Appraisal Management Companies - Issue Summary
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| What is the fundamental issue? |
| An appraisal management company (AMC) is a third party company between independent fee appraisers and lenders performing many of the administrative elements of the appraisal process. AMCs are regulated to varying degrees by the states and are not regulated at the federal level. AMCs should be regulated at the federal level through the Financial Institutions Reform Recovery and Enforcement Act (FIRREA). This will allow for some regulation and oversight at the federal level but the states will be the primary vehicle for implementation and enforcement. |
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| I'm a Realtor®. What does this mean to my business? |
| AMCs are often perceived as companies that drive down fees for independent appraisers, retain inexperienced licensed appraisers for work, and provide substandard appraisals to lenders and clients. The company offers services to a client, usually a lender, and consumers pay an appraisal fee, which can be found on the HUD-1 form. Typically the HUD-1 indicates the total cost of the appraisal but does not break out fees paid to the appraiser, AMC, or even any fee kept by the lender. |
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| NAR Policy: |
| NAR is drafting policy that is expected to be adopted at the 2009 Midyear Meetings in Washington, DC that supports the regulation of AMCs through FIRREA, with state implementation and enforcement. |
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| Legislative/Regulatory Status/Outlook: |
| There is no pending federal legislation or regulatory action. Several states are taking legislative action to regulate AMCs. |
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