12 Questions To Ask Your AMC

This post is based on a TMConnect webinar featuring Triserv President Joe Bryant. It can be viewed here.

If you’re a lender considering outsourcing appraisal management to a third party AMC - either for the first time or because you want to add another vendor option - you’ll, of course, want to vet the AMC. The CFPB requires any company under their purview to “Know Your Vendor,” plus it’s just a smart thing to do.

Here are a dozen questions to ask any AMC candidate, as well as the answers you should look for.

1. How many states is the AMC licensed in? If you only do business in one state, of course, it’s fine to work with a regional AMC in your area. But if you have customers purchasing property across the United States, you’ll want to make sure you’re working with an AMC that’s licensed in all 50 states and the district of Columbia. Last time we checked, there were only 39 of these out of 4,000 AMCs in the industry.

2. Will you have a customer service team you can call? Some AMCs have large calling centers, where someone different will answer the phone every time. But some have dedicated teams - including folks in different time zones to cover more hours in the day - that really get to know you and your needs.

3. Does the AMC pay their appraiser “reasonable and customary fees” as required by AIR and Dodd-Frank? AMCs are supposed to do regular surveys to ensure that they’re paying market rate in each local area, but many of them don’t. Some pay low fees to appraisers so as to keep more money for themselves, which means they won’t have the best appraisers working for them, and they certainly won’t get the best turn-times.

4. How often does the AMC pay their appraisers? Some take 60 or even 90 days to pay, which again means appraisers won’t have their “A game” going for those AMCs. Look for an AMC who pays their appraisers every two weeks, whether they’ve been paid or not. Those AMCs attract the best appraisers who prioritize their orders.

5. Does the AMC charge the appraiser $10 or $15 for the “privilege” of using that AMC’s back end technology? This, in our opinion, is a disgraceful way to take more of the total appraisal fee out of the appraiser’s pocket.

6. Will the AMC disclose how much of the total appraisal fee went to the appraiser and how much the AMC kept? This is preferred so you can ensure the appraiser is getting that “reasonable and customary fee” and that the best appraisers will want to keep working for that AMC.

7. Is the AMC integrated with major LOS systems and middleware providers? At a minimum, ensure the AMC is integrated with whatever technology you use. Ideally, they’ll be at the forefront of integrating with emerging market leaders in case you upgrade or switch your tech stack.

8. Does the AMC use off-the-shelf software or do they have proprietary technology? If you want something customized, it can be challenging (and potentially impossible) to get it from off-the-shelf solutions. Proprietary technology can often be customized relatively quickly, without filling out tickets or work orders and waiting for months.

9. How secure is the AMC’s technology? The CFPB loves an SSAE 18 SOC 2 Type 2 attestation. It costs a lot of money to obtain, but it’s worth it because it tells you that AMC is super secure.

10. Is the appraisal reviewed? If so, what’s the definition of “review”? And who does it? If the review is done electronically, there’s a lot of room for error. Manual reviews are preferable, especially if the review is performed by a licensed or certified appraiser who is a full-time employee of the AMC. The better the review, the lower the revision rate.

11. Does the AMC have business continuity or disaster recovery plans in place? If there’s anything we’ve learned from the past year or more, between a pandemic, hurricanes, fires, and floods, it’s that anything can happen. Businesses need to be prepared to keep running no matter what.

12. Can the AMC put together a custom panel of trusted appraisers? Most lenders have appraisers they’ve used and like. Your AMC should be able to put these appraisers into a custom panel that they choose from on your behalf.

Every lender should have at least two AMCs on board, for risk dispersion purposes. By asking these 12 questions, lenders can make sure they’re partnering with the right AMCs.

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