As published in Scotsman Guide's Residential Edition, May 2012.
Appraisal management companies (AMCs) that maximize their service strategies often pass along their success to mortgage brokers and originators by allowing them to close more loans. Before closing a deal, originators often must outsource the appraisal management aspect of a deal to an external AMC, so it’s crucial for originators to be sure that the AMCs they’re using operate to the highest possible standards.
When choosing an AMC, originators should consider seven variables that work together in order to facilitate a swift and successful closing. Complicated by a variety of regulations, the appraisal aspect of the loan process is a topic that many originators are unfamiliar with.
Originators often are provided with a lender-approved list of AMCs, or they’re required to simply use the AMC that’s most affiliated with the lender. In short, being disconnected from the appraisal process presents a major challenge: The AMC that you work with may not offer the same level of service that you provide to your customers.
In order to ensure the quality of an AMC, mortgage professionals should at least be certain that a given AMC has invested adequately in its system of operation. This means that the organization has trained its staff on the Uniform Standards of Professional Appraisal Practice (USPAP) and constantly engages the appraiser, underwriter and loan officer to contribute to the process. AMCs that operate in this manner can maximize their quality and service.
That said, this isn’t the only consideration that mortgage professionals should bear in mind when choosing an AMC. Additionally, consider the following seven points of criteria to ensure that your AMC will serve you and your clients well. How an AMC performs in any of these categories could make or break your next loan’s closing, so it’s important to carefully consider each of these areas.
1. Appraiser selection
Be sure to ascertain how an AMC selects its appraisers, inquiring about the company’s minimum qualifications and hiring processes.
AMCs often draw from national panels that provide access to thousands of preselected appraisers, all of whom range in competency. Other AMCs, however, may draw from an internal panel. Regardless of the source, the only guaranteed credential of an appraiser on a national panel is a state license that’s in good standing. It’s solely up to the AMC to decide what, if any, filters will be added to the minimum criteria.
Industry best practices suggest that AMCs develop metrics for performance to create a preferred panel, identifying a potential field of only the highest-quality professionals. The profiles of the appraisers on a preferred panel would include appraisers who have been certified and approved by the Federal Housing Administration (FHA) for at least three years, have no complaints or state sanctions, and have track records of quality work.
2. Assignment time
You should be clear about how long it takes a given AMC to assign an appraisal request after that request has been transmitted. You may investigate, for one thing, whether or not an AMC requires the appraiser to provide proof of receipt within a designated window of time.
Managing a large volume of appraisals requires a platform that accommodates thousands of orders each month, as well as the messaging associated with each order.
An AMC that receives hundreds of appraisal requests per day still must not delay in delivering them to the optimal appraiser. After all, how quickly the appraisal is assigned is important to borrowers and appraisers alike, as appraisers want to maximize every hour to complete a credible assignment.
AMCs’ assignment times can vary greatly, ranging from one hour to 48 hours after the receipt of an order. Industry best practices, however, dictate that orders should be delivered to appraisers within one hour of receipt and then accepted or declined by the given appraiser within four hours. Time is always of the essence, especially when managing a part of the process that does not contribute to the bottom line.
3. Tracking method
Brokers and originators also should know how an AMC monitors the delivery of its appraisals. There are many players involved in the appraisal process, and they all must work together smoothly and efficiently.
When an AMC employs good customer-service specialists, they are more likely to meet or even exceed the delivery deadlines proposed by lenders. These specialists should be readily accessible, service multiple time zones and often should be available on the weekends.
Service levels in the industry range from simply tracking past-due appraisals to providing everyone involved multiple daily updates for each appraisal. Most of the responsibility in turnaround time lies at the appraiser level. AMCs that make it a priority to build a good rapport with appraisers — and that honor reasonable and customary fees — are those that will yield the most in terms of quality, speed and communication.
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