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The reverse mortgage industry has just came through some of its most challenging years. That said we may be facing a new challenge…one of supply and demand which could increase the cost of an appraisal substantially. What’s the driving force behind increasing costs?
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Editor in Chief: HECMWorld.com
As a prominent commentator and Editor in Chief at HECMWorld.com, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
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4 Comments
Many appraisers are leaving the business because the AMCs take most of the money paid for the appraisal. An appraiser who used to get $400 per appraisal now might get only $150, and the cost to the borrower goes as high as $550. Eliminate the AMCs and we will see an immediate increase in the number of appraisers.
We must come back to why FHA placed AMCs between appraisers and lenders. In truth it was because appraisers lacked the integrity to maintain their independence at all costs. Many appraisers complained that they were being bullied into higher estimates of value because all or almost all of their work was coming from a few lenders.
Many viewed there were three key players in the lending process which did not maintain their independence which greatly contributed to the demise of the mortgage market. The first were appraisers, followed by underwriters, and finally rating agencies.
The only party to be placed under a buffer was appraisers. It was common to hear that the credential appraisers wanted to be highly regarded, MAI, eventually came to be joked as meaning: “Made as Instructed.”
What the AMCs were intended to do and what they do have some common ground but not nearly as much as they should. The existence of AMCs should result in better estimates of value but now seem to end up as appraisers providing low values and hiding behind the AMC when it comes to accountability. The AMC system is harming seniors by delivering an inferior product at a higher cost.
The AMC process is a failure. Costs to consumers have increased, payments to the people actually doing the work have declined. A bureaucratic middle layer has been inserted that taps money and saps efficiency. Many appraisers function as occasional contractors with little accountability. The quality of appraisals and ability to efficiently cure defects has declined markedly.
Eliminate the bureaucracy. Restore the funds flow to the people actually performing the work, stabilize the price to the consumer, improve efficiency and quality.
Unfortunately you have stated why it has worked except for some higher costs to consumers.
I agree with you but we have a different agenda than FHA.