The recent introduction of the "Valuation Code of Conduct" (HVCC) and its pending approval from some of the remaining powers that be, has been accepted by most appraisers as a welcomed change for the better. This new "code of conduct" requires lenders to order all appraisals through an "Appraisal Management Company" (AMC). The most welcomed aspect of this code specifically deals with appraisers not having to communicate directly with lenders, therefore reducing the possibility of any undue pressure. The AMC's especially like to boast about this feature because it helps to offset some of the negative aspects of ordering appraisals through an AMC.
With the recent disclosure of all the shady lending practices that have gone on over recent years and the current activity to rectify the situation and put polices in place to make sure that these things don't happen again, immediate attention needs to be given to some of the flaws of this new HVCC.
So while we're at it, let's change the practice of allowing AMC's to take as much as 50% of the fees they collect for an appraisal assignment that would ordinarily go to the appraiser. "Electronically" assigning and reviewing appraisals is not worth that much money!
While we're at it, let's require the lenders to have some respect for the time, effort and labor involved in accurately appraising real estate instead of creating bid wars amongst the AMC's using lowest price and quickest turn time as an across the board criteria. Every appraisal assignment is different, we don't live in a fixed world. Lenders/AMC's are not performing the appraisals, they shouldn't be allowed to dictate how much or how long an appraisal should take. Let's make lenders include the appraisers experience as part of that criteria so this current practice will not be allowed to continue with the inexperienced appraisers who don't know any better. If not, we will continue to get unsubstantiated values.
While we're at it, let's not allow lenders to own or partially own AMC's and require their customers to use their AMC. This practice invites collusive activity.
While we're at it, since AMC's have so much control of appraisal management, lets require them to follow appraisers standards (USPAP).
Although the practice of ordering appraisals through a third party seems to be the best alternative in theory, AMC's have already lost law suits for pressuring appraisers to make certain values and there are similar law suits currently pending. If the AMC's main motivation wasn't profit, maybe we'd be rid of all the bugs in the new system!