Top 5 Mistakes Smart Lenders Make when Selecting an AMC

Have you Made any of these Mistakes When you Selected your last Appraisal Management Company?


5. Not Having a policy in place to assist with corrections, mistakes, and/or considerations.

Appraisers are not perfect and mistakes can and will happen. A great AMC will have an efficient process in place allowing appraisers to receive requests for corrections or additional considerations. Remember, the appraiser does have final say if the requests are valid and may or may not take them into consideration. In any case, it is a necessary component to the appraisal process.

What to do: Request a copy of your AMC's policy and any forms available to get a look into what their review process is like.

4. Non-Compliance

Make sure your AMC is fully compliant. Ask questions regarding this issue. In todays ever changing climate you need to make sure that the AMCs you are using are in compliance with not only HUD, Fannie and Freddie, but you need to make sure they are in compliance with the new Frank Dodd wall street reform act, GLB ACT, New State Licensing Requirements, UAD, even though most provisions have "sunset" HVCC.

Does your AMC have a process in place to review the appraisal work submitted by appraisers?

What to do: Having a great review process or Pre-Underwriting standards checklist is a must. This will drastically cut down on corrections and or revisions; increasing turn times, lock rate fall out, and overall efficiency.

3. lack of proper Insurance

Every appraiser will have their own E&O policy and the same goes for the AMC, however, does the AMC offer additional coverage in the event of losses due to appraisal related deficiencies?  

Appraisal related deficiencies are a leading cause forcing lenders to buy back performing or non-performing loans from investors. A loss of this sort can put many brokers or correspondents right out of business.

What to do: Having the right coverage in today's market is a must. Always make sure your AMC has coverage that protects you in these circumstances.

2. Using UnQualified Appraiser Panel

Most institutions that sign up with AMCs never ask the question on how AMCs are adding appraiser the their pannel. A great AMC will look for professional licensed appraisers that specialize in specific geographic locations.

What to do: Experience plays a major roll in quality appraisal work.  Here are some questions to ask: Is the panel made up of new appraisers with less than 5 years experience? How far is the AMC willing to send an appraiser to appraise a property? These are just some of the questions lenders need to be asking about AMCs.

1. choosing LOW cost over HIGH quality. 

Most AMCs rely on "Broadcasting" or "Bidding" methods in search of the "Lowest Cost Provider" which leads to the number one mistake smart lenders make when selecting an AMC - depending on the cheapest cost to an appraisal.

Fundamentally, this is one of the largest unspoken issues in the appraisal industry. When you do business with an AMC that encourage broadcasting in search of the lowest possible fee, then you can count on the panel of appraisers not being paid properly. 

What to do: On the other hand, a "Full Fee" AMC will guarantee appraisers are paid their full fee which results in quality appraisal reports that have a higher likelihood of being delivered on time. 

In the long run, you get what you pay for.