Appraisal management companies frustrate brokers

by Justin da Rosa21 Aug 2015
It’s the topic the media isn’t covering and the one every mortgage player wants to read about, according to a seasoned originator.

The HVCC appraisal guidelines – which have led to an influx of appraisal management companies – have been in place for years, but industry players are still struggling with inaccurate appraisals that slow down the originations process.

You often don’t hear anything good about appraisal management companies, Paul Deschaine of Maine Home Mortgage told Mortgage Professional America, arguing the appraisers appointed by these companies often lack knowledge of local markets and provide inaccurate assessments.

They also often cost the client more and result in slower origination turnaround, some industry players argue.

“A deal I started in April is just now closing because the lender kept rejecting inaccurate appraisals,” Deschaine said.

Appraisal management companies have become prevalent since the Home Valuation Code of Conduct took effect in May 2009. The guidelines were meant to ensure appraisers aren’t influenced by the lenders or brokers, and they do provide the benefit of removing a task from brokers’ origination processes. 

For his part, one player has found more success with smaller appraisal companies.

“We’ve worked with good and bad versions of (AMCs),” Roger Steur of Principal Mortgage said. “The bigger the department or the bigger the AMC, the more hoops and likely that’s where (the) frustration lies.”

However, some players argue they sometimes result in inaccurate appraisals.

“The communication from AMCs is often poor, the process times are extended, and the reports aren’t always accurate,” Michael Pond, a loan officer with Envoy Mortgage told Mortgage Professional America. “And they’ve been commonplace for a while.”

However, Pond has been able to avoid using these companies because his company has a dedicated appraisal desk in his office.

“The desk we have in-house complies with the rules,” he said. “I don’t speak to the appraisers and I don’t choose which appraiser gets assigned.”

With that in-house desk, Pool and his colleagues are assured the appraisers are up-to-date on local real estate trends and that appraisals are accurate and processed in a timely manner. 

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