Sounding Bored is my semi-regular column on the state of the appraisal profession. There have been more changes made to the profession in the past several years than in the entire history of the profession, and most of the changes have not resulted in a more credible service. Still, I’d like to hope that the latest financial services sector turmoil will bring a clean slate approach to better regulatory oversight (devoid of insanity).
While appraisers face tough economic conditions in 2009, there is a lot of nervousness invading the insulated land of adjustments and contributory value. I can’t tell you how many people and several clients we have are under the impression that lenders are required to order appraisals through appraisal management companies effective May 1, 2009 under the new Cuomo/Fannie Mae Deal. Related news coverage makes the whole thing sound very scary.
Here’s the Fannie Mae Home Valuation Code of Conduct Frequently Asked Questions (FAQs) on Fannie Mae’s web site that answers many of the questions currently on appraiser’s minds. Here are the comments specific to AMCs:
Appraisal Management Companies
Q25. Is a lender required to use an appraisal management company for ordering appraisals?
No. A lender may order appraisals directly from an individual appraiser.
Q26. May an appraisal management company affiliated with, or that owns or is owned
in whole or in part by the lender or a lender-affiliate, order appraisals?
Yes, an appraisal management company affiliated with, or that owns or is owned in whole or in
part by the lender or a lender-affiliate, may order appraisals if the appraisal management
company meets the criteria of Section IV.B. of the Code.
Q27. When a lender uses an appraisal management company, the appraisal
management company is responsible for retaining and paying the appraiser. Is it
likewise permissible for a mortgage broker to use an appraisal management
company, since the mortgage broker does not technically retain or pay the
No. The Code prohibits lenders from relying on an appraisal where the broker had a role in
selecting, retaining, or compensating the appraiser.
Q28. May a mortgage broker provide the lender with an approved appraiser list for the
lender to use when ordering appraisals for that particular broker?
Please read the entire FAQ. There is a lot of useful information.