Appraisal Management Company (AMC)
What Is an Appraisal Management Company (AMC)?
An Appraisal Management Company (AMC) is an independent entity through which mortgage lenders order residential real estate valuation services for properties on which they are thinking about stretching out loans to homebuyers.
AMCs satisfy an administrative function in the appraisal process, including choosing an appraiser and delivering the appraisal report to the lender. Individual appraisers who work for AMCs give the actual property valuation services.
Understanding Appraisal Management Companies (AMC)
AMCs have been a part of the real estate scene for the past 50 years. Be that as it may, their numbers stayed limited until the financial crisis of 2007 to 2008.
In 2009, the New York Attorney General, government-sponsored enterprises Freddie Mac and Fannie Mae, and the Federal Housing Finance Agency (FHFA) laid out the Home Valuation Code of Conduct (HVCC) appraisal rules. The HVCC rules, presently not on the books, established the groundwork for the appraiser independence found in the [Dodd-Frank Wall Street Reform and Consumer Protection Act](/dodd-frank-financial-administrative reform-bill) and the Truth in Lending Act. Laws committing lenders to utilize independent appraisers prompted a sharp rise in the utilization and number of AMCs.
The HVCC and later federal regulation looked to limit the amount of direct contact that lenders could have with appraisers. Basically, the U.S. federal government made appraiser independence requirements to keep lenders from impacting appraisers to blow up property values, a problem accepted to have contributed to the housing crisis.
With an AMC, mortgage brokers, loan officers, nor homeowners might choose the appraiser for the property on which they need to loan/acquire funds. Since the former parties have a financial interest in the transaction, there is a risk they could endeavor to influence the appraiser to assign a higher value to the property than market conditions support so the transaction will go through.
At the point when the system works accurately, the AMC picks an appraiser with nearby information on the market for the property being appraised.
Appraisal Management Company (AMC) Requirements
AMCs keep a pool of state-authorized or state-qualified appraisers to meet solicitations from lending institutions. An appraiser is then assigned to give an appraisal report to the property.
AMC appraisers are not given any prior data in regards to the property or put in contact with the lending institution. The appraiser's assessment must fulfill the Uniform Guidelines of Professional Appraisal Practice (USPAP) rules. Assuming there are any issues, the AMC can legally help.
- An Appraisal Management Company (AMC) is an independent real estate appraisal company recruited by a lender to perform valuations on possibly mortgaged properties.
- Customers seeking a mortgage on a prospective property, lenders, and mortgage brokers can't pick the appraiser.
- The U.S. government developed appraiser independence rules, confining the influence lenders have on appraisers.
- AMCs select state-authorized or state-qualified appraisers to valuate properties and deliver appraisal reports to lenders.