Real estate valuation is crucial for a mortgage lender's business as it provides them with information that can help them determine whether or not to finance a borrower’s purchase of a property, in this case, a residential property. A residential appraisal management company focuses on process integrity while ensuring that the entire valuation process strictly complies with all applicable guidelines and laws for residential appraisal.
What is an appraisal management company and why do mortgage lenders need them?
A residential appraisal management company is an independent company that oversees a property valuation on behalf of a lender. They assign a licensed appraiser from their pool of qualified appraisers and work with them through the full process, from, data collection to document retention, and payment timelines.
Property valuation through an appraisal management company
It is essential that the appraisers themselves work independently to determine valuation. An AMC may neither sway the valuation in either direction, nor help “overturn” appraisals. Instead, an AMC focuses on process integrity, data quality, and compliance with due consideration to appraiser independence safeguards.
Here’s a few key things to remember when conducting property valuation through an AMC:
1. The AMC may not share information about the assigned property to the appraiser in advance
So as not to compromise the integrity of the results, appraisers aren’t given any information regarding the property prior to starting the appraisal process. This is done to ensure that the results won’t be biased in any way; that is, favoring the lender, broker, or borrower.
2. You may not directly communicate with an appraiser without permission.
When you work with an appraisal management company or AMC, you are not allowed to choose the appraiser or directly communicate with them before, during, and after the property valuation without first notifying the AMC.
This ensures that the lender won’t have any influence on the appraiser’s report.
3. An AMC ensures compliance with USPAP as well as state and lender-specific guidelines
The Uniform Standards of Professional Appraisal Practice or USPAP state that appraisers perform their duties with integrity. If any part of the report is found to be inconsistent, lacking, or outright fraudulent, the lender could be accused of influencing the results even if they actually had nothing to do with it.
In addition, Federal Housing Administration (FHA), Veterans Affairs (VA), Government-
sponsored Enterprises (GSE), Debt Service Coverage Ratio (DSCR), and portfolio loans all have different overlays to be considered along with state-specific laws concerning record retention, registration requirements, and even appraiser payment timelines.
A residential appraisal management company ensures compliance though proper appraisal assignment, and rigorous quality control.
Click here to contact Exactus AMC or reach them at (636) 206-4919 to inquire regarding a residential appraisal.