When the HVCC rules came into effect in mid-2009, appraisers learned quickly that working with Appraisal Management Companies (AMCs) wasn't an option, but a necessity. Although there are many small companies which are still adapting to such regulations, the larger companies were well prepared with their legal contracts and processing software to bring in and maintain thousands of appraisers nationwide. Unfortunately, some of the contracts only benefit the AMC and can be seriously detrimental to the appraiser. This article will explain the major flaws in Appraisal Management Dallas Texas contracts and what you can do to protect yourself.
Broadcasting of Low Fee Orders- In recent years, these companies have come under fire for broadcasting orders to many appraisers, seeking the lowest fee for servicing an order. Many experienced appraisers will not service these orders for such low fees. The result has been that many assessments are performed by less experienced appraisers who may not have enough business to decline the low-fee orders and still stay in business. Another result is that many seasoned real estate appraisal professionals have left the business as the low fees are insufficient to support the business expenses of running a small office of highly-trained professional staff.
Why should opt for appraisal management contract when I have E&O Insurance? Currently, E&O insurance is extremely affordable and well worth the cost. It brings wonderful peace of mind knowing you are covered for just about anything. So what is one major area it does not cover? You guessed it; indemnity clauses.
One of these stipulations would be the indemnity clause, which holds the AMC harmless if a problem arises with any part of the assessment. This clause makes the appraiser responsible for the problem and financial responsibility for any legal cost suffered by the AMC, as well as any suffered by the appraiser. Many appraisers seeking to offset any legal costs have bought E&O Insurance. This type of insurance is reasonably priced and offers protection for peace of mind. However, E&O Insurance does not cover any form of an indemnity clause.
Other AMCs have appraisers on staff to review the evaluation reports while others have individuals who are not trained appraisers reviewing evaluations for compliance with lender requirements. These activities often add several days between when an appraisal is delivered to the AMC, and when the AMC delivers the report to the lender. Technology Fees- In addition to taking a cut of the fee for an evaluation, many AMCs also change the appraiser a "technology fee" in order to receive an order.
That is when the appraisal management contract comes in. Your E&O insurance is still in place, so you are covered for anything you did. However, now because of the "hold harmless clause, " you now have to cover all legal costs of the AMC as well.
As appraisers are getting wiser regarding the contracts they are signing, some AMCs have made changes to their contracts to make them fairer. Remember that it is mostly the largest AMC's that carry questionable contracts. Huge corporations, such as Wells Fargo or Bank of America that have big corporate lawyers are the ones causing the most damage. There are still hundreds of small AMC's, many that carry a simple one-page contract or none at all, that you can sign up with.
What are the Regulations for these companies? Most states have minimal regulations about these management companies, despite having significant regulatory control over banks and licensing control over appraisers. Some only require a small fee to register, and then the company can advertise for orders. There is no requirement for these companies to be owned, or staffed by licensed assessment or financial professionals.
Broadcasting of Low Fee Orders- In recent years, these companies have come under fire for broadcasting orders to many appraisers, seeking the lowest fee for servicing an order. Many experienced appraisers will not service these orders for such low fees. The result has been that many assessments are performed by less experienced appraisers who may not have enough business to decline the low-fee orders and still stay in business. Another result is that many seasoned real estate appraisal professionals have left the business as the low fees are insufficient to support the business expenses of running a small office of highly-trained professional staff.
Why should opt for appraisal management contract when I have E&O Insurance? Currently, E&O insurance is extremely affordable and well worth the cost. It brings wonderful peace of mind knowing you are covered for just about anything. So what is one major area it does not cover? You guessed it; indemnity clauses.
One of these stipulations would be the indemnity clause, which holds the AMC harmless if a problem arises with any part of the assessment. This clause makes the appraiser responsible for the problem and financial responsibility for any legal cost suffered by the AMC, as well as any suffered by the appraiser. Many appraisers seeking to offset any legal costs have bought E&O Insurance. This type of insurance is reasonably priced and offers protection for peace of mind. However, E&O Insurance does not cover any form of an indemnity clause.
Other AMCs have appraisers on staff to review the evaluation reports while others have individuals who are not trained appraisers reviewing evaluations for compliance with lender requirements. These activities often add several days between when an appraisal is delivered to the AMC, and when the AMC delivers the report to the lender. Technology Fees- In addition to taking a cut of the fee for an evaluation, many AMCs also change the appraiser a "technology fee" in order to receive an order.
That is when the appraisal management contract comes in. Your E&O insurance is still in place, so you are covered for anything you did. However, now because of the "hold harmless clause, " you now have to cover all legal costs of the AMC as well.
As appraisers are getting wiser regarding the contracts they are signing, some AMCs have made changes to their contracts to make them fairer. Remember that it is mostly the largest AMC's that carry questionable contracts. Huge corporations, such as Wells Fargo or Bank of America that have big corporate lawyers are the ones causing the most damage. There are still hundreds of small AMC's, many that carry a simple one-page contract or none at all, that you can sign up with.
What are the Regulations for these companies? Most states have minimal regulations about these management companies, despite having significant regulatory control over banks and licensing control over appraisers. Some only require a small fee to register, and then the company can advertise for orders. There is no requirement for these companies to be owned, or staffed by licensed assessment or financial professionals.
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