Pro-Teck Makes Case for Appraisal Management Companies

Much controversy has surfaced regarding the role and effect of appraisal management companies (AMCs) in the wake of the GSEs' new ""Home Valuation Code of Conduct"":http://www.freddiemac.com/singlefamily/pdf/122308_valuationcodeofconduct.pdf (HVCC).
Just last week, lawmakers in the House introduced legislation that would ""suspend HVCC for 18 months"":http://dsnews.comindex.php/home/news_story/3164, so that concerns over its effectiveness could be addressed. A number of industry groups, including the National Association of Realtors and the National Association of Mortgage Brokers, have ""spoken out against the new appraisal rules"":http://dsnews.comindex.php/home/news_story/3164 imposed by Fannie Mae and Freddie Mac, citing concerns that AMCs are not adhering to effective standards for appraiser assignments and could be in a position to put independent appraisers out of business.
Waltham, Massachusetts-based ""Pro-Teck Services"":http://pro-teck.com, which has over 30 years' experience in valuation and appraisal management, took up the other side of the debate in a corporate statement issued Tuesday which highlights the advantages of working with an established AMC.
Pro-Teck argues that long before HVCC, the credit meltdown, and the ensuing government intervention programs such as the Troubled Asset Relief Program (TARP), the mortgage industry has recognized the value of an independent review of appraisals. The company says that some of its clients turned to Pro-Teck to add fraud protection criteria to their appraisals, others for a second set of eyes to review information, and in all instances, Pro-Teck was able to provide an added level of quality and objectivity that AMC’s are uniquely qualified to deliver.
The company says that in today’s market, along with providing a ""firewall"" between loan officers and appraisers, AMCs increase the quality of appraisals by utilizing standardized qualifications and guidelines that go beyond the ""Uniform Standards of Professional Appraisal Practice"":http://commerce.appraisalfoundation.org/.../USPAP2008/index.htm (USPAP). Pro-Teck explained that this added measure often holds AMCs to a higher standard because clients’ unique quality requirements become the common denominator.
For example, Pro-Teck has established two tiers of appraisal reviews. Level one applies scripted rules and logic to validate data. Level two involves a manual review by regional personnel to address highlighted issues and guideline exceptions identified in the automated review process. The company says it uses a defined quality assurance process that rigorously assesses the appraiser’s valuation logic and methods.
In addition, Pro-Teck says the review process by AMCs integrates market and demographic data, such as assessor, sales, listings, listing history, market appreciation, foreclosure ratios, short sales, flips, mapping, and satellite/flyover imagery. The company says this piece of the process allows AMCs to review appraiser data selection, accuracy, and logic with a comprehensive view of local market drivers.
Pro-Teck points out that in selecting and managing appraisers, AMCs employ complex scoring models that quantify quality, turn-times, responsiveness, and proximity to the subject property. The most qualified appraiser is then chosen in an unbiased, blind selection based on these factors.
The company says AMCs provide additional protections for lenders and their customers, such as blanket Errors & Omissions insurance, warranty programs, and independent verification of all approved appraisers' license, insurance, and good standing. Pro-Teck also has an Appraisal Standards Board in place, which is overseen by the company's chief appraiser. Pro-Teck explained that the board meets regularly to review applicable legislation, regulatory requirements, and industry standards and guidelines, to ensure any necessary changes to the process are seamlessly implemented and monitored across Pro-Teck’s vendor panel and review staff.
No doubt, HVCC has put AMCs in the spotlight and spurred debate as to their role and value. But according to Pro-Teck, much of what has been said is ""biased and misinformed."" The company argues that an experienced AMC adds substantial value by providing consistent high-quality appraisals that are uniquely independent from the influences and fraud that went unchecked in recent history.