09 Feb Addressing Frequently Asked Questions For AMC’s
As we’ve discussed in previous articles, AMC’s (Appraisal Management Companies) work closely with lenders and appraisers to manage the ordering, tracking, quality control, and delivery of appraisal reports. AMC’s have been around since the 1960s, but their reach was limited, compared to today. Back in 2009, New York Attorney General Andrew Cuomo, Fannie Mae, and Freddie Mac, with support from the Federal Housing Finance Agency, created a set of appraisal rules known as the Home Valuation Code of Conduct (HVCC).
The rules are meant to isolate parties with a financial interest in a mortgage loan transaction from retention and appraiser selection. Even though this is no longer in place, HVCC influenced the Appraiser Independence Rules that can now be found in The Dodd-Frank Wall Street Reform and Consumer Protection Act. As a result, national appraisal management companies like Arivs have continued to flourish, as many lenders and appraisers depend on their services. Since the role of appraisal management companies are so diverse, we find that questions about our process frequently come up. Today, we will be addressing frequently asked questions for Appraisal Management Companies.
Frequently Asked Questions for Appraisal Management Companies
Are AMC’s Regulated?
Yes. Dodd-Frank requires that the Federal Financial Institution Regulatory Agencies, The Federal Housing Finance Agency, and the Consumer Financial Protection Bureau, jointly communicate rules on the minimum requirements for states to register AMC’s. Certain states have already enacted AMC regulation, while others are in the process of finalizing it. All state legislation needs to adhere to the minimum federal requirements, with the understanding that states are not allowed to adopt their own AMC requirements, either.
Does A Lender Need To Use An AMC?
While lenders are not required to use appraisal management companies, they must ensure that appraisers are engaged independently and not overly influenced. Since AMC’s have proved time and time again that they are resourceful, lenders will usually lean on them to fulfill this role. Risk practices will vary for every lender, so it’s imperative that AMC’s modify their reporting requirements of each lender client.
What Is The Role Of An AMC In The Appraisal Process?
National appraisal management companies will perform the administrative functions for ordering and completing appraisal reports, but it should be noted that it’s not their responsibility to handle the appraisals. Every company will establish a process for completing and or augmenting these functions, based on their business model, as well as the corresponding Federal and State regulatory requirements.
How Does An AMC Qualify An Appraiser?
Appraisal management companies will develop screenings and ongoing assessments, to track and evaluate the performance of an appraiser’s eligibility for continued appraisal assignments.
How Are Appraisers Selected For Assignments?
An AMC assigns an appraisal based on a large selection of criteria. Criteria may include local experience and proximity to the property, license level, education, MLS access, appraisal history, and capacity for handling assignments.
Why Do Lenders Have Their Own Requirements?
Lenders establish their own appraisal requirements due to internal risk policies and the data within the appraisal that they believe impacts these policies.
Why Isn’t The Buyer An AMC Client?
Remember this: The AMC is providing a service as an agent for the lender. Lenders are mandated from federal legislation to run the real estate appraisal programs, which engage appraisers for federally related transactions. A variety of lenders will use AMC’s to fill this role.
Partnering With National Appraisal Management Companies
Arivs has the knowledge and experience to support appraisers and lenders. We hope this helped answer many of your lingering questions. To learn more about how we can help you, contact us today!