Current Event Blog

Below are the minutes from the Oregon Appraiser's Coalition from July 15, 2010.

oacminutesjuly152010[1].doc

AMC Reg Bill 3624.pdf

AMC_Registration_Rules_(6.23.2010).pdf

HR 4173.pdf

HB 3624-A

HB 3624-A dash 7 amendments.pdf

As a small business owner and resident in Oregon, I am writing to you to ask your support for HB 3624-A. This bill would require Appraisal Management Companies (AMCs) to register with the Oregon Appraisal Certification and Licensure Board.

Real Estate Agents, Financial Institutions and Real Estate Appraisers are licensed and regulated by their state and the federal government. AMC’s are the only party to Real Estate Financial Transaction that are not regulated. Most importantly, they are outside the loop that protects the consumer and public trust.

Most of the larger AMCs are owned and operated by banks. In some instances, these AMC’s are profit centers for the bank and the profits are paid for by the consumer. It appears that due to the current economic crisis, the banks created a way to increase their bottom line through their bank owned AMCs. This is an example of the fox in charge of the hen house.

Our small businesses as appraisers, contribute to the overall economy, we pay our taxes, we pay for our licenses and business expenses in the State or Oregon, most of the AMCs are out of state and do not financially support our State. With regulation, the AMCs must pay a registration fee and will be monitored for the performance, to ensure that consumers of the State of Oregon are protected! Again, we need to foster the public’s trust!

Due to the advent of the HVCC adopted in May 2009, which was a settlement between the New York Attorney General and the GSEs (Government Sponsored Enterprises – Fannie Mae and Freddie Mac), the AMCs have experienced tremendous growth. The HVCC intentions were good, imposed the separation between the loan officer, loan processor and the appraiser, but had some very unfortunate consequences. Lenders felt the need for third party separation (hence an AMC), that caused increased fees to the consumer, required unreasonable turn times, appraisers that are not geographically competent and has affected the quality and accuracy that leads to a credible conclusion of value. Again, the consumer has been harme

Although, there is not a perfect solution to this issue, I believe that your vote for passage of HB 3624-A is a huge step in the right direction to protect the public trust! Enforcing the accountability of AMCs for their actions should be mandatory!

Thank you for your efforts in passing HB 3624-A.

The plight of the real estate appraisal trade in dealing with appraisal management companies (AMC) aside, the consumers and people of the State of Oregon need this bill. Between 1991 and just before the agreement to the HVCC by Fannie and Attorney General of New York, appraisal fees were roughly stagnant. While not the best situation for real estate appraisers, the steady fees certainly were a boon to the consumer that had to pay them. Now in the last six months to a year I am hearing how consumers are now being charged anywhere from $500 to $900 for real estate appraisals that the appraisers are being paid $175 to $350, or so, by the AMCs. It is the AMCs that are hitting the consumers with these rapidly increasing fees while at the same time having little concern regarding the skills or experience of who the AMCs hire to do the real estate appraisals. The Oregon consumer is getting the shaft.

Worse, the vast majority of appraisal work being done in Oregon is now funneled through out-of-state AMCs. Oregon runs on small businesses. Real estate appraisers in Oregon represent small businesses. If you allow these profits being raked off the backs of Oregon consumers to flood out-of-state, it certainly may contribute to the reduction in Oregon business taxes for the Oregon General Fund as well as allow Oregon households to lose discretionary spending dollars to out-of-state interests. At the current rate I hear other appraisers all saying they are getting out of this business, it may not be long and residential appraisers that are willing to try and compete against this AMC business model, and profit center for out-of-state banks that own them, will mostly all be gone. That damages the consumers of this state, and it damages the state tax base that is in part supported by Oregon real estate appraisers.

Please support HB3624.

Sample letter for submission to pass HB3624

HB 3624-A received bi-partisan and near-unanimous support (8 to 1) in the House Consumer Protection and Govern-ment Accountability Committee. The need for HB 3624-A has become apparent in Oregon and elsewhere as we experience the constrictions brought about by recent government responses to the collapse of the real estate market. The Home Valuation Code of Conduct (HVCC) is the result of a joint agreement made in March 2008 between Fannie Mae, Freddie Mac, the Federal Housing Finance Agency, and the New York State Attorney General to enhance the independence and accuracy of the appraisal process. It set up a firewall between lenders and appraisers, leading to greater reliance on Appraisal Management Companies (AMC’s) to manage the appraisal process.

However, this Code has led to unforeseen consequences for purchasers and property owners, lenders, appraisers and others involved in lending and the sale of real estate. Since the implementation of the HVCC, the majority of appraisal assignments for lending purposes are now placed through appraisal management companies. AMC’s are currently the only unregulated entity in the real estate valuation chain. Banks, mortgage lenders, title companies, real estate agents, and appraisers are all highly regulated via licensing laws.

Too many AMC’s have devalued appraisers to the point that many appraisers are leaving the field, after deciding that it is no longer a worthwhile career. This does not benefit purchasers or property owners, who expect a competent, credible and reliable appraisal of their home or commercial property, but who may not understand the process well enough to evaluate the problems, including:

• Minimal or no education requirements for AMC’s means that too often the lack of real estate knowledge on the part of AMC’s has led to poor results for the consumer. Real estate appraisers are required to have a college degree and continuing education, in addition to being licensed, while AMC personnel are not.
• Appraisers are required to complete appraisals in less than adequate time and their compensation level has dropped significantly. Sometimes Oregon appraisers have not been paid by AMC’s.
• Real estate appraisers work from comparables, which are comparisons of similar houses or properties that have recently sold in the surrounding neighborhoods. Frequently, an AMC will select an appraiser based on the lowest bid rather than on experience with certain types of property and geographic knowledge.
• AMC’s may require reduced turn-around times which adversely affect the ability to accurately research and verify data. This can mean that appraisals received by lenders are not accurate, thus having financial ramifications for consumers. Real estate agents must shoulder extra burdens in working with appraisers who are unfamiliar with the area or comparable sales data.

HB 3624 requires appraisal management companies to register with the Appraiser Certification and Licensure Board, and establishes standards for appraisal management companies working in Oregon. Six states have already adopted similar AMC regulation: Arkansas, California, Louisiana, Nevada, New Mexico, and Utah. Other states are in the process of adopting legislation as well.

Please vote “yes” on HB 3624-A as it moves to the floor. Thank you!