Wholesalers Lenders Start Using AMC’s to Ensure Appraiser Independence

Earlier this year the Federal Housing Administration announced that it would adopt the language from the Home Valuation Code of Conduct (HVCC) to ensure full alignment with the Government Sponsored Enterprise (GSE) standards. 

While FHA is not requiring the use of an Appraisal Management Company (AMC) or other third party providers, it does require that reverse mortgage lenders take responsibility to ensure appraiser independence.

With a proposed rule putting the responsibility of correspondents on FHA mortgagees (lenders), wholesalers like MetLife are requiring that brokers use AMC’s to ensure they remain compliant.

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According to a notice MetLife sent to brokers:

Effective on all loans with case #s assigned on or after December 18th, 2009, the appraisal orders must be placed with an Appraisal Management Company (AMC) to ensure that the appraisal reports are prepared by an FHA Roster appraiser who has not been selected, retained or compensated in any manner by the mortgage broker or any member of the lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.

The company is requiring that appraisals be ordered through ServiceLink, Equifax, or National Real Estate Information Services.  MetLife isn’t the only wholesalers who is requiring that brokers use an AMC.

Other wholesalers like Live Well Financial will also be utilizing AMC’s to ensure compliance with FHA guidelines.  In an email to RMD, Brett Ludden, Senior VP at Live Well Financial said the appraisal ordering process will be integrated directly into its proprietary origination system to make the process easy for correspondents. 

Even if wholesalers can make the new process easy, many reverse mortgage brokers are concerned that the AMC requirement will increase the costs of an appraisal for their customers. 

“The costs on AMC managed appraisals for conventional-forward mortgages has gone from $225 to a minimum of $405 up to $680,” said Jack Belles, President of Reverse Mortgage of New England.  The company does a few “forward” loans and said he sees no reason why the costs won’t go up when wholesale reverse mortgage lenders start requiring the use of AMCs.

Most wholesalers are requiring the use of AMCs starting January 1st, 2010.