Since appraisal management companies are now responsible for the super majority of appraisals being ordered through lenders for mortgage purposes due to HVCC. Currently, AMCs are not normally regulated institutions, the consumer is exposed more than ever to the potential for low quality appraisals, continuing to undermine the public trust in the appraisal profession. We suspect this trend has the potential to push errors and omissions insurance rates higher and provide more exposure to the mortgage lending system.
Appraisal management companies are becoming increasingly important because of sweeping changes to regulations for home valuations nationwide. The stricter regulations are geared toward boosting consumer safety and stabilizing the housing market. Most of the new AMC legislation requires companies to make sure their appraisals are in line with the Uniform Standards of Professional Appraisal Practice. They are also responsible for ensuring they use certified and licensed appraisers only.
These bonds are currently required in 10 states: CA, OR, AK, TX, AZ, TN, NV,LA,UT, and NM. The newest state to join is Arizona which passed Bill S 1351 in July 2010 to make this new requlation effective with their AMC application. This new regulation is expected to spread through at least another 15-20 states before the end of the year.
Merchants Bonding Company, a standard bonding market, currently offers these $20,000 bonds at 1%, so it would be $200 permium per year. As with any surety bonds, approval is dependent on company credit and the financial stregnth of the company.
If you have any questions please contact Christine Boscacci, she has been following this issue for the past several months (christine@surety1.com or (877) 654-2327). To apply for the bond with us please click here and select Appraisal Management Company (AMC) as the bond type.
For further information on the subject please refer to this article by Jonathan Miller with Matrix
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