An AMC Takeover is Coming!
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
- Bias in Automated Valuation Models - February 28, 2022
AMCs completing appraisal reports in direct competition with the independent appraiser
As an appraiser, you have probably seen or heard that AMCs are hiring staff appraisers to complete appraisal assignments in local markets. What does this mean for independent fee appraisers? Here is some background information to consider.
54.1-2020 of the Code of Virginia states:
An Appraisal Management Company is “a person or entity that (i) administers a network of independent contract appraisers, receives requests for appraisals from clients, and receives a fee paid by the client for the appraisals and (ii) enters into an agreement with one or more independent appraisers in its network to perform the appraisals contained in the request.”
54.1-2021.1(j) of the Code of Virginia states:
“That the entity (AMC) maintains a detailed record of the following: (i) each request for an appraisal service that the appraisal management company receives; (ii) the name of each independent appraiser that performs the appraisal; (iii) the physical address or legal identification of the subject property; (iv) the name of the appraisal management company’s client for the appraisal; (v) the amount paid to the appraiser; and (vi) the amount paid to the appraisal management company; and”
54.1-2022 of the Code of Virginia states:
- (A) “An appraisal management company shall not enter into any contracts or agreements with an independent appraiser for the performance of real estate appraisal services unless the independent appraiser is licensed to provide that service under § 54.1-2017 and as otherwise provided in Chapter 20.1 (§ 54.1-2009 et seq.).
- (D) 2 “Altering, modifying, or otherwise changing a completed appraisal report submitted by an independent appraiser without the appraiser’s written knowledge and consent;”
It is clear Virginia Statute states AMCs contract with independent appraiser, not complete the appraisals.
Keep Reading, it gets even more interesting………
From the Final Rule:
“Appraisal management company (AMC) means a person that:
- (i) Provides appraisal management services to creditors or to secondary mortgage market participants, including affiliates;
- (ii) Provides such services in connection with valuing a consumer’s principal dwelling as security for a consumer credit transaction or incorporating such transactions into securitizations; and
- (iii) Within a given year, oversees an appraiser panel of more than 15 State-certified or State-licensed appraisers in a State or 25 or more State-certified or State-licensed appraisers in two or more States, as described in § 1222.22;
- (2) An AMC does not include a department or division of an entity that provides appraisal management services only to that entity.”
“Appraisal management services means one or more of the following:
- (1) Recruiting, selecting, and retaining appraisers;
- (2) Contracting with State-certified or State-licensed appraisers to perform appraisal assignments;
- (3) Managing the process of having an appraisal performed, including providing administrative services such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and secondary market participants, collecting fees from creditors and secondary market participants for services provided, and paying appraisers for services performed; and
- (4) Reviewing and verifying the work of appraisers.
Appraiser panel means a network or panel of licensed or certified appraisers who are independent contractors to the AMC.”
On July 2, 2013, the National Association of Realtors issued a Q & A on Appraisal Management Companies. Here is what they said:
“What is an AMC’s role in the appraisal process?
The AMC performs the administrative functions involved in the ordering, completion and delivery of an appraisal report. Each AMC establishes processes to complete and/or enhance these functions based on the AMC’s business model and corresponding Federal and State regulatory requirements. Appraisal management companies do not perform appraisals.”
The intent of our Federal and State Regulators is clear; the AMC does not complete the appraisal. The National Association of Realtors states the AMC performs an administrative function and does not complete the appraisal.
Each and every appraiser needs to stand up on April 26, 2016 at the Virginia Real Estate Appraisal Board Meeting and express your concerns on AMCs completing appraisal reports in direct competition with independent fee appraisers.
- Express your concerns this practice was not the intent of Federal or State Legislators
- Explain how the public is harmed with this practice
- Provide documentation of AMCs advertising for staff appraisers
- Ask the VREAB to address this issue at the meeting.
If you are unable to attend the Virginia Real Estate Appraiser Board Meeting on April 26th, please express your concerns to them via email, US Postal Service, Fax, Telegram, carrier pigeon or any other means you have. Please also express your concerns to the CFPB, OCC, FDIC and the ASC.
This is the future of the appraisal profession. Appraisers need to be leading the way!