We've recently engaged an AMC to handle our 1-4 family appraisal engagement. As part of the service, they also perform a review of the appraisal, beginning with an electronic review, then a non-appraiser (but qualified individual) review, and if there are appraisal deficiencies that would result in a perceived value change an licensed or certified appraiser review.

Should we, as the bank, still perform our own documented appraisal review? Is this a risk decision, or is it a regulatory decision?

edited to clarify third review

One bump to see if there is any help or comments available.

In looking at this subject, it looks like it was considered when the interagency requirements for AMCs were finalized, but that they are covering that in a separate rulemaking instead. It makes me believe that, unless and until that rulemaking takes place we are probably still required to perform our reviews internally on all transactions, rather than on a sample basis.

Would an Appraisal Management Fee paid to an AMC for handling the ordering and review of appraisals be a finance charge??

Are you saying that the fee would be associated with individual mortgage loan transactions, and charged to their respective borrowers?

Yes, the Borrowers are charged for the cost of the appraisal as a separate fee - but they are also charged for the fee paid to the Appraisal Management Company (AMC) who is the one that orders the Appraisal from the Appraiser (using a list of bank approved appraisers) and the AMC also does a review of the Appraisals when received. A lot of Banks are doing this now to ensure no Prohibited Appraisal Acts and Practices by internal staff regarding coercing of appraisers. Since the Borrowers pay the fee for the Appraisal just as they would if the Bank ordered it, and the Bank is now passing on their cost of using the AMC to the Borrower there is a question as to whether or not this would be a finance charge(??)

I am currently working on reviewing our Appraisal Review process. What sort of components should I keep an eye out for during testing? Does anyone have some type of QC process or audit program they would be willing to share?

Thanks in advance