While some people might have heard of Appraisal management companies, most people don't know what they do. Appraisal management companies are in the business of administering independent appraisers to execute appraisals of real estate properties on behalf of the lenders. There practices are regulated under the Consumer Protection Act of 2010 and Dodd Frank Wall Street reform.
Regulation of AMCs
Appraisal Management Companies (AMCs are the are commonly referred to as) are essentially working with the lenders and appraisers to make way for the effective ordering, tracking, quality assurance and delivery of appraisals. Their existence has almost proliferated as the lenders are in need of their services so as to comply with the recent regulations in the form of Dodd-Frank reform, Truth in Lending Act, and Interagency Guidelines.
The recent reforms are highly influenced by the Home Valuation Code of Conduct (HVCC) that was developed to isolate those parties having a financial interest in the mortgage transaction from the selection and retention of appraiser. Because lenders are required to ensure the independent appraisals, therefore, they find it better to avail the services of AMCs. However, they are not required to do so.
AMCs role is administrative in that they facilitate the appraisals’ ordering, completion and delivery. So they start out by selecting appraisers through the development of screening and assessment processes. They also work to erect benchmarks which measure, compare and track the performance of the appraiser. This helps them mark the eligibility of the appraiser for continuous real estate assignments.
There is a wide range of criterion that the AMCs go through when assigning appraisals. Although the criteria varies, however, most AMCs consider the proximity to the subject property, local experience, license level, access to the suitable MLS, education, quality of appraisal history, and the current capacity.
The AMC places the appraisal order, confirms the contact details of the borrower, special requirements of the lender and the date at which the appraisal is due. AMC asks for updates on the appraisal process and takes note of whether there are any discrepancies. When the appraiser has completed the appraisal, it is then sent to the AMC which then passes the appraisal through their quality assurance system and then after ascertaining its quality, the report is then forwarded to the lender.
AMCs are supposed to comply with the lenders individual requirements. Lenders usually have requirements of their own springing from their own risk policies and so they require data which might have an impact on those policies.
AMCs also encourage the real estate agents to offer information for appraisal such as plot surveys, neighborhood details, inspection results, etc. Real estate agents are also urged to feed as much data as they can in the MLS listing with the corresponding photos as well.
So if you didn't know what appraisal management companies are or what they do, now you do!