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Definition: Appraisal Management Company (AMC)
Appraisal Management Company is an independent entity in the United States through which residential real estate valuation services are ordered by mortgage lenders for the properties on which the consideration of extending the loans to the homebuyers is done. In the appraisal process, those companies fulfill an administrative function which includes selecting a proper appraiser and delivering the report to the lender. The actual property valuation services are provided by the individual appraisers who work for those AMCs.
AMCs were there for decades, but their importance came into picture after the subprime mortgage crisis of 2007 and 2008, when the amount of direct contact that lenders could have with appraisers was limited by the new federal regulations. An appraiser was created as an independence requirement by the federal government in the U.S. to prevent lenders from influencing appraisers to inflate property values. Thus lenders were prevented from issuing mortgages based on the inflated appraisal value which was believed to be the problem that contributed to the housing crisis.
None of the mortgage brokers or loan officers or the homeowners has an authority to select the appraiser for the property on which they want to lend or borrow the funds. Since the former parties want more money in the transaction so there could be the risk that they influence the appraiser to assign a higher value to their property than the market value. When it works fine, an appraiser has been chosen by an Appraisal Management Company who has the local knowledge of the market of the property being appraised.
Most of the mortgage loans are the federally-related transactions. a state-certified appraiser needs to be selected. It is the responsibility of AMC. In addition, federal regulations require AMCs to register with their respective state appraisal boards and require AMCs to follow the Uniform Standards of Professional Appraisal Practice. AMCs are regulated under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Truth in Lending Act.
Example: Epic property solutions, llc. in Pittsburgh. Licence no. is AM-032 issued on 7/1/11 valid upto 31/12/16.