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The failure of the appraisal management company AppraiserLoft highlighted the weaknesses in the entire industry post Dodd-Frank.
I am reminded of what a total disaster the whole situation continues to be and wonder when it might get better.
One reader sent over an email showing how dealing with AppraiserLoft was an exercise in adding insult to injury. The San Anselmo, Calif.-based appraiser billed AppraiserLoft for $6,000 worth of work. Checks covering the work arrived late and bounced.
For this inconvenience, Bank of America ($13.19 -0.08%) charged the appraiser a $25 "administrative fee" for handling the bad checks. Poor guy.
It is infuriating that there is no regulatory investigation into AppraiserLoft, but then, this happened with Taylor, Bean & Whitaker's appraisal system, didn't it?
Truth is, there isn't much to stop this same thing from happening again while states scramble to put a uniform code of conduct for AMCs into place.
The reader concludes, "life was better before the AMCs came along." Presumably this is in reference to the housing boom years in which appraisers are accused of favorably inflating house values?
AMCs admit it will be a rocky road as the new regulatory structure is established. Things won't smooth out until 2017, estimates Brian Coester of Coester Appraisal Group.
Coester is aware that not paying appraisers raises red flags quickly. He's trying to put together quicker reimbursement using direct deposit, for example. But these things take time. As a rule of thumb, Coester said appraisers should expect to get paid about 60 days from the date of filing an appraisal invoice.
He suggests appraisers use commonsense in choosing AMCs to work with. But, in reality, it isn't always that easy.
In the meantime, consolidation in the industry will continue, and appraisers will see less and less work. So, unfortunately, the environment allows for bad apples. Most appraisers are not in a position to turn down any offer.
The temptation for $6,000 worth of work is too great.
And those who continue to try to make a living out of appraisals will continue to be vulnerable.