The President of the Real Estate Valuation Advocacy Association (REVAA) testified on behalf of Appraisal Management Companies (AMC). AMCs are a major driver in the BPO industry. BPOs are discussed in the testimony as well as the use of BPO Standards & Guidelines (BPOSG)
Pertinent to BPOs - extract from the testimony:
REVAA is a real estate valuation industry trade association that promotes education, high
ethical standards, political awareness, and the professional development of the real estate
valuation industry.
REVAA believes that homeowners, the mortgage lending industry, and the economy as a
whole are best served by a diversified array of real estate valuation products. With growing
complexity regarding real estate valuation in today’s challenging market, it is vital that end-users
have the ability to select the most appropriate valuation service to meet their specific needs.
REVAA members have committed to being proactive in efforts to promote and expand
the industry. Our members produce and deliver real estate valuation products including
Appraisals, Broker Price Opinions (BPOs), Automated Valuation Models (AVMs), and other
innovative valuation methods that benefit mortgage investors, servicers, originators, and
borrowers.
FAIR is a coalition of five of the nation’s largest AMCs,1 which operate networks of
individual appraisers and appraisal firms for the completion of appraisal reports. FAIR members
have become leaders in the industry by adopting responsible polices and procedures to protect
appraiser independence, promote quality appraisals, and serve lender-client needs in a timely
manner for the ultimate benefit of homeowners.
AMCs Role in the Industry and Overview of their Functions
AMCs operate regional and national networks of employee appraisers, independent
contractor appraisers, and appraisal companies/firms for the completion of appraisal reports. In
addition to pre-qualifying these appraisers and receiving appraisal orders from lenders and other
clients, AMCs facilitate and manage the entire appraisal delivery process, including tracking the
progress of the order, managing all communication between the lender and the appraiser,
reviewing specific elements of appraisal reports for quality and compliance with applicable laws,
ensuring prompt delivery of completed appraisals, and collecting and paying the appraisers’ fees
for their services. Today, there are approximately 315 AMCs operating in the United States.
AMCs act as a centralized appraisal source for mortgage lenders that operate on a wide
geographic basis. Rather than contacting hundreds of individual appraisers in each state or
jurisdiction, most lenders obtain appraisals through a centralized AMC model. AMCs recruit
and qualify vendors for their networks, by verifying appraisal licensure and/or certification,
checking references, performing background checks, performing examinations, and auditing
work samples. AMCs also negotiate service level expectations and maintain service level
agreements with individual vendors.
...........
In addition to providing appraisal services, many AMCs also provide alternative
valuation products such as Automated Valuation Models (AVMs) and Broker Price Opinions
(BPOs). While appraisals remain the primary method for assessing a property’s value in
connection with a loan origination, alternative valuation products have a proven track record of
accuracy and efficiency and are commonly used in the mortgage lending industry to assess and
validate appraisals, to conduct due diligence reviews of loan portfolios, to assess loss mitigation
strategies for distressed loans, and to establish eligibility for government-sponsored foreclosure
alternative programs. In particular (i) banks use BPOs and AVMs to determine the sales price of
real estate owned (REO) properties, to approve proposed short sale transactions, and to modify
distressed loans and avoid foreclosure; (ii) investors use BPOs and AVMs to conduct due
diligence on loans that they are buying or selling; and (iii) government-sponsored enterprises
(GSEs) utilize BPOs and AVMs to establish the eligibility of distressed loans for the Home
Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives
Program (HAFA).
Most states recognize the use of BPOs and AVMs for these purposes, and many states
have updated their statutes in recent years to specifically permit the use of BPOs in the mortgage
lending industry. The Dodd-Frank Act likewise permits the use of BPOs in all contexts other
than as the primary basis for a mortgage origination decision in connection with the purchase of
a consumer’s primary dwelling. The Interagency Appraisal and Evaluation Guidelines specify a
wide range of transactions that do not require a traditional appraisal, and provide standards for
the alternative use of non-appraisal evaluation products. Finally, BPO Standards and Guidelines
(BPOSG) have been widely adopted in the valuation industry to provide a comprehensive
framework for the preparation of BPOs on a national level. In each case, there is recognition of
the essential role that alternative valuation products play in today’s mortgage lending industry,
and AMCs have been instrumental in the development and distribution of these products.
If you are a member of the press and/or a journalist and would like to speak to NABPOP regarding anything related to Broker Price Opinions - BPOs, please contact us at:
