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Lender groups call for AMC model to be protected

By AppraiserLoft Team | December 21, 2022

Two professional groups of major national lenders have sent a letter to the House Financial Services Committee and the House Rules Committee calling for the appraisal management company (AMC) business model to be given protection in upcoming legislation that is aimed at reforming the mortgage industry. Among other requests, the groups believe that AMC regulation on a state level should be overseen by the states’ respective bank regulatory agencies and not appraisal boards, which are described as “dysfunctional.”

The letter was sent to the Chairmen and Ranking Members of the Committees by the Consumer Mortgage Coalition and the Housing Policy Council, both of which are trade groups that represent the national residential mortgage lenders, servicers and service providers. Members include such titans of the industry as Citigroup, Wells Fargo, Bank of America and J.P.Morgan Chase and Co.

In the letter, the groups strongly endorse the AMC business model, saying that it helps lenders comply with the Home Valuation Code of Conduct and gives “value-added services,” including:

-  Providing a firewall between loan-production staff and appraisers;

-  Maintaining comprehensive, state-by-state databases to ensure that only licensed and certified appraisers in good standing are engaged;

-  Ensuring appraisers comply with all aspects of USPAP;

-  Maintaining systems to track and ensure the quality and timeliness of appraisals; appraisal technology improves quality control and accuracy; and

-  Backing their appraisals with significant capital as well as errors and omissions insurance, both of which most individual appraisers lack. This is an important protection that enhances the safety and soundness of mortgage lenders, while it benefits private investors.


The groups call for the upcoming AMC regulations contained in H.R. 1728 to be amended. Specifically, they do not believe that state appraisal boards will be able to effectively enforce the regulations, calling boards “dysfunctional” and “under-resourced.”

“It would be a mistake to impose a new federal mandate on states to regulate AMCs, and then force them to use the dysfunctional, under-resourced state agencies that have been ineffective at meeting their basic regulatory mission,” the letter explains. It cites testimony delivered by the Appraisal Institute to Congress earlier this year that claimed 60 percent of state appraisal boards had failed to uphold their enforcement responsibilities.

Instead of state boards overseeing AMC regulations, the groups suggest it would be better to have state bank regulatory agencies in place instead, as these agencies would have the “sufficient resources, expertise and a track record of taking disciplinary action when needed.” In addition, state and federal banking regulators already have the standards and processes in place that are needed for reviewing and supervising third-party service providers for banks.

The other amendment to HR 1728 that the group calls for is in registration fees for AMCs. The current level is too high, they say, and would bankrupt or force out of business those companies who operate on a national level. They suggest an annual cap of $5,000, as this would give enough capital for the new oversight program, “without unfairly harming smaller AMCs.”

Source: Valuation Review

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