Lenders face considerable challenges managing their in-house panels in the current mortgage environment. AMCs offer solutions. Record mortgage activity in 2020 has inspired many of the lenders that have traditionally self-managed their appraisal processes to take another look at the advantages of working with an appraisal management company, or AMC. While some are seeking to shift entirely to an AMC model, others are considering a hybrid approach that retains their in-house panel while leveraging the innovative technology of an AMC.
“Lenders want to be free to focus on their core competencies right now,” says Phillip King, vice president and principal product manager, EXOS Valuations, at ServiceLink. “When they realize that an AMC can provide a strong team to manage risk and compliance, technology that elevates the customer experience, and a deep focus on performance and quality assurance, they start to look at their own processes and overhead in a new light. Working with an experienced, financially-sound AMC with a national footprint can lead to improvements in a variety of areas.”
Specifically, lenders can benefit from working with an AMC in the following areas:
Risk Management and Regulatory Compliance
Keeping up with evolving statutes, regulations and industry standards requires an extraordinary level of diligence and investment. National AMCs can dedicate resources to these compliance and risk issues at a level few lenders can match.
For example, lenders with in-house panels must be able to demonstrate to regulators that the individuals managing their panel are isolated from the sales, operations and production functions of their businesses so there can be no question as to their impartiality. The lender is tasked with walling off the panel and imposing strict guidelines around how it operates. Lenders that use an AMC are relieved of this burden because AMC appraisers are independent of the lending organization.
“As an AMC, we have the ability to constantly invest in risk and compliance measures,” says Matthew Woodhouse, managing director, Valuations, at ServiceLink. “Our clients rely on us not only for compliant appraiser selection and management, but also for developing and implementing technology, systems and protocols to address a whole host of compliance needs. We are always poised to respond quickly to regulatory changes and to incorporate new lender-driven requirements, policies and procedures. On the risk management side, we prioritize data security through controls and regular audits of our facilities, systems, communications and internet protocols.”
When an AMC takes over, the lender is relieved of the responsibilities and overhead related to maintaining and managing the appraiser panel — e.g., screening, selecting and boarding new appraisers; auditing for certifications, licenses and insurance; and scoring appraisers to ensure a qualified appraiser is assigned to each order.
Woodhouse says that AMCs need to go the extra mile in vetting these individuals. “At ServiceLink, we have standard policies requiring E&O [errors and omissions] insurance plus state and federal background checks for all of our appraisers. We invest in sophisticated scorecarding to help us monitor performance levels and ensure that a highly qualified appraiser with the requisite skills and experience is selected for each appraisal.” he says.
Technology and the Customer Experience
The best AMCs tend to be on the leading edge of technology, for a couple of reasons: (1) Because their solutions are built on technology, they make ongoing, sizable investments into its development and implementation, and (2) they hear from lenders throughout their footprints, which helps them anticipate emerging challenges.
“We can provide lenders and consumers alike with an exceptional digital experience because our clients across the country share their insights into what they want and what their customers expect from a technology perspective,” says King. “We identify trends that might take an individual lender a little longer to see and help them keep their technology ahead of market- and quality-specific challenges.”
One of the needs ServiceLink identified early on was for real-time scheduling. “Our scheduling platform provides consumers, loan officers, and real estate agents with increased convenience and transparency,” King says. “No more phone tag or delays — the user can select an appointment date and time, receive instant confirmation and have the assurance of knowing who’s coming, because they immediately receive the appraiser’s name, contact information, photo, and car make and model. All of this adds to the lender’s credibility as a partner focused on customer satisfaction.”
Scalability and Diversity of Expertise
Many lenders had the experience of needing to recruit appraisers quickly this year, as refinance volume spiked to a 17-year high. AMCs were able to accommodate these volume fluctuations more easily because they already had deep appraiser panels in place.
“Because AMCs manage volume from lenders around the industry, we have built scalability into our capabilities. In addition, this deeper pool of talent offers a wider range of knowledge,” says King. “Working with 15 or 20 lenders in a particular market gives our appraisers greater insight into that market. Factor in their expertise in specific property types and value ranges, and you can see the benefit to lenders of having a panel of this scope working for them.”
AMCs Offer Options
While many lenders opt to shift fully to an AMC model, others move to a hybrid approach. This might take the form of adopting the AMC’s technology but not its panel management, or handing off volume outside of the lender’s key geographic footprint or area of expertise. “These markets tend to be more difficult, time-intensive and expensive for lenders, whereas AMCs can manage them comfortably,” says King.
Woodhouse adds one more option to the AMC-versus-hybrid discussion — a model he dubs a “soft landing”: “When a lender has a trusted panel of appraisers they want to keep but no longer manage, ServiceLink can in some instances pull those appraisers into our system. The lender benefits from our technology; experience in the settlement services business; and appraiser oversight, scorecarding and recruitment capabilities, while eliminating their operational and fixed-personnel costs. The financial and operational benefits of this type of model can be exceptional.”
In our next installment in our series on AMC selection, you’ll hear from Matt Woodhouse again, as he lists and explains the 6 characteristics you should look for in your AMC.
To learn more about ServiceLink, visit svclnk.com.
*ServiceLink Valuation Solutions, LLC, (“ServiceLink”) is a registered Appraisal Management Company (“AMC”) in all states with AMC licensing requirements. ServiceLink’s AMC license numbers in states that require disclosure on these instructions are: NV # AMC.0000118, VT # 077.0067954-MAIN, WI #2-900.