSSING WHAT THE LENDER/CLIENT WANTS.

– You can put text comments info Conclusions on Page 2. Do not check any boxes. Do not fill in any repair estimates. Write up your description in the comments. Such as None apparent (do NOT discuss effect on collateral or marketability). Or, the home has been completely destroyed, except for the foundation. No roof, walls, etc.

– DO NOT FILL OUT ANYTHING IN THE RECOMMENDED INSPECTION SECTION. Repeat the above disclaimer. You can include a brief, general, description of the home in the comments section. Even if is there is no damage apparent, you did not previously appraise the home. Be sure to explain this. For example subject and nearby homes do not appear to have been affected by Hurricane Sandy.

NEIGHBORHOOD DESCRIPTION IS NOT INCLUDED IN THIS FORM AND IS A SIGNIFICANT FACTOR. The disaster forms and the 2075 form include a neighborhood section. Optionally, you may include a statement on neighborhood/nearby homes, such as “Almost all the homes within 2 blocks of the subject are almost completely destroyed” Or, the subject is 1 mile from any apparent storm damage.

You MUST write up your own addendum/letter, covering:

– Statements that:

THIS IS NOT AN APPRAISAL AND IS PROVIDED TO ASSIST THE LENDER AFTER A DISASTER. THE SCOPE, INTENDED USE, CONTINGENT AND LIMITING CONDITIONS, AND APPRAISER’S CERTIFICATION ARE SUPERSEDED BY THIS ADDENDUM. THE SIGNATURE PROVIDED ONLY INDICATES WHO DID THE EXTERNAL INSPECTION. ALSO PUT THIS STATEMENT BELOW “HAS THE MARKET VALUE DECLINED” SECTION. DO NOT CHECK THE BOX.

– Intended use. Do NOT include “To determine if the property has declined in value since the date of the original appraisal for a mortgage finance transaction.”

– Scope of work. ONLY include “perform and exterior inspection of the subject property from the street”.

BE SURE TO INCLUDE THE DISCLAIMER BELOW

“While the appraiser noted no VISIBLE damage, the appraiser is neither an engineer nor a contractor and is not qualified to comment upon whether or not damage may be present which was not apparent from a visual, exterior inspection.”

Source: Liability Insurance Administrators

—————–

REFUSING TO FILL OUT THIS FORM. Some appraisers are refusing to fill out this form. This has the same problem since 2005. Nothing has been done about this. It is your decision. As you can see, it is not appropriate and only the first section of the form can be filled ouit.

If you choose to fill out this form, it is your choice.

—————————

WHAT’S THE ANSWER? A standard disaster inspection report, used by all lenders.

————————–

My last local disasters were in 1989/1990 – Oakland firestorm and Loma Prieta earthquake. I did re-inspections on properties I had previously appraised for lenders. No values or estimated costs, etc., of course. Most of the appraisal work was for insurance companies to determine the value of the property previous to the disasters.

The most recent large disaster was Hurricane Katrina in 2005. This was pre-HVCC and lenders ordered the property inspections as AMCs were not predominant. Many lenders ordered 1004D forms and many appraisers refused to fill them out.

————————-

Be sure you can find the subject!!

GPS is not exact. A subject can be hard if there is nothing there and all the nearby homes are gone. I know from experience!! I had previously appraised the homes after a disaster and had difficulty finding them!!

————————————

What about fees?

The primary factor is how much time it will take. You can work for any fee you choose, even $1, for any report.

Since you will not be providing any opinion of repair estimates, direction in value, etc. look at how long it will take you driving, research (finding the subject), writeup, and transmitting the report. Also, if you can do lots of them on the same day, in the same neighborhood.

I’m hearing from a minimum of $75 (low Fannie 2075 fee) to $200+ each.

If you are doing interior inspections, be sure someone accompanies you. Be very, very careful. Don’t do them for a low fee. They are probably ok in areas with minimal damage, such as broken windows, etc.

Appraisal Humor

Appraisal business tips

A very, very funny appraiser video!

Posts Tagged AMC

I Received A Notice… Now What?

Types of Bankruptcy

Take A Number

What Can You Do While You Wait

Improve And Move On