As the Home Valuation Code of Conduct (HVCC) declares a new relationship between lenders and appraisers – with an appraisal management company (AMC) taking on a stronger role as a sort of liaison – it has become more important for lenders to be on an AMC’s approved lender list. Doing so allows the lender to be part of the AMC’s database for sanctioned, quality appraisals.
The process to be approved as a qualified lender will vary from state to state, as well as what category your loan business falls under (i.e., FHA). However, there are a few basic requirements that are generally found across all lender approval applications:
- You must sign an agreement set forth by the AMC (i.e., good-faith business practices)
- Your company must have a net worth of at least $250,000 and a certain amount of liquid assets (usually 15 to 20%)
- You will need to verify your institution type (i.e., bank, credit union, etc.)
- List the total number of approved loans in the previous fiscal and/or calendar year
- Prove that your business is based within the United States and has at least two owners (no sole proprietorships) and/or must have been originating loans for at least one year
- List the names, titles, and qualifications of chief personnel (i.e., owners, managers, loan closers, etc.)
- Your institution will need to be “direct lenders”; originate, process, administer, finalize, and actually fund the loan
- Prove to have a clean history of business practices and loan procedures
Other requirements that have been required by a few AMCs include having someone in-house that can speak Spanish or having a separate building to conduct business with a clearly visible sign.
In accordance with the HVCC, it is also assumed that the lender and its loan production and sales employees will not have any involvement with any portion of the appraisal process or communication with appraisers (or AMCs) that could have any sort of impact on the valuation.
Finding a reputable appraisal management company with a solid approved lender list is also essential for appraisers themselves, as they have to trust that the lender has been thoroughly screened and met qualifications. This notion is even more poignant if the appraiser does not or cannot provide a list of preferred lenders to the AMC.
With increased competition and more AMCs temporarily halting the number of approved lenders within their network, it is crucial to remember to keep your standards high and not just sign on with any AMC. Being patient and searching for a sound AMC will pay off for lenders in the long run.
Eamon Arnett is writer and CEO of 48HN.com (http://www.48hn.com), a website featuring Approved Lender List.
[tags]approved lender list[/tags]
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