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 Investment Trust - ...

    A security that sells like a stock on the major exchanges and ...
  5. Commercial Real Estate

    Property that is used solely for business purposes. Examples ...
  6. Real Estate Mortgage Investment ...

    A complex pool of mortgage securities created for the purpose ...
RELATED FAQS
  1. No results found.
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. Options & Futures

    Give Yourself More Options With Real Estate Options

    Real estate options have many benefits, including a smaller initial capital requirement.
  4. Taxes

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.
  5. Investing

    Looking To Invest In the Third-Largest Pharmacy?

    Rite Aid Corporation's $4 billion purchase of the Eckerd retail pharmacy chain during the Great Recession might not have been its savviest decision.
  6. Chart Advisor

    Why This Real Estate ETF Should Be on Your Radar

    At current levels, real estate should be near the top of the list for most traders. Here's one ETF of REITs to pay particular attention to.
  7. Home & Auto

    Real Estate Face-Off: Zillow Vs. Trulia

    Both websites help you find homes for sale, but they organize the information differently. Here's how they compare.
  8. Options & Futures

    How To Make Money WIth Real Estate Options

    Buying real estate options is one way to invest in real estate at a lower entry cost.
  9. Personal Finance

    Will Your Net Worth Be Affected By A Recession?

    Here's a look at how a potential recession could impact your net worth in a negative way.
  10. Home & Auto

    A Soaring Housing Market: College Apartments

    How to play the boom in upscale student housing.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center