It is now a fact that the HVCC that went into effect on May 1, 2009 has changed how lenders and real estate appraisers communicate with regard to single family home loans. Although there are new rules regulating how real estate appraisals are obtained for single family homes, doing business with a time-tested, modern appraisal firm like Allied Appraisal remains in everyone’s best interest. In the first installment of a 3 part series, we will go into how AMC’s (Appraisal Management Companies) have affected the real estate landscape (not just in Massachusetts, but across the country).
THE APPRAISAL MANAGEMENT COMPANY (AMC)
With the implementation of the new regulations, a new money-making scheme called the “Appraisal Management Company”, or “AMC” began to increase in popularity. The basic premise is this: Preying on the unsuspecting lender, an AMC claims to “provide a firewall between the lender and the appraiser”. They use scare tactics such as “non-compliance with HVCC” if one continues to directly communicate with the appraisers one has been doing business with for years. In order to gain such business, they lower the fee to the appraiser actually doing the work, and increase the fee that they charge the lender (which the lender then passes on to their customer). This takes money out of the pocket of the independent fee appraiser as well as the lender’s customer, while attracting only the appraisers (usually trainees or newly licensed appraisers) that will work for such a low amount. Furthermore, the lender may actually be violating the code without even knowing it by utilizing an AMC, as the code clearly states that the appraiser must be “geographically competent” to appraise a given property. Many times, the only appraisers that will work for the small fees AMC’s provide are driving 100 miles each way just to reach the property. In the end, more inferior appraisals are hitting the street, good appraisers are forced out of the market, and your customers are paying more!
In conclusion, under the Code, lenders are not required to use an AMC. In our opinion, The AMC will fade as quickly as they appeared, and time-tested, experienced appraisal firms will remain. The truth is larger firms such as Allied Appraisal of Worcester, MA meet HVCC with flying colors, and provide lenders and their customers with the quality that has made us a leader in the industry for over 30 years.