Yep, new rules regarding the ordering of FHA appraisals mirroring those of HVCC have come into effect. That's right, your FHA appraisal is now ordered by an AMC (appraisal management company), who tend to select, how should I put this........THE LOWEST BIDDER!
To think that pressuring an appraiser into coughing up half their fee to the AMC in order to get the job is not going to effect the quality of the end product is obtuse! The AMCs have no interest in the quality of their work.
So as a broker, you have the client pay the AMC $500 for an FHA appraisal, and the AMC collects $150-$250 for "their effort" and the appraisal is not satisfactory to the underwriter, does the client get their money back? No! They might have to spend another $500 to have a second appraisal done and the AMC collects another fee. Can you see where an AMC really does not have much of an incentive to make sure that the appraisers they hire are actually any good. It's not like it's costing them any money out of pocket. The check in this process is the actual lender possibly pulling the contract. Then again, there are a lot of lenders that actually own AMCs (PROFIT CENTER).
HUD does not want the broker to order the appraisal? Fine I understand the rational. I do not agree with it, but I understand it. Back when I first started as a broker we were assigned an appraiser by the Portland HUD office. They had a list of approved rostered appraisers and they picked who you got. Pretty simple stuff! Too simple by half for the boys back East! No, that would not help their friends in the banking and AMC lobby would it?
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