ANSWERS: 1
  • An appraisal management company is a third-party service that connects appraisers to lenders and borrowers. It oversees the appraisal process for the lender and serves as an appraisal reviewer as well.

    Significance

    As of May 1, 2009, mortgage lenders can no longer select the appraiser for the loans they underwrite. They are required by federal law to use appraisal management companies.

    Function

    The appraisal management company enforces honest business practices and prevents lenders and appraisers from having undue influence on the appraisal process.

    Types

    Most appraisal companies cover all types of appraisals, while some focus on commercial appraisals and others focus on residential appraisals.

    Considerations

    An appraisal management company places an appraisal request out to a bidding process and selects the lowest bidder. The lender is not guaranteed a local appraiser.

    Warning

    With the new law in effect, lenders are no longer allowed to speak to appraisers at all during the appraisal process. Any questions, corrections or comments are to be passed through the appraisal management company.

    Source:

    TAVMA.org: Defining Appraisal Management

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