Where to start with this? Do I have to refer you back to my past articles like “What’s Not in Your Wallet or Appraisers Outraged?” Where do we even begin….
We begin here. Another story of an Appraisal Management Company going out of business owing tons of money to appraisers for services they provided. Coester VMS that was once one of the biggest players in the game closed its doors recently. They closed them leaving appraisers with thousands of unpaid invoices for services that who knows if they will ever be paid for. As stated in previous blog posts, these amcs are acting as agents of the lenders that choose to use them. The lenders sign contracts with the AMCS to provide a service to them in order to help keep Appraiser Independence as stated in Dodd Frank legislation. So who is really responsible for payments to appraisers. The Lenders? The now out of business AMCS? Who? Who do appraisers turn to when the AMC goes out of business owing them money? Many states but not all require a surety bond in order for an AMC to do business in that state however as was the case in NC, the bond amount was only $25,000.00 and appraiser claims exceeded the amount in 4 days leaving most appraisers to be paid on a pro rated basis. So who else is responsible? Maybe you the Borrower? Do we really know? The laws are so vague it’s actually quite disturbing.
So lets start with a good story. A story of a lender named Sierra Pacific out of CA that has been bombarded with requests from appraisers to pay fees owed due to the now defunct Coester VMS appraisal management company. Sierra Pacific was the lender using Coester VMS as their AMC. When Coester decided to close its doors and leave appraisers unpaid, Sierra Pacific stood tall and has since been doing the right thing. They are paying appraisers for work done for them even though Coester VMS took the money from borrowers and ran. They have stepped up to pay appraisers for fees owed to them for prior appraisals. So bravo to you Sierra Pacific. We thank you for doing the right thing. See the letter below and know that Sierra Pacific is a quality Company.
Now we get to Planet Home Lending.
This was another company that had entered into a contractual agreement with Coester VMS. They are the Lender that hired Coester to be their agent and provide a service to them. Appraisers have contacted Planet Home Lending demanding payment for appraisals done for them. Unlike Sierra Pacific, Planet Home Lending decided to take a different route as seen below:
So what does this all mean??? You have one lender paying appraisers due to their admission they used a deadbeat AMC to represent them and want to do what is right. Yet another flat out states they don’t care nor will they pay due to not having an agreement with the Appraiser directly.
Here is the ultimate question? Who is responsible? The lender doing the loan or the AMC representing the Lender? Does it matter If the lender collects the fee for the appraisal from the borrower and passes it along to their agent to pay the appraiser or if the agent or AMC charges the borrower the fee directly? Good question. Why? Because this is the only profession and industry where there is a third party making contracts, taking payments on behalf of others, and making decisions with your bank or lender, while the actual entity that performs the service is left out. So another question? Why are AMCS taking payments directly from the borrower? What about Escrow accounts like Realtors have to use or how about the borrower pays the appraiser directly. We are in a day and age where borrowers can pay the appraiser directly via numerous avenues due to technology, Apps on devices, PayPal, credit cards or yes even cash or check. Why for the nth time do we have to have appraisers go unpaid for services due to an AMC failure? WHO MADE THESE TERRIBLE AND RIDICULOUS LAWS? You guessed it. Our government, who is indifferent to small businesses, the backbone of the economy but they sure will support the banks and lenders.
Enough is enough and as consumers you should be outraged as well. You could one day wake up with a lien on your home. Maybe a lien on an investment property? Maybe you just get calls from the appraiser who wants his payment. Are you ready for all of that?
Your money is not going where it should but instead enriching the lives of others at the expense of real estate appraisers and small business owners due to these poor laws, legislations and the blind eyes not paying attention.
It’s time for a change. It’s time to have lenders pay AMCS separately from the appraiser . Its time for TRANSPARENCY and ACCOUNTABILITY! It’s time for appraisers to be paid fairly, rightfully and on time. It’s time to change the poor laws.
A class action law suit needs to happen. I have not worked for coaster for years. But all of the appraisers that are owed money need to join together in a class action suit against the lender. The AMC doesn’t have any money.
I have a close associate with a large law firm that it chomping at the bit to persue a class-action case along these lines. More particularly to go after the bottom feeder AMC’s that shop fee to make a bigger margin – much to the demise of the appraisal profession as well as the consumer.
As business owners we need to investigate the creditworthiness, integrity and ethical behavior of our clients (whether they are AMCs, mortgage companies or financial institutions) prior to accepting assignments. WE are granting them credit. AND we need to continue to pay attention to any changes in their business after we start to work with them. Read blogs, articles, BBB website, look up their senior management, read their websites, how do they treat their employees and any other comments about your clients or potential clients. It’s ok to ask for payment upfront if you don’t find a lot of information about them that makes you feel comfortable. Limit how much credit you allow them. If they begin to pay late, stop doing business with them. Coester’s unethical behavior was of a concern to us years ago. We chose not to work with them. Not trying to be over righteous at all. Just don’t want my fellow appraisers to be taken advantage of.