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THE LATEST SECONDARY MARKET Lawmakers Call Appraisal A tory Impact on Consumers and Business, Congress reviewed testimony on recent and im- pending changes to the appraisal industry. One issue of focus during the hearing was the rise of appraisal management compa- nies (AMCs) and their validity and necessity in the market. According to a recent re- t a House of Rep- resentatives hearing titled Appraisal Over- sight: The Regula- port by the Government Accountability Office, AMCs have grown from 15 percent market share to between 60 and 80 percent market share over the past few years. Defending the role of AMCs, Don Kelly, executive director of the Real Estate Valuation Advocacy Association, stated these companies serve as barriers between lenders and appraisers to prevent lenders from coerc- ing appraisers into altering their objective view of a property's value. "Overzealous mortgage brokers and lenders were partly to blame for overvalued properties and inflated appraisal values, as they used the promise of future business in a booming market and higher appraisal prices to influence the ultimate valuation conclusions made by licensed and certified appraisers," he stated in his testimony. AMCs prevent this "by acting as the sole point of contact be- tween the lender and appraiser," Kelly said. Kelly explained that AMCs Management Firms into Question The House Finance Subcommittee continues to delve into the appraisal sector, calling on industry leaders for commentary. lenders that operate nationally or in several geographic regions. While his testimony insisted that AMCs verify their appraisers' credentials and select appraisers based on expertise and geographic proximity, other witnesses argued that AMCs largely base their as- signment decisions on two factors: fee and turnaround time. "Instead of selecting the best non-appraisers with only a cursory knowledge of valuation," who "interfere with appraisal independence by asking or insist- ing that specific observations about the property, comparable sales, or market be excluded from the appraisal report." Gregoire also asserted NAR's appraiser to complete the appraisal assignment on the basis of experi- ence, knowledge, and competency, the assignment is often awarded to the vendor responding first to an email blast sent to dozens or hun- dreds of appraisers that happen to be on the AMC panel in that state, function as centralized ap- praisal sources for large mortgage speaking on behalf of the National Association of Realtors (NAR). Gregoire also suggested that AMC personnel "are often " said Francois K. Gregoire, ent organization than it was just seven months ago," stated David Bunton, president of the Appraisal Foundation. "I attend every single one of their meet- ings and the difference between now and then is night and day. However, Kelly said, "We'd nesses for their views on the prog- ress of the Appraisal Subcommittee. Consensus was that there is room for improvement, but the commit- tee is making some progress. "The ASC is a much differ- view that "all AMCs should be required to register with state appraisal regulatory bodies where they are providing appraisal management services." Currently, AMCs owned by federally regu- lated financial institutions do not have to register with their state appraisal regulatory bodies. Congress also looked to wit- like to see the ASC move a little quicker." THE M REPORT | 73 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET