AMC purpose

[Aokreal1]

I thought the AMC’s were created to put a third party between lender and appraiser to stop lenders from influencing the appraiser. If that is in fact the case, how do many of the AMC’s now have staff appraisers doing their work? Can someone enlighten me?

 

[George Hatch]

That isn't what AMCs were created for. The lenders are already required to isolate the appraisal process from the loan origination process. The direct engagement lenders do that by routing the function through a different dept like the credit or underwriting pipelines, or by elevating the chief appraiser to a VP position that has the same - but separate - organizational status as the VP of loan production. The lenders are still allowed to run their own internal appraisal depts, they just can't let their internal loan origination side manage that appraisal dept.

The AMCs enable the lenders to outsource the entirely of the fixed and variable overhead as well as all the time/effort to an outside vendor. Same as outsourcing appraisals to fee appraisers instead of staff appraisers. Instead of hiring, training and retaining staff appraisers regardless of whether or not there's enough volume to support them, using fee appraisers and AMCs enable the lenders to scale their spending to buy only the services they are actually using, when they are actually using them.

Now it's the AMCs that carry the fixed overhead regardless of whether they are doing enough business to cover that overhead. They have the opportunity to diversify their client base to avoid the redundancy (same overhead services 4 or 5 clients instead of just one), but if their overall volumes drop too low they just go out of business. Same way the fee appraisers operate. Multiple clients instead of just one client the way the staff appraisers operate.

 

[djd09]

you sure do know alot about the AMC model...

 

[George Hatch]

That's because I understood FIRREA long before the HVCC came along. I taught the federal and state laws and regs course for 11 years prior to the HVCC, and that course includes the references to the "Appraiser Independence" section of the federal banking regs.

And because prior to teaching, I worked on staff for a federally regulated bank and saw firsthand how they handled the conflict of interest between loan origination and due diligence in compliance with FIRREA and the other banking regs. At that bank the LOs were not allowed to even step foot on our floor or to call into the appraisal dept, on pain of getting fired for it.

 

[J Grant]

asked the question to AI:

AI Overview


Appraisal Management Companies (AMCs) were primarily created
to ensure appraiser independence, separating those with a financial interest in a loan (lenders/brokers) from the appraiser. Following the 2008 financial crisis and the 2010 Dodd-Frank Act, they became essential to prevent valuation fraud, maintain compliance, and provide third-party, unbiased property valuations.
National Association of REALTORS® +4
Key Purposes and Functions:

• Ensuring Independence: They act as a neutral intermediary, removing the ability of loan officers to pressure appraisers for higher values, a practice often cited as contributing to the housing crisis.
• Regulatory Compliance: AMCs ensure appraisals comply with the Uniform Standards of Professional Appraisal Practice (USPAP) and federal guidelines.
• Quality Control & Efficiency: They handle the vetting of appraisers, manage the bidding process, and review reports for accuracy, saving lenders time in administrative overhead.
• Risk Mitigation: By vetting for qualified, local appraisers, they help lenders manage the risk of inaccurate property valuations.
  ational Association of REALTORS® +6

While some AMCs have existed since the 1960s to manage costs, they became industry standard following the introduction of the Home Valuation Code of Conduct (HVCC) in 2009, which forced a separation between sales and valuation

 

[Zoe]

you sure do know alot about the AMC model...

It was done to relieve pressure on appraisers from mortgage brokers. The whole process has totally failed. AMCs put pressure on appraisers worse than mortgage brokers did in fee by commingling of fees and value pressure.

AMCs are in it for fastest and cheapest. Public trust is not in AMCs vocabulary.

AMC which lender may be part owner may charge borrower $1,000 and pay appraiser $250. AMC may drop appraiser if they don't meet value or for whatever reason.

 

[Zoe]

you sure do know alot about the AMC model...

I do brother.

 

[George Hatch]

asked the question to AI:

AI Overview


Appraisal Management Companies (AMCs) were primarily created
to ensure appraiser independence, separating those with a financial interest in a loan (lenders/brokers) from the appraiser. Following the 2008 financial crisis and the 2010 Dodd-Frank Act, they became essential to prevent valuation fraud, maintain compliance, and provide third-party, unbiased property valuations.
National Association of REALTORS® +4
Key Purposes and Functions:

• Ensuring Independence: They act as a neutral intermediary, removing the ability of loan officers to pressure appraisers for higher values, a practice often cited as contributing to the housing crisis.
• Regulatory Compliance: AMCs ensure appraisals comply with the Uniform Standards of Professional Appraisal Practice (USPAP) and federal guidelines.
• Quality Control & Efficiency: They handle the vetting of appraisers, manage the bidding process, and review reports for accuracy, saving lenders time in administrative overhead.
• Risk Mitigation: By vetting for qualified, local appraisers, they help lenders manage the risk of inaccurate property valuations.
  ational Association of REALTORS® +6

While some AMCs have existed since the 1960s to manage costs, they became industry standard following the introduction of the Home Valuation Code of Conduct (HVCC) in 2009, which forced a separation between sales and valuation

Your AI is an idiot and if you keep believing it instead of reading the law then that makes you an idiot, too.

AMCs didn't change after the HVCC. The lenders did. Once their MB-select preferences were outlawed their choice was limited to either direct engagement or outsource to AMCs. There was no 3rd option for them to consider. Some went one way, others went the other way.

 

[J Grant]

It is not "my" AI- it is the AI which pulls the best data to answer questions and provide information.

I did not see where the OP asked it as a legal question.

 

[TC]

Their purpose is to raise appraisal fees and have it assigned to the lowest bidding appraiser.