In the first month of operating under the Home Valuation Code of Conduct, the percentage of lenders ordering appraisals through management companies roughly equaled the share dealing directly with appraisers, a technology vendor said.

Vladimir Bien-Aime, the president and chief executive of Global DMS in Lansdale, Pa., said that perception, which some may find surprising, comes from the vendor's conversations with lender customers.

His company is also noticing a surge in customers that have been using appraisal management companies for the past few months and are not happy with the results, he said.

The large lenders, Bien-Aime said, are more likely to conclude that their volume justifies the decision to outsource the ordering of appraisals. But it might be better for the small or midsize lender to keep the function in-house, he said.

Outsourcing could increase the cost to the borrower. AMCs do not work for free, Bien-Aime pointed out. To increase profits, they can either raise their fees or cut what they pay appraisers — neither a good option, he said. The "major" AMCs, he said, charge higher fees because they have higher overhead.

On the other hand, because of the code, which took effect May 1 for all loans bought or guaranteed by Fannie Mae or Freddie Mac, AMCs have proliferated, giving lenders more choice. Global DMS signed up more than 100 AMCs to use its technology last quarter, Bien-Aime said.

He said a lot of lenders do not know that keeping the ordering process in-house is an option for compliance with the code. "They are hearing from people internally, 'We've got to go to an AMC. That is the only way to solve this problem,' " Bien-Aime said. "And if that is what you hear, that is what people believe. Everyone is saying the same thing, whether it is true or not."

Furthermore, using an AMC does not guarantee compliance with the code. The lender needs to make certain the AMC is following guidelines for such things as ensuring the appraiser is licensed. Ordering is just one piece of the code, albeit the one most people are familiar with and thus generating the most noise right now from the originator community, Bien-Aime said.

"Ultimately the responsibility is yours," he said. "You can't outsource your responsibility and that is what people are trying to do with this quick 'silver-bullet' answer."

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