An appraiser for the U.S. Department of Housing and Urban Development, a trade group representing appraisers and another trade group representing appraisal management companies recently weighed in about the merits of using AMCs, appraisal management technology and in-house appraisal management.
Jeff Schurman, who is executive director of the Title Appraisal Vendor Management Association, was among panelists at a recent appraisal Webinar. TAVMA says its members include “40 of the largest” AMCs, while Schurman said 17 of the top 20 lenders utilize AMCs.
The Webinar, Preparing for Changes to FHA Appraisals, was hosted by MortgageDaily.com on Jan. 20 and moderated by Patton Boggs LLP Partner Michael Waldron.
Milton H. Corson, a panelist and a HUD appraiser, explained that under new FHA requirements, mortgage brokers can only order an appraisal using a blind system where the broker has no influence over the appraiser selection.
TAVMA’s Schurman described the blind process provided by AMCs and said 85 percent of AMC business is done by the top 20 firms out of a total of around 225 AMCs. He said that the average AMC appraiser has more than 15 years’ experience.
Appraisal Institute Director of Government and External Relations Bill Garber also served on the panel and noted that falling applications and other factors have had a “real effect” on market fees. He said that lenders and AMCs have become the “price setters,” while appraisers have become “price takers.”
Garber noted that HVCC and FHA do not require the use of an AMC — adding that compliance can be accomplished by establishing long-standing risk-management practices, including separation between risk management and loan production.
He said AMCs don’t necessarily provide transparency about the appraiser selection and qualification process, and he recommended that lenders investigate beyond what they are told. Other factors that should be considered when considering an AMC include minimum credential requirements, the review process and whether the review appraiser is educated and qualified. Garber also suggested that review appraisals at AMCs are done offshore and questioned whether any AMC has ever paid on a warranty.
“As early as two years ago, mortgage brokers constituted 60 percent of the market, and roughly 15 to 20 percent of the market was appraisal management companies,” Garber stated. “That’s changed quite a bit since the Home Valuation Code of Conduct has been released and mortgage brokers have basically been replaced by appraisal management companies.”
Garber said other options for appraisal compliance include utilizing technology platforms and maintaining sound firewalls between loan production and risk management.
One available technology platform is GlobalDMS, which says its offering is used by more AMCs than any other technology platform. The service provider is a MortgageDaily.com advertiser.
Panelist Vladimir Bien-Aime, president and co-founder of GlobalDMS, said their offering — AppraisalTransfer.com — is a system that enables appraisals to be transferred.
“Using a technology platform, production staff can request appraisals via a portal and have the request processed automatically or manually by non-commission based staff,” Bien-Aime’s presentation indicated. “Advanced portals provide options for LOS integration, AVMs and payment method options including credit card and e-check.”
Appraisal management technology costs users between $3 and $25 per order, according to Bien-Aime. Percentage-based pricing models range from 3 percent to 10 percent, while the subscription pricing model costs between $3 and $25 per order. He added that AVMs are growing and also cost between $3 and $25.
Bien-Aime noted that mortgage brokers, who in the past relied on the relationship they had with an appraiser to determine whether a prospective borrower’s estimate of home value was in the ball park, are now turning to AVMs. Some AVMs offered by GlobalDMS are as low as $3 each at retail.
