Appraisal Management Company - AMC

AAA

DEFINITION of 'Appraisal Management Company - AMC'

A U.S. independent entity through which mortgage lenders order residential real estate valuation services for properties on which they are considering extending loans to homebuyers. AMCs fulfill an administrative function in the appraisal process, including selecting an appraiser and delivering the appraisal report to the lender. Individual appraisers who work for AMCs provide the actual property valuation services.

INVESTOPEDIA EXPLAINS 'Appraisal Management Company - AMC'

Appraisal management companies have been around for decades, but they became more important after the subprime mortgage crisis of 2007 and 2008, when new federal regulations limited the amount of direct contact that lenders could have with appraisers. The U.S. federal government created appraiser independence requirements to prevent lenders from influencing appraisers to inflate property values. Thus lenders would be prevented from issuing mortgages based on inflated appraisal values, a problem believed to have contributed to the housing crisis.

Neither mortgage brokers, loan officers nor homeowners may select the appraiser for the property on which they want to lend/borrow funds. Since the former parties have a financial interest in the transaction, there is a risk they might attempt to influence the appraiser to assign a higher value to the property than market conditions support so the transaction will go through. When the system works correctly, the AMC chooses an appraiser with local knowledge of the market for the property being appraised.

For federally-related transactions, which most mortgage loans are, AMCs must select state-licensed or state-certified appraisers. 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 (USPAP). AMCs are regulated under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Truth in Lending Act.

RELATED TERMS
  1. Real Estate Settlement Procedures ...

    This act was designed to protect potential homeowners and enable ...
  2. Real Estate Mortgage Investment ...

    A special purpose vehicle (SPV) that is used to pool mortgage ...
  3. Other Real Estate Owned - OREO

    In bank accounting, this term refers to real property owned by ...
  4. Real Estate Owned - REO

    Property owned by a lender - usually a bank - after an unsuccessful ...
  5. Real Estate Mortgage Investment ...

    A complex pool of mortgage securities created for the purpose ...
  6. Commercial Real Estate

    Property that is used solely for business purposes. Examples ...
RELATED FAQS
  1. What can cause the rate of return to be negative?

    Several factors can cause an investment to have a negative rate of return. Poor performance of a company or companies, turmoil ... Read Full Answer >>
  2. Why should you invest in tangible assets?

    Savers who deliberately buy tangible assets for investment purposes value their tangible goods as a form of value diversification ... Read Full Answer >>
  3. What are some examples of the law of demand in real markets?

    The law of demand posits a negative relationship between the price of a good and quantity demanded if all other factors are ... Read Full Answer >>
  4. What role did securitization play in the U.S. subprime mortgage crisis?

    The securitization of subprime mortgages into mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) ... Read Full Answer >>
  5. Which asset classes are the most risky?

    Equities is the riskiest class of assets. Dividends aside, they offer no guarantees, and investors' money is subject to the ... Read Full Answer >>
  6. How risky are small cap stocks?

    In terms of equity categories based on market capitalization, small caps are the fourth riskiest group out of five. The other ... Read Full Answer >>
Related Articles
  1. Home & Auto

    What $200,000 Will Buy In The Atlanta Real Estate Market

    Atlanta housing prices are up from last year, but they're still lower than the national median. And there's lots of inventory so plenty of choice for buyers. Here's how to get the most for your ...
  2. Home & Auto

    What $300,000 Will Buy In The Riverside/San Bernardino Real Estate Market

    The median list price for the San Bernardino/Riverside, Calif. market is $292,800, up 24.6% from the same month last year, according to the National Housing Trend Report for February 2014, published ...
  3. Investing

    The Labor Market Recovery’s Missing Ingredient

    Job creation is running at the fastest pace since the 90s, and there is some evidence that wage growth is finally starting to accelerate, albeit modestly.
  4. Mutual Funds & ETFs

    6 ETFs to Fight Your Recession Jitters

    Are you worried about a recession? If so, consider these 6 ETFs.
  5. Investing

    The 10 Biggest REITs in the U.S.: Dos and Don'ts

    Five of these REITs may offer potential over the next 1-3 years. Be careful with the other half.
  6. Mutual Funds & ETFs

    Non-Traded REITs: Risks and Rewards

    An overview of the risks and rewards of non-traded REITs and how they compare to exchange-traded REITs.
  7. Investing

    When Will The Bull Market End?

    A few weeks ago, the current bull market celebrated its sixth anniversary, making it one of the longest in history.
  8. Economics

    Worried About a Recession? Then Buy These 5 Stocks

    What makes these stocks so resilient? And how did they perform during the last crisis?
  9. Investing

    Top Alternative Investments To The Stock Market

    Dislike the stock market or want greater diversity? Here are some alternatives.
  10. Mutual Funds & ETFs

    At Look at REITS vs. Real Estate Mutual Funds

    REITs and real estate mutual funds have their differences, but they both offer liquidity and easy access to diversified real estate assets.

You May Also Like

Hot Definitions
  1. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  2. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  3. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  4. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  5. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  6. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
Trading Center