Appraisals are generally required when purchasing most residential and commercial properties, for lenders rely on these assessments to determine and confirm property values. Appraisal management companies take the burden of managing many appraisals off of lenders’ shoulders.
Appraisal management companies (AMCs) act as intermediaries between lenders and appraisers. These companies typically handle communication between the two parties, and they also take care of the ordering, monitoring, delivering and quality assurance of appraisal reports.
In other words, AMCs take care of appraisal-related administrative details for lenders.
As lenders have many appraisals to manage (especially during months of peak real estate transactions), outsourcing with an appraisal management company has multiple benefits.
The most obvious benefit that appraisal management companies offer is taking care of obtaining appraisals. Lenders don’t have to worry about the routine ordering and receiving of appraisals, and they also don’t have to sort out complications when they arise. An AMC will handle all of the details.
This allows lenders to focus on their core areas of expertise, and save time. The headaches avoided and time saved increase with each appraisal, and multiply for every appraisal service that’s used.
The appraisals that lenders rely on, of course, must be consistently accurate. Appraisal management companies take care of this, too.
Quality assurance begins with confirming the full completion of each ordered appraisal, which is something AMCs certainly do before sending appraisals onto lenders. QA extends beyond just checking each individual appraisal for completion, however.
AMCs also ensure the reliability and knowledge of all appraisers that are hired. Since AMCs work specifically with appraisers, they know who the reliable ones are.
An appraisal management company will check the full completion of each appraisal they receive, before passing it onto the lender. Since appraisal management
Appraisal Management Companies both qualify new appraisers, and periodically check the continued qualifications of regularly used appraisal services.
Qualification begins with making sure an appraiser at least meets any applicable state or local requirements, and most AMCs also only contract with appraisers who have standard industry certifications and/or memberships.
Once these baseline criteria are established, most AMCs establish their own screening and onboarding processes to identify appraisers that have a strong track record.
Sometimes less recognized, appraisal management companies also segregate the various parties that have a financial interest in a property. This helps eliminate many potential conflicts of interest, and it creates a more transparent process from property buyers’ and regulators’ perspectives.
The segregation that AMCs provide came to light with the post-2008 Home Valuation Code of Conduct (HVCC).
The HVCC was backed by then-New York Attorney General Andrew Cuomo, Freddie Mac, Fannie Mae, and the Federal Housing Finance Agency. The rules set forth isolated different lenders and appraisers for greater independence throughout the process.
Although the HVCC was relatively short-lived and is no longer in place, many of the HVCC’s rules influenced the Appraiser Independence regulations that are set forth in Dodd-Frank and other official policies.
AMCs continue to have a place keeping lenders and appraisers independent of one another.
Lenders are generally required to confirm that appraisers are independently engaged, and aren’t unduly influenced during the appraisal process in any way. These requirements are set forth in Dodd-Frank and Truth in Lending.
The official requirements of Dodd-Frank and Truth in Lending don’t actually stipulate that lenders use appraisal management companies, but many lenders find that working with AMCs is the simplest way to ensure independence.
Per Dodd-Frank regulations, multiple federal agencies oversee appraisal management companies. AMCs must adhere to criteria that the Federal Housing Finance Agency, the Bureau of Consumer Financial Protection, and the Federal Financial Institution Regulator Agencies have in place.
Some states also have their own legislation that builds upon the federal ones. With so much oversight in place, lenders can have confidence that AMCs meet minimum requirements.
AMCs such as AmeriMac Appraisal Management go beyond the minimum legal requirements for operating in this field.
AmeriMac reviews each appraisal report against a 63-point checklist that’s more comprehensive than industry standards, places 99.99 percent of all appraisals, and maintains clear communication throughout the process. The company has a consistent 99 percent client satisfaction rate.
To learn how AmeriMac Management could take the burden of sourcing and securing appraisals off of your organization, contact us today. One of our knowledgeable team members would be happy to further explain our services, and particularly how they could streamline your lending process.