AMC Is Not Always a Theatre Chain

AMC - what is it?

AMC is a movie theatre chain, at least in my mind.  When I picked up the Realtor magazine for September, 2009, I was surprised to read about AMCs - Appraisal Management Companies.  Since May, 2009. HVCC, Home Valuation Code of Conduct, requires that all conventional loan  appraisals to be sold to Fannie Mae or Freddie Mac, be placed through a third party - an AMC.  This legislation was passed to thwart lenders and mortgage brokers who were putting pressure on appraisers to 'bring in the value'.  This practice was widespread and added to the implosion of housing prices in our market.

This legislation may sound good, but in practice, it's creating havoc in the industry.  For one thing, appraisal prices have increased by 10 to 15%, because of the third party fees.  Secondly, appraisers are being assigned on a rotating basis, not based on area expertise.  So, an appraiser who is accustomed to appraising housing in North Scottsdale may be sent to appraise a small bungalow in South Phoenix.   Because our Valley is so large and wide-spread, it's difficult to have a 'handle' on all areas.  Appraisers are not familiar with the condition of the sold comps in a particular area; consequently, appraisals are coming in much lower than buyers and sellers anticipated.

Most importantly, many of the AMCs are owned by the lenders!!  RELS,, Quantrix, Finiti are all owned, at least partially, by major lenders.  How can these appraisers be impartial, and how much pressure can still be placed on the appraisers?

National Association of Realtors is proposing an 18 month moratorium on HVCC, so that these issues can be resolved.  In theory, AMCs should ease the pressure on appraisers, but in fact, this is not the case.  Hopefully, this issue can be resolved so that the industry can regain its footing.  If buyers cannot obtain a loan, because of an improper appraisal, this dampens the buyer's enthusiasm for the process.  Buyers should be encouraged in this market , since we have so much inventory.  I am not advocating' anything goes'.  There must be a middle ground and the current HVCC does not appear to be finding that ground.