After years of unregulated practices that arguably cause both direct and indirect harm to the public, Appraisal Management Companies (AMCs) are finally being examined for their impact on both consumers and small businesses.  It appears that a handful of the largest of these AMC entities controls the majority of the mortgage-related real estate appraisal sector of our national economy.  The extent of that control is expanding while the number of these primarily bank-spawned AMCs is narrowing, with the effect that a few of the heavily bankrolled, giant AMCs are taking on more of the characteristics of monopoly. 

As seen in the past when monopolies have arisen, their abuses of both the public and the small contractors with whom these firms do business have become flagrant - while being viewed by the monopolists as their right and privilege.  Those small contractors, each the very definition of the small business person we as a nation proudly encourage, are compelled by poorly regulated behemoths to provide more uncompensated services, take greater professional risks, and accept smaller and often less prompt payments for their services.  Almost the only alternative for those small business people - in this case, the professional appraisers - is to go out of business entirely. 

While real estate appraisers have taken the brunt of these abuses, consumers of real estate finance-related services have been harmed as well.  AMCs, with their seemingly unquenchable thirst for higher profits, have made it a practice to locate and identify appraisers who will accept smaller portions of that fee that was identified to the consumer as the "Appraisal fee", when only a fraction of that fee is actually going to pay for the appraisal itself.  And they have pushed the total "Appraisal fee" charged to the consumer higher over time, providing no additional benefit to the consumer.  The consumer is actually just unknowingly paying the AMC more while receiving nothing more.  In fact, the consumer arguably receives less under the AMC system, because the AMCs are applying unrelenting pressure on appraisers to complete valuations in less time.  Coupled with their demands for ever-expanding report content that makes no demonstrable improvement in the acccuracy of the property valuation, these tight time constraints inevitably lead to errors that would have been far less likely had the professional been allowed a reasonable and appropriate timeframe for performing the work.  Consumers are therefore paying for valuations whose quality may be somewhat compromised by these pressures.

A number of skilled, experienced appraisers have left the business rather than completely submit to the demands for less professional treatment of valuations and those who perform them.  The rest would discourage their children from ever entering the business at all.  For most appraisers, performing skilled valuations was once a privilege with which they had been entrusted.  And AMCs are now reducing that profession to "assembly line" style work in terms of both faster production times and lower quality of the final valuation.

As a Realtor, a real estate appraiser, and a consumer of financial services, I urge you to adopt and enforce regulations concerning 1.) AMC payment of Customary and Reasonable appraisal fees, and 2.) making and/or permitting full disclosure to consumers regarding what the AMC is actually charging them, versus the real cost of the appraisal.  Furthermore, I strongly urge you to require that AMCs operating in Virginia follow the dictates of the federal law known as the Dodd-Frank Act regarding how Customary and Reasonable fees are determined.  You should not rely upon the Federal Reserve, which has thus far abdicated its watchdog responsibility with regard to the Customary and Reasonable fees provision of this important law.  The law explicitly states that appraisal management company fee schedules are not to be used in determining appraisal fees for lenders and their agents.

It appears to be incumbent upon you to take a proactive course in applying the Customary and Reasonable fee requirements of our law.  Please do so, and feel free to take pride in your protection of Virginia's consumers and small business people.  Thank you.