Appraisal Management Company | Dodd-Frank Wall Street Reform

Appraisal Management Company (AMC)

An individual or business entity that performs appraisal management services, i.e. a person or entity that for a fee maintains and administers a list of appraisers and fulfills requests for appraisal services using the services of those appraisers Appraisal Management Company Dodd Frank Wall Street Reform An AMC selects and appoints the firm that will carry out valuation-related services, usually for a regulated institution, such as a bank or insurance company. “The term ‘appraisal management company’ means, in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction secured by a consumer’s principal dwelling or by an underwriter of or other principal in the secondary mortgage markets, that oversees a network or panel of more than 15 certified or licensed appraisers in a State or 25 or more nationally within a given year—(A) to recruit, select, and retain appraisers; (B) to contract with licensed and certified appraisers to perform appraisal assignments; (C) to manage the process of having an appraisal performed, including providing administrative duties such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for services provided, and reimbursing appraisers for services performed; or (D) to review and verify the work of appraisers.”, Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Sec. 1121, as added by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Sec. 1124(f)(4) (12 USCA § 3353). For the purpose of The Interagency Appraisal and Evaluation Guidelines (IAEG) 2010, an “‘appraisal management company’ includes, but is not limited, a third-party entity that provides valuation-related services, such as selecting and engaging an appraiser to perform an appraisal based on requests originating from a regulated institution”, IAG Appendix D—Glossary of Terms, issued by the responsible Federal Agencies (OCC, FRB, FDIC, OTS and NCUA).

Any Appraisal Management Company must be certified or licensed

by an agency in the State where the company operates and are subject to the supervision of that agency. Any appraisal carried out by an Appraisal Management Company for a “regulated financial institution” in respect of a “federally related transaction” only to be carried out by a licensed or certified appraiser, and the appraisal work to be carried out in accordance with provisions of the Uniform Standards of Professional Appraisal Practice (USPAP). Also, an appraisal carried out by a certified or licensed AMC must be “conducted independently and free from inappropriate influence and coercion pursuant to the appraisal independence standards established under section 129E of the Truth in Lending Act”, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Sec. 1124(a)(4). There is a requirement that an owner of an AMC has not been refused or denied an appraiser licence or certificate and nay person who owns more that 10 per cent of an AMC must be of “good moral character”. These are the minimum requirements and States may establish their own rules in addition to those require by federal law.

Over half the States have enacted comprehensive legislation providing for the regulation of AMCs operating in the State and establishing a body for vetting and the registration of AMCs (such as Real Estate Appraiser Commission or a Real Estate Appraiser and Licensing and Certification Board). In most cases, a registered Appraisal Management Company is required to post a surety bond to ensure the proper performance of its duties, including disciplinary action or even baring an Appraisal Management Company in the event of professional misconduct or a misdemeanor.

Over half the States have enacted comprehensive legislation providing for the regulation of AMCs operating in the State and establishing a body for vetting and registration of AMCs (such as Real Estate Appraiser Commission or a Real Estate Appraiser and Licensing and Certification Board). These bodies usually have power to take disciplinary action or even bar an Appraisal Management Company in the event of professional misconduct or misdemeanors. In most cases, a registered AMC is required to post a surety bond to ensure the proper performance of its duties.

An Appraisal Management Company collects fees from the party requesting the service and reimburses the appraiser for the work it performs. Although a lender can engage appraisers directly without the use of third parties, many lenders use the services of an Appraisal Management Company to provide consistency and to simplify the appraisal selection process.  See also appraiser, customary and reasonable fee. See also: A list of states with current or pending AMC legislation. For more: Login to Real Estate Defined for “Statutes” – Significant U.S. Federal Legislation and Regulations, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

(Appraisal Management Company)

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