The path to homeownership islined with middlemen.
Most buyers are aware of these parties, butone group mostly flies under the radar.
Their fees are often hidden, lumped in with other charges or buried in paperwork.
These are appraisal management companies, little-known players that have flourished in theaftermath of the 2008 housing crash.
Some consumer advocates consider opaque appraisal fees to be one of the most egregious examples ofhidden costs in homebuying.
An appraisal is a critical part of any home purchase or refinancing.
Those fees are typically passed directly to the borrower.
AMCs have been around for decades, but it wasn’t until 2009 that they gained prominence.
These cozy relationships offered ample room for fraud.
Both sides worked to pump up home values and keep the good times rolling until the entire facade collapsed.
Most decided it would be easier and cheaper to outsource the whole process to an AMC.
The lender gets to opt for services it wants the AMC to provide.
The typical consumer probably wouldn’t know to look for a difference anyway.
Other internal documents show the appraiser’s fee alongside the AMC’s fee.
In many instances the AMC’s cut roughly matches or exceeds the amount paid to the appraiser.
Take, for example, a single-family home in California that was up for refinancing.
Tucker calls AMCs' charges “one of the fees that is absolutely price gouging the consumer.”
Each year the company estimates the “total addressable market” for AMC services in the US.
And again, that fee is passed along to the borrower as part of closing costs.
“It’s more of an anomaly than anything else,” Schiffman tells me.
“Usually it’s about the same.
Sometimes it’s higher, sometimes it’s way lower.”
During a rulemaking session in 2013, the CFPB actually considered such a provision but ultimately decided against it.
The CFPB concluded that requiring breakouts of the charges could “produce information overload” for consumers.
The appraiser groups say that the decision was a mistake.
Tucker, though, says it shouldn’t be prohibitively difficult.
And consumers, he tells me, have a right to know where their money is going.
James Rodriguezis a senior reporter on Business Insider’s Discourse team.
