The ABCs of AMCs
Ask just about anyone and they’ll likely tell you that buying a house is stressful. Certainly, it’s the largest single purchase most Americans make. In addition to the expense, the process requires a great deal of time, not to mention completing seemingly endless amounts of paperwork when applying for a mortgage and during closing. Because the appraisal process is not well understood by home buyers (and sellers), it can often feel like the most stressful part of the home purchase journey, especially since the entire purchase transaction depends upon the appraisal’s outcome.
The appraisal process can be stressful for lenders as well. Federal regulations enacted after the financial crisis of 2008 limited the amount of direct contact allowed between appraisers and lenders. The requirement for independence was intended to reduce the potential for improperly inflated appraisal values. Because neither lenders nor homeowners may directly choose the appraiser for the property being purchased, the appraisal management company, or AMC, has become an important consideration for lenders. AMCs work with lenders in the appraisal process by independently selecting an appraiser to conduct the appraisal and deliver the appraisal report to the lender.
When choosing an AMC, look for one that maintains a large network of qualified appraisers. All AMCs are required to use state-licensed or state-certified appraisers, and adhere to the Uniform Standards of Professional Appraisal Practice (USPAP). The best AMCs not only uphold the ethical and performance standards of USPAP, they take all necessary steps to stay compliant with all pertinent regulations (AMCs are subject to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Truth in Lending Act). Beyond compliance, lenders that work with AMCs that use geographically competent appraisers can rest easier, knowing they can rely on the accuracy of the appraisal.
If you have questions about managing your appraisal process, we invite you to contact Janus AMC today.