What Are Appraisal Management Companies, and Are They Friend or Foe?

Compared to the anticipation that precedes them, real estate closings are anticlimactic affairs.  In the most upscale parts of the Five Boroughs, the law office conference rooms where the closings take place are lovely to behold, but if you can afford to buy a real estate property that would entail such an opulent setting for its closing, then handsome law office conference rooms are a dime a dozen as far as you are concerned.  More likely, though, your closing will take place in a drab law office on an upper floor of a building where the elevator keeps you guessing about whether it will remain functional until it reaches its destination.  Throughout the closing, you are full of anticipation about what comes next, setting up the furnishings of your new house or condo in time for the housewarming party to which you have already sent out invitations, or, conversely, struggling to piece together enough gigs to make the payments on the mortgage you qualified for in recent, but still less financially stressful, times.  In a stuffy room in a building where the elevator may or may not convey you safely back to the main floor, it is hard to pay attention to the long list of numbers that the lawyers, whom you have never met before, are reading to you.  You might be overpaying for closing, but you are too tired and full of anticipation to worry about it.  For help getting a fair price on closing costs and other aspects of your real estate purchase, contact a Bronx real estate attorney.

Appraisal Management Companies Are Supposed to Bring Transparency to the Real Estate Appraisal Process

An appraisal of the property happens early in the application process when you are applying for a home mortgage loan.  Once it has finished, you put it in the back of your mind and move on to worrying about the other hurdles you must clear to make it to closing.  Appraisals can cause more trouble in a real estate transaction than you might expect.  Before the housing market crash of 2008, lack of transparency regarding appraisals done by in-house appraisers working for mortgage lenders was a common practice, and it likely contributed to the problem.  Therefore, since 2009, appraisals by third-party appraisers have been the norm.  Appraisal management companies (AMC) connect lenders to independent appraisers and perform quality control on the appraisals.

How Much Do Third Party Appraisal Management Companies Drive Up Closing Costs?

The Consumer Financial Protection Bureau (CFPB) has recently raised alarms about AMCS, even characterizing their fees as “junk fees.”  This is because it is not clear how much of the money the AMC charged the lender went to the appraiser and how much went to the AMC.  AMCs are supposed to keep only about $125 per appraisal, but sometimes they choose the cheapest appraisal companies they can so they can keep a bigger cut of the price.

Schedule a Confidential Consultation With a Bronx Real Estate Attorney

A real estate lawyer can help you get from the appraisal to the closing on your real estate purchase without unnecessary expense.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

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