Caterina Platt responds from the Appraisal Scoop "Comments"
The body of my response letter to Austin Kilgore at housingwire.com
Dear Mr. Kilgore,
Thank you for your recent article in Housing Wire discussing TAVMA's reaction to a la mode's fee database.
What many appraisers have found in reading Mr. Schurman's comments and claims over the recent past is that he continually spins and misleads readers, not representing the full side of the story. His objective as the mouthpiece for the AMC is to support that industry, however his propaganda and commentary is not the full analysis of the issue, but merely his viewpoint as the spokesman for an AMC trade association.
For instance, take this paragraph:
“The a la mode analysis attempts to redefine what is reasonable and customary using this analysis that cherry picks results and implies that a small sub-group of the industry should dictate industry-wide prices,” said TAVMA executive director Jeff Schurman. “The FHA says ‘reasonable and customary’ should be defined by the entire marketplace.”
This is complete spin. The a la mode analysis provides the real fees appraisers collect when an AMC is not involved, period. The AMCs have attempted to 'own' the market since the implementation of Fannie and Freddie's HVCC requirements, however TAVMA refuses to acknowledge that the HVCC does not require the use of an appraisal management company. The language of the HVCC states that the loan production staff cannot order the appraisal. The below link is directly from Freddie Mac's website:
http://www.freddiemac.com/singlefamily/pdf/hvcc_746.pdf.
The pertinent paragraph from page 2:
- Requires absolute independence within a lender’s organization between the appraisal function and loan production and limits communication with the appraiser.
- A lender’s loan production staff is prohibited from being involved in the selection of the appraiser, or having any substantive communications with an appraiser or appraisal management company about valuation.
- The loan production staff consists of those responsible for generating loan volume or approving loans, as well as their subordinates. This includes an employee whose compensation is based on loan volume or the closing of a loan transaction. Employees responsible for the credit administration function or credit risk management are not considered loan production staff.
As you can see above, nowhere does Freddie Mac (or Fannie Mae for that matter) state that an Appraisal Management Company must be employed. AMCs have marketed themselves to smaller organizations that choose not to maintain a separate department from the loan production staff. Additionally, large lenders created their own corporate spin off AMCs within the past decade or so - long before the HVCC was conceived - as an additional profit center. Wells Fargo = Rels Valuation, Chase = Quantrix, Bank of America, after purchasing Countrywide took on Landsafe. These 'separate' entities which are owned under the corporate blanket of these large lenders provide additional revenues for title, flood, and appraisal functions carried out in the process of mortgages.
The 'marketplace' Mr. Schurman speaks of contains what we might refer to as wholesale and retail levels in the appraisal industry. The AMC pays the equivalent of wholesale fees to appraisers and then marks up the cost to the consumer on the HUD 1 settlement statement after adding their charges. This wholesale fee should not be confused with the actual reasonable and customary fees found in the marketplace. a lam ode is not cherry picking. Mr. Schurman is attempting to state the AMC industry's wholesale price beat down on appraisers held hostage by the TARP funded big box lenders and their AMCs are standard. They are not! In fact, it can be argued that the low fee levels that these AMCs choose to pay appraisers is the primary cause of their quality concerns.
Actually, a la mode is not causing confusion. Jeff Schurman speaking for TAVMA is the confuser in many ways.
1) it is not a requirement that AMCs be utilized to obtain appraisals
2) AMC fees are not the industry standard. They are wholesale fees. Please ask the borrower what they paid for an appraisal for their Wells Fargo/B of A/Chase refinance. You'll find it's no where near what Jeff Schurman will claim, but far more expensive AFTER the AMC applies their pricing markup.
3) his comparison to Home Depot vs. the corner hardware store is an inaccurate analogy. Home Depot charges retail just like the corner hardware charges retail. Mr. Schurman is trying to compare what the corner hardware store charges in retail to what Home Depot pays wholesale when they purchase from their supplier. This is an false analogy!
Finally, and perhaps most importantly, Jeff Schurman completely ignores the biggest problem he actually has with David Biggers and a la mode. His lack of disclosure of this particular point is the biggest challenge to his own ethics and points out his attempts to obfuscate and mislead. Dave Biggers' Mercury Network, from which this fee schedule is taken actually provides competition to the AMC industry. Yes, indeed. Mercury Network provides a double blind ordering system that meets HVCC compliance requirements without the AMC and without their markup. Mr. Schurman does not address this particular issue when he claims to have a problem with Alamode's fee study. I find that infuriating, but I also am not surprised as this is not the first misleading information we have seen from him.
Again, I would like to thank you for your article and appreciate your consideration of all sides of this issue which is so critical to the residential real estate appraiser.
Caterina Platt
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