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Appraisal Management Companies Add No Value

Appraisal Management Companies Add No Value

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Published by kjprnews
“Appraisal Management Companies add no value” is something that Realtors the NAMB and some pissed off brokers have been screaming for the past several month.
“Appraisal Management Companies add no value” is something that Realtors the NAMB and some pissed off brokers have been screaming for the past several month.

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Published by: kjprnews on Jan 05, 2010
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Appraisal Management Companies Add No Value“Appraisal Management Companies add no value” is something that Realtors the NAMBand some pissed off brokers have been screaming for the past several month.Gaithersburg, MD - January 05, 2010 -- The cozy relationships with the appraisersare gone, the comp checks are gone and the pressure to hit the number is finallygone. Saying appraisal management companies add no value to the mortgage businessis like saying police add no value to the safety of the community. AppraisalManagement Companies add tremendous value to the appraisal process by not onlyensuring an arms-length transaction, but also ensuring the appraisal is donecorrectly and in compliance with all regulations. Appraisal Management Companieshave spent years forming relationships with appraisers all over the country toensure the most accurate appraisal possible. Unknown to most of the industry,appraisal management companies have been around for decades and the vast majorityof them have had a panel of established appraisers well before the HVCC. The valuethey bring to the lending process ensures the integrity of the appraisal andultimately the loan file.10 Reasons Appraisal Management Companies add Value to the Process.1. Managing the Appraisal Process - It may sound easy to just order the appraisaland close the loan; however, if you have been in the mortgage business for a fewyears it will become apparent this is not how the process works. There are 100’sof things that can go wrong that need to be handled on a daily basis to ensure theappraisal is returned and properly completed. The term “the appraisal process” isused because appraising is really a process and should be treated that way. Whenan appraiser is completing a report, their main concern is to ensure the mostaccurate timely appraisal possible. Having a staff to back them up (the AMC) isalso critical to the process. A good appraisal management company will ensure theproperty gets inspected promptly; assist the appraiser with any technicalquestions related to the appraisal and ensure the appraisal is back within areasonable time after the inspection. Once the appraiser is chosen and the reportis received the appraisal will be reviewed to ensure the appraisal meets theclients requirements and deliver the final product the way the lender hasspecified. As long as there are no extensive delays, this entire process shouldtake no more than 3-5 business days.2. Payment Processing - Appraisers complaining about not getting paid has been areal shot to the mortgage industry’s credibility for years. Most mortgagecompanies don’t have an extensive payment processing system that can effectivelypay appraisers consistently and on time. Appraisal Management companies typicallywill accept all major credit cards, personal checks over the phone, money ordersand also have the ability to front the appraisal fee to the appraiser regardlessof if the client has paid them or not. Typically lenders don’t like to pay for theappraisal until the loan closes; this can be 30 -90 days after the appraisal hasbeen completed. An appraiser can’t wait this long to get paid; an appraisalmanagement company would have already paid the appraiser well before the loancloses and will ensure the appraiser is paid on every appraisal.3. Appraisal Compliance - With the HVCC, OTS, OCC, FHA and other state relatedappraisal independence requirements, having a totally independent third partyhandling the appraisal process is something every lender should want andemphasize. This is not only important for compliance with recent regulatoryrequirements but to ensure the appraisal is done as accurately as possible. If oneloan is made with an overinflated appraisal, the lender could end up losinghundreds of thousands of dollars. One loan bad loan could easily eat up 50 goodclean loans’ profits. Most of this risk could be avoided by having the appraisal
be accurate.4. Quality Control - Appraisal Management companies have extensive quality controldepartments to ensure the appraisal is executed properly and will check to ensurethe data is presented accurately.5. Fresh Prospective - An appraisal management company will have several highlytrained staff appraisers in the office and will be able to offer valuable insightto both the appraiser and the client on a file. Appraising is extremely complexand being able to have another expert’s opinion on how to handle a particularsituation is vital for an accurate appraisal. This process often goes unseen tothe client but should be treated as highly valuable because you essentially have ateam of appraisers working with you on every file.6. Innovation - Competition yields innovation and innovation yieldsperformance.Appraisal Management Companies are in business just like everyone elseand due to this they constantly strive to invent new ways of serving clientsbetter. The result of this is the clients, appraisers and the borrowers reap thebenefits from this which allows the industry as a whole to reap the rewards.7. Ensuring Arms-length appraisals - The accuracy of the appraisal should beeveryone’s main concern. Getting the deal done is just a bonus. The integrity ofthe appraisal is the most important aspect of the transaction as the value of thecollateral is what all vested parties are making their bets on. I often askclients “if you were lending someone you didn’t know $250,000 to buy a property,would you let them decide who determines the value of the property? And would youwant the person you hire to be aggressive or conservative?” More often than notyou would want them to be conservative and as accurate as possible because this isyour money being spent. For a lender it is their money and they want to know thereal number and what the property really looks like. If the value is supportableto facilitate a loan then they are more than happy to make sure this happens. Anappraisal management company will ensure the appraisal is done in an arms-lengthprocess and that the appraisal is not tainted. They will achieve this by havingseveral firewalls in place to separate the mortgage originator and the appraiser.8. Multiple Product Offerings - Most appraisal management companies will offermuch more than just appraisals and can provide valuable products to assistmortgage lenders with compliance and ensure a better overall operation. FromBPO’s, appraisal reviews, AVM’s, title, credit checks, flood insurance aretypically offered by most national AMC ’s, you essentially have a full servicereal estate company.9. Extensive Order Management System - Being able to order, track, manage, receiveupdates and deliver the appraisal is something lenders need to ensure their dealsare moving properly. Most appraisers are not equipped to do this. By having thesesystems in place, appraisal management companies offer tremendous value to theclient in the form of communication and access.10. Ease of Doing Business - Appraisal Management Companies allow lenders to focuson getting loans done and not chasing down appraisers. There are 3,143 counties inthe United States the average appraiser covers only 3 counties, which means youwould have to be in contact with over 1,000 appraisers just to have full coverage.An appraisal management company will take the burden from not only you but yourentire company and ensure the best possible product.I hope these 10 points have assisted you in seeing why appraisal managementcompanies do add value to the appraisal process and that they are in place toensure the most accurate appraisal possible. They do much more than most people

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