Leah Phinney, director of new product development, Class Appraisal Inc.
As published in Scotsman Guide's Residential Edition, May 2012.
Appraisal management companies (AMCs) that maximize their service strategies often pass along their success to mortgage brokers and originators by allowing them to close more loans. Before closing a deal, originators often must outsource the appraisal management aspect of a deal to an external AMC, so it’s crucial for originators to be sure that the AMCs they’re using operate to the highest possible standards.
When choosing an AMC, originators should consider seven variables that work together in order to facilitate a swift and successful closing. Complicated by a variety of regulations, the appraisal aspect of the loan process is a topic that many originators are unfamiliar with.
Originators often are provided with a lender-approved list of AMCs, or they’re required to simply use the AMC that’s most affiliated with the lender. In short, being disconnected from the appraisal process presents a major challenge: The AMC that you work with may not offer the same level of service that you provide to your customers.
In order to ensure the quality of an AMC, mortgage professionals should at least be certain that a given AMC has invested adequately in its system of operation. This means that the organization has trained its staff on the Uniform Standards of Professional Appraisal Practice (USPAP) and constantly engages the appraiser, underwriter and loan officer to contribute to the process. AMCs that operate in this manner can maximize their quality and service.
That said, this isn’t the only consideration that mortgage professionals should bear in mind when choosing an AMC. Additionally, consider the following seven points of criteria to ensure that your AMC will serve you and your clients well. How an AMC performs in any of these categories could make or break your next loan’s closing, so it’s important to carefully consider each of these areas.
1. Appraiser selection
Be sure to ascertain how an AMC selects its appraisers, inquiring about the company’s minimum qualifications and hiring processes.
AMCs often draw from national panels that provide access to thousands of preselected appraisers, all of whom range in competency. Other AMCs, however, may draw from an internal panel. Regardless of the source, the only guaranteed credential of an appraiser on a national panel is a state license that’s in good standing. It’s solely up to the AMC to decide what, if any, filters will be added to the minimum criteria.
Industry best practices suggest that AMCs develop metrics for performance to create a preferred panel, identifying a potential field of only the highest-quality professionals. The profiles of the appraisers on a preferred panel would include appraisers who have been certified and approved by the Federal Housing Administration (FHA) for at least three years, have no complaints or state sanctions, and have track records of quality work.
2. Assignment time
You should be clear about how long it takes a given AMC to assign an appraisal request after that request has been transmitted. You may investigate, for one thing, whether or not an AMC requires the appraiser to provide proof of receipt within a designated window of time.
Managing a large volume of appraisals requires a platform that accommodates thousands of orders each month, as well as the messaging associated with each order.
An AMC that receives hundreds of appraisal requests per day still must not delay in delivering them to the optimal appraiser. After all, how quickly the appraisal is assigned is important to borrowers and appraisers alike, as appraisers want to maximize every hour to complete a credible assignment.
AMCs’ assignment times can vary greatly, ranging from one hour to 48 hours after the receipt of an order. Industry best practices, however, dictate that orders should be delivered to appraisers within one hour of receipt and then accepted or declined by the given appraiser within four hours. Time is always of the essence, especially when managing a part of the process that does not contribute to the bottom line.
3. Tracking method
Brokers and originators also should know how an AMC monitors the delivery of its appraisals. There are many players involved in the appraisal process, and they all must work together smoothly and efficiently.
When an AMC employs good customer-service specialists, they are more likely to meet or even exceed the delivery deadlines proposed by lenders. These specialists should be readily accessible, service multiple time zones and often should be available on the weekends.
Service levels in the industry range from simply tracking past-due appraisals to providing everyone involved multiple daily updates for each appraisal. Most of the responsibility in turnaround time lies at the appraiser level. AMCs that make it a priority to build a good rapport with appraisers — and that honor reasonable and customary fees — are those that will yield the most in terms of quality, speed and communication.
4. Assignment method
In addition to inquiring about how an AMC develops its larger panel of appraisers, brokers and originators also should know how an AMC selects its appraisers on a job-by-job basis.
The way that an AMC selects an appraiser for a specific assignment can range from computerized selection to personal, hand-picked selection. Finding the optimal appraiser for the specific job is the first step to ensuring an accurate and credible report.
How an AMC evaluates performance should be well understood by originators. Make sure you know the criteria used to select appraisers and make sure that decisions are not solely motivated by the lowest available fees. Companies that custom-select their appraisers and adhere to a four-day turnaround time are considered to be in line with industry-best practices.
5. Quality control
Next, brokers and originators should know how an AMC examines its appraisers’ work. Related, originators also should investigate the qualification requirements of a company’s quality-control examiners.
AMCs were originally intended to ensure an environment of non-influence for the appraisal-ordering process. How in-depth an AMC chooses to organize its process is entirely up to the company itself. Typically, however, there is a minimum administrative review of the appraisal before it’s delivered.
This function can be performed by a computer program or a staff member, who may or may not be familiar with the USPAP. That said, industry-best practices dictate that the individual performing a quality control examination should, at minimum, be a former certified appraiser or underwriter and should have completed the current USPAP seven-hour update course.
A higher-quality report means that fewer conditions will come back from a deal’s underwriters. Unfortunately, it’s often the case that appraisals reviewed for quality by a computer program are prone to flaws. It’s important, therefore, to ask AMCs what they require of their quality control examiners, as well as how they guarantee that you’ll receive a quality report.
6. Review and rebuttal
A truly high-quality AMC will have a protocol in place that allows for rebuttals. If an AMC does permit rebuttals, brokers and originators should be sure that this process is facilitated by a professional who can communicate their concerns and provide additional information to appraisers in a fair and unbiased manner.
Although the availability of a review-and-rebuttal process is ideal, this level of service is not required in any sense, thus it’s not offered by every AMC. There are many reasons why an AMC may not offer this service, but the most prevalent reason simply may be a shortage of staff members who are capable of fielding the types of questions raised by direct-endorsement underwriters, who often provide additional evidence to be used for consideration in the appraisal.
The AMC that you choose should have a team that’s capable of acting as the liaison between you and the appraiser. This must be a person whom you trust to present your information in the event that it could alter the report. AMCs that choose to build this process into their list of available services are businesses that often have a significant edge over competitors.
7. Customer support
Finally, brokers and originators should carefully consider an AMC’s customer-support services. Asking yourself several key questions can help you evaluate the quality of an organization’s customer service. For instance:
- What is the response time to my questions regarding an order?
- Is the customer-service staff knowledgeable and helpful in finding solutions?
- If issues with an appraisal arise, is there a swift resolution?
- Am I offered an opportunity to leave a message, or does it seem as though my calls are lost altogether?
Some AMCs have automated answering services that collect messages — all while time ticks by. Other companies may promise to return calls the same day, while still others may not have a specific standard response time.
Regardless, the AMCs that are industry leaders frequently offer personalized customer support 12 hours per day, accommodating business on both coasts. A quality customer-support staff often can be an AMC’s best sales force, so a company that hires accordingly will surpass expectations. Look for a team that satisfies your needs for timely resolutions and also is willing to enlist anyone in the company for assistance.
These seven areas are critical to an appraisal’s quality and the speed with which it’s delivered. Brokers and originators must juggle a variety of tasks each day, so it’s imperative that their chosen AMC is facilitating the closing process — not complicating it. Ultimately, the only person that your customers will recall when reflecting on their experience is you. The support that you receive, however, can make all the difference in defining that image in the eyes of the customer.
Leah Phinney is director of new product development for Class Appraisal Inc. and was instrumental in the development of the seven AMC core competencies. Class Appraisal defines best practices using its gradient to differentiate the seven service levels that define the appraisal management process. Named as a top performer by a leading software producer, Class Appraisal has been recognized as the new standard in appraisal management. Reach Phinney at lphinney@classappraisals.com or (866) 333-8311 ext. 321.
