Frequently Asked Questions
No, lenders are not required to utilize AMCs. However, lenders are required to ensure that the integrity of an appraisal is upheld through the means of independent appraisers. Mortgage brokers, loan officers, and homeowners cannot select, nor influence, an appraiser for the property in which they want to take a loan on. As a result, many lenders use Appraisal Management Companies (AMCs) to assign orders to appraisers and act as a layer of oversight between all parties involved.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that the Federal Financial Institution Regulatory Agencies, the Federal Housing Finance Agency and the Bureau of Consumer Financial Protection, to disseminate rules collectively on the minimum requirements for states to register AMCs. Minimum federal requirements must be included in all state legislation, however, states may approve additional AMC requirements.
AMCs perform real estate valuation management involving the assigning, completion, and delivery of appraisal reports to lenders. AMCs, individually, establish their processes to ensure completion of an order based on each AMC’s business model, corresponding with all Federal and State regulatory requirements. Appraisals are performed by independent appraisers, appraisal management companies only manage the process.
Each AMC establishes its screening and assessment processes. These often include benchmarks to continually measure and track performance to evaluate an appraiser’s qualifications for appraisal assignments.
The criteria in which an AMC assigns appraiser’s orders can vary. An appraiser’s experience and proximity to the area of the property are key factors. Other factors may or may not include license level, education, MLS access, quality appraisal history, turnaround time, and capacity at the time of assignment.
At the time of an assignment, an AMC will confirm the borrower’s contact information (name, address, and phone number), any special instructions, and a due date. Throughout the assignment, the AMC may request updates and communicate any possible issues or discrepancies. After the appraiser’s assignment, the appraisal report will be sent securely to the AMC.
When there is a disagreement on a property’s appraised value, a request can be made for a report to be reopened. The AMC will communicate additional data/comparables or perceived errors in the report for reconsideration by the appraiser. The appraisal report and/or property value may, or may not, be revised at the appraiser’s discretion.
The lender is contracting the AMC for their real estate valuation services, including managing the appraisal process. Federally related transactions are required to engage independent appraisers to maintain the integrity of real estate appraisal programs. AMCs act as a buffer between the lender and appraisers, on the lending institution’s behalf.
Property conditions that affect its safety, intactness, or structural integrity should be addressed or repaired. Loans will not be accepted by Fannie Mae or Freddie Mac if the conditions are severe enough to impact the safety and integrity of the property. Also, due to privacy concerns, it is recommended that owners remove anything that could prevent an appraiser from documenting/photographing required details for the appraisal report. This might include sensitive pictures/photographs or religious symbols.
For further tips on how to prepare for an appraisal, visit our Home Appraisal Tips page
Information including recent comparables similar to the appraisal property, plat surveys, inspection results, and neighborhood details (such as schools and shopping options) can be provided to appraisers. Property details should be inputted into the MLS listing by the real estate agent, including exterior and interior photos. Also, energy efficiency details and certifications can be added to some MLSs.