Appraisal Management Companies – Who Owns Them?

With a great number of appraisal management companies (AMCs) operating, someone can get confused inside the sea of assures, promises, and misrepresentations. It has been a trying point in time for appraisers over the past 12 months as they have worked through the clutter that has become the appraisal profession. No more are the days of getting compensated for excellent customer service and constructing business relationships with clients and becoming a leader in your area business community. Currently it is merely a career of availability when the phone call or email comes in from the AMC.

There has been much argument with regards to AMCs and their contribution towards appraisal process. These issues have come from numerous factions but most of the worries appear to be originating from individual appraisers who will work for these management companies. Long established, professional appraisers have been completely relegated to a role of waiting for their turn to come up within the AMC roster.

At the heart of the debate are AMCs, through which the major financial institutions manage appraisals on home loans that they will sell off to Fannie Mae and Freddie Mac. The system that is set up has many tens or hundreds or thousands of appraisers signed up with a individual AMC to perform work in a specified county. So, as an example, and i’m making these figures up, but say that with a particular AMC, there are 769 home appraisers signed up with appraisal management company A to carry out appraisals in Cook County, Illinois.

Now, how do you think the appraisal management company decides what person does a particular appraisal. Yes its true, it is based on the “rotation” of appraisers inside that corporations list. So, when you, as an appraiser, receive an request from Company A, you may expect that an additional 768 appraisals will be directed by that company before it comes back to you in the rotation. Where is the professional incentive in that model?

Appraisal management companies came towards the headlines with the implementation of the HVCC. The Home Valuation Code of Conduct (HVCC) attempts to eliminate possible appraisal sway by prohibiting mortgage brokers from selecting his or her appraisers, and by encouraging banking institutions to accept anonymous appraisals organized by a 3rd party. Even though financial institutions may hire appraisers directly, the personnel picking the appraiser cannot be associated with mortgage loan production.

The biggest difficulty is that finance institutions are allowed to own the appraisal management companies they do business with. One example is, Bank of America owns the appraisal management company LandSafe Inc. And nearly every single AMC is held at least in part from the bank or mortgage loan lender that uses them. That is just crazy, people.

The AMCs seem to be legitimized by the big banks without rein on their business activities. Since AMC’s will not be going away, I’m in support of regulating all of them Intensely!

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