There are various options that a lender can choose to be compliant with the HVCC. One of these being hiring a third party appraisal management company to facilitate the process and ensure HVCC compliance.
There is no best option, but only an option that fits your companies needs the best.
Depending on what type of business model you have will determine the best solution for you and your business. Banks, correspondent’s, mortgage bankers or wholesale lender involved in TPO business all have various compliance needs and requirements. To effectively manage the appraisal process they must work hand and hand with the appraisal management companies to ensure a quality delivery process.
What your business model is will help determine what type of solutions an AMC will offer you. This will also determine the scope of work necessary to commence commerce.
If you do decided to use and AMC understanding what they are is extremely important to an effective relationship.
So what is an AMC?
An AMC typically doesn't do the appraisal, but rather finds the best appraiser to complete the appraisal for the transaction. They establish relationships with vendors nationally and are able to ensure a quality products delivered timely. For some companies they might even manage a panel of appraisers and assign orders on a random or rotating basis working from a list.
What an appraisal management company does is manage the valuation process for you.
Things to remember:
They aren’t the appraisers, nor do they always have access to all of the information the local appraiser have.
Many offer a variety of products such as AVM’s, BPO’s, Review, and other various services that should be taken advantage of.
What are the best practices to work with an AMC?
CRITICAL SUCCESS FACTORS:
From our clients relationships we have found the more time invested upfront will enable a better overall relationship and better fulfillment from both companies.
Outlying exactly what is expected and what is required is best for both business relationships. Having a service level agreement outlying the entire process from start to finish is vital to a establishing a win-win relationship that will last.
Problems, and major problems will occur and having procedures in place to prevent thing is extremely important to long term success.
Things to consider, and that must be addressed:
1. Review & QC Procedures
• Helping the AMC with what you require and expect for appraisal quality is important if you expect the AMC to perform to your standards. Thinking they will “know what to do” is not a good approach as different clients have very different management processes and procedures and by letting them do what they want and what is expected is extremely important.
2. Panel Management
• Other than just simply appraisals most AMC’s will offer some appraiser panel management specifically for your company. Managing your Approved or “do not use” vendors and ensuring the appraisals are sent or not sent is something you should consider letting the AMC do. We handle panel management for some banks and lenders we work with, and have had great success with the process. By setting it up so you only have specific approved vendors you limit the amount of exposure your company has to dealing with, too many vendors. Also if your company requires appraisers with specific qualification criteria or appraisals written in a certain way this will aide in the process of ensuring all appraisals are done right the first time.
3. Escalading and default resolution procedures
• Everyone knows problems will occur and having a procedure in place for addressing these issues beforehand is critical for a long term working relationship. Just as simple as what to do when the appraiser doesn’t show up, or if they feel the value is way too low or the appraiser goes MIA is extremely important to have. By having these procedures in place it will ensure that rather than just pointing figures at each other steps are taken to resolve the issue and continue commerce.
4. Compliance and reporting procedures
• Staying in compliance with the HVCC is a must for all Fannie Mar and Freddie Mac sellers and knowing that the AMC is responsible for and what your responsible for is extremely important. Most AMC’s will include a “compliance certificate” on all appraisals. This is not the same certification of compliance you as a lender will have to provide to Fannie Mae and Freddie Mac, but more to ensure the report ordered is completed by an appropriate vendor and not someone impersonating the vendor.
5. Delivery Process
• There are various web portals that can handle the delivery process for lenders. Companies like GlobalDMS, AppraisalPort, and Real EC all offer compliant delivery process for lenders to manage multiple national vendors all with a customizable delivery process.
6. Borrower Delivery
• The borrower is now required to get a copy of the appraisal 3 days after completion which means that someone is going to be responsible for delivering the report to them. E-mail is usually the best way and providing the AMC with the e-mail address of the borrower is extremely important. Yes and AMC can call and get it however some AMC’s process 100’s of orders per day and calling all of the borrowers as well as ensuring delivery can be near impossible if the representative of the company is trying to track down a borrower to get an e-mail address.
7. Secondary review and QC procedures.
• After the initial appraisal is done typically its not a one and done process. Underwriters will have conditions and questions and having an expected turnaround as well as “best effort” procedure In place is extremely important.
8. Billing Arrangements
• This is probably the single most preventive delaying process of all. Having the loan officer collect payment from the borrower or a charge card number before the actual appraisal is scheduled or ordered is a huge time saver. Many often appraisals get delayed several days or even weeks trying to collect payment from the borrower.
9. Certificate of compliance.
• Even though Fannie and Freddie require the lender to ultimately be compliant with the HVCC. A lender involved in TPO business has appraisals coming from multiple channels and sometimes it can hard to say who the appraisal was from really. We have had issues with people saying the appraisal was done by Coester Appraisal Group however we did not do the appraisal they just put an invoice with our name on it. We issue a certificate of compliance on all of our appraisals. This allows a security measure in place that you know the appraisal was done by us.
From an appraisers prospective:
Allot of appraisers think that all an AMC wants is an appraiser that will do an appraisal for peanuts. This may be true with some companies however the majority are looking to pay an appraiser a fair fee for their work and just want a quality appraisal done right in a professional timely manner.
Critical Success Factors;
1. Communication
2. Updating the web and online portals daily
3. Being reasonable with the fees
4. Thinking win - win for a relationship
5. Responding to conditions and revisions quickly and thoroughly.
The ideal vendor
Someone who will deliver on their promises, and not flake out. Be a "go to person" for the company. We all want the same thing, to make money and work with great people. The better the relationship and product, the more work you will receive. It’s not about being on "the list" we have 22,000 vendors on our list we only use maybe 1,000 on a regular basis. We get over 100 calls a day from appraisers looking for work but very few that are looking to do business together with a win-win relationship in mind.
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