InsightsSelecting an AMC for Today’s Market

Part 2 of 3 in the series: Selecting an AMC for Today’s Market

Looking to work with an AMC partner? Here are some areas to consider as you make your choice.

As lenders continue to navigate the surge of home purchase and refinance activity of recent months, many are looking to national appraisal management companies, or AMCs, for support. With their dedicated focus on risk management, compliance and technology, reputable AMCs with a national-footprint can free lenders to focus on their core competencies.

How do you know which AMC to choose? Start by making sure that they’re strong in the following areas. Then talk through your specific goals with them to find your best fit.

Industry Experience and Stability

Although AMCs have been part of the real estate environment for the past 50 years or so, few existed prior to the establishment of the Home Valuation Code of Conduct (HVCC) federal appraisal guidelines established in response to the 2007-2008 financial crisis. HVCC and its successor, the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, sought to protect consumers by preventing direct lender pressure on appraisers to inflate property values. AMCs began proliferating in response to growing demand by lenders seeking to comply with these federal statutes.

“Back in 2007, there may have been five of us AMCs; now there are about 600 — a lot of which are small or micro businesses,” says Matthew Woodhouse, Managing Director, Valuations, at ServiceLink.* “It is incredibly important when you evaluate an AMC to look at the company’s history and stability. ServiceLink has been a pioneer in the business for about 50 years, and we have unfortunately seen a lot of less experienced AMCs shutter their operations overnight as the result of claims, financial penalties, audit findings or other setbacks. It’s important to look for an AMC that has built up a level of financial strength that allows it to stand behind its work and come through for its clients in any situation.”

Scope of Reach and Expertise

Before you engage with a particular AMC, it’s important to know whether they have the scope to support your strategic plans and grow with you. If you are looking to expand geographically, for example, make sure your AMC is registered in all of the jurisdictions within the realm of possibility for your expansion efforts. Some AMCs are registered to do business in only one state or a handful of states; very few have the financial strength, stability and technology to operate successfully as an AMC in all of the various jurisdictions that require registration.

If you are seeking support with a certain property type or value range, ask to see how the AMC has performed in these areas and what level of expertise they have. If you’re looking to work more broadly with an AMC, asking questions about their expertise and capacity in a variety of markets will help you gauge their ability to manage your entire clientele.

While expertise in compliance and technology are table stakes in AMC evaluation, look to see where a company provides more value — in tenure, additional related services, etc.

Agility

Lenders recognize the need to be nimble as evolving regulations continually transform the lending landscape. “Regulatory oversight by the OCC and other agencies is always of concern to lenders, who feel the pressure to be compliant and responsive. Perhaps more than ever before, AMCs need to be ready to adapt quickly when it comes to their technology and processes,” says Woodhouse.

This demand for agility came into sharp focus recently, when Fannie Mae and Freddie Mac put AMCs to the test by mandating brand-new processes to support consumers in the face of the COVID-19 pandemic. “Recognizing the urgency, our ServiceLink team turned these changes around for our customers in just a few days,” Woodhouse shares. “Lenders simply can’t afford delays in this fast-moving market.”

High-Quality Appraiser Network

Your AMC should never compromise on the quality and performance of its appraisers. Ask how they recruit, screen, vet, onboard and manage their appraisers. They should uphold the most stringent standards for background checks, verify that appraisers have adequate errors and omissions (E&O) coverage, strictly adhere to customary and reasonable (C&R) fee regulations, and continually monitor their performance.

Woodhouse shares some of ServiceLink’s best practices: “We have a massive team in our chief appraiser office that provides oversight and panel vetting. This includes several subpanels: our general panel plus panels of FHA experts, new-construction experts, experts in appraising $5 million-plus properties, etc."

“We also make significant investments in training, evaluation and communication. Our automated scorecards far exceed the manual calculations some companies do at the end of the month. Too often, they just look at how quickly an order was turned around and assume the fastest appraiser is the best. We focus on quality. That means a lot of panel training and ongoing communication. From our chief appraiser office, we regularly send out memos talking through regulatory changes and other subjects in response to what’s happening across the country.”

Transparency/Reporting

When it comes to communication, your AMC should be forthcoming in all areas, including providing you with monthly reports and performance summaries that give you the opportunity to continually evaluate how well the company is serving your needs and clientele. You should also have easy access to information related to the individual orders you place, whether that’s through online access or your dedicated point of contact.

Customer Service

Though AMCs are often embraced for their innovative technology, they should never lose sight of the human element — i.e., the lender-AMC relationship. When you have a question, a concern, a challenge or an opportunity you’d like to discuss with your AMC, do you know who to ask for? What depth and speed of service can they and their support team provide?

Engage with an AMC that delivers outstanding customer service, including a dedicated, collaborative relationship manager and a customer service team that’s eager to resolve your issues as quickly as possible. Remember: You are the customer. That means your needs should always come first.

For more information on partnering with an AMC, consider checking out our article “Is It Time to Shift from Appraisal Self-Management to an AMC Model?

*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.

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