Compliance for Appraisal Management Companies
Appraisal management companies (“AMCs”) are subject to a number of state and federal compliance standards, most of which have been enacted over the past few years as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and in response to the mortgage crisis of 2008. It is critical that AMCs comply with these regulations in order to legally operate. At the Bernard Law Group, our attorneys have been advising clients in all aspects of the real estate and mortgage industry for many years, and we have the experience and know-how to make sure your AMC is in compliance with all applicable state and federal standards.
Federal Mandates for Registration and Supervision of AMCs
On April 30, 2015, The Consumer Financial Protection Bureau (CFPB), along with five other federal regulatory agencies, issued a final rule for minimum licensing requirements for AMCs, as required by the Dodd-Frank Act. The rule defines an AMC as an entity that provides appraisal management services to lenders or underwriters or other principals in the secondary mortgage markets. These AMC services include contracting with licensed and certified appraisers to perform appraisal assignments on behalf of mortgage lenders.
State Regulation of AMCs
AMCs are required to register as required by the state in which the AMC operates. AMCs are subject to state and federal oversight, including but not limited to the requirement that appraisals for federally related transactions must be conducted by a state-certified or state-licensed appraiser, and that such appraisals must comply with the Uniform Standards of Professional Appraisal Practice (USPAP).
Appraisals must be conducted in accordance with the statutory valuation independence standards pursuant to the federal Truth in Lending Act and its implementing regulations, and are subject to compliance with the Appraiser Independence Requirements, which is designed to protect the appraiser from unlawful influence in the valuation of the subject property.
Mortgage Lender Oversight of AMCs
Mortgage lenders are obligated by requirements of the CFPB and other federal and state agencies to manage regulatory compliance and oversight of their third-party vendors, such as AMCs. Therefore, not only are AMCs subject to regulatory oversight, but they are also subject to the oversight of the lenders who utilize their services.
Don’t wait until your top mortgage lender client contacts you for a review or examination of your AMC operations. If you are starting an AMC or already in business as an AMC, contact the Bernard Law Group today for proactive guidance in ensuring your compliance with all state and federal guidelines.
Assistance with Appraiser and Panel Management
AMCs are required to establish effective panel management systems that features a reliable and competent group of appraisers who can provide high-quality appraisal services, and who are evaluated based on clear and objective criteria, including qualifications, experience, certifications, and adherence to industry standards. Performance monitoring involves performance expectations and benchmarks for appraisers, including turnaround times, quality of work, and adherence to guidelines and regulations. Effective AMCs are aware that the lenders and Government Sponsored Entities (GSEs) such as Fannie-Mae and Freddie Mac, are continuously assessing appraiser performance based on delivered work product by the appraisers on their panel. AMCs should also proactively monitor appraiser quality through feedback from lenders, internal quality control, and post-closing reviews.
The Bernard Law Group can help AMCs who are challenged by non-performing appraisers, panel management issues, negative lender feedback or other challenges in the management of its AMC panel.
The Bernard Law Group’s attorneys have over 30 years’ experience working in the mortgage industry, and more than a decade in providing counsel to AMCs in the implementation of compliant AMC practices. We also consulted with one state at the earliest stages in their establishment of their AMC regulations in compliance with the Dodd-Frank Act, and have guided several AMCs through in-depth examinations and audits by regulators and third-party lenders, respectively.
Contact the Bernard Law Group for Proactive Guidance on AMC Compliance in the following areas, and more:
- AMC Compliance Management Systems
- Audits – Lender or Regulator
- AMC Panel Compliance
- Appraiser Relationship Management
- Appraiser Rating Systems and Quality Control Requirements
- Licensing and Expansion
- AMC Training
- Lender relationship management
- Appraiser Independence Requirements
Need Assistance With Appraisal Management Company Compliance?
Don’t wait until your top mortgage lender client contacts you for a review or examination of your AMC operations. If you are starting an AMC or already in business as an AMC, contact The Bernard Law Group today for proactive guidance in ensuring your AMC’s compliance with all state and federal guidelines.