Prospect Mortgage offloading appraisal management company
Did regulatory pressure press too hard?
Prospect Mortgage entered into an agreement to sell its appraisal management company Velocette Resource Group.
The transaction is still pending completion, a spokesperson for the company said. No other details are public.
This moves comes during a time of increased scrutiny on appraisal management companies from the Consumer Financial Protection Bureau.
“Whether a bank chooses to utilize an AMC or handle the appraisal function internally, it does not have bearing on the market itself. From a regulatory standpoint, it is further illustration that every corner of the real estate industry will have a light shown on it,” Bill Garber, director of government and external relations with the Appraisal Institute.
According to a HousingWire source, for some lenders, like Prospect, who owns an AMC to do its appraisals, the CFPB was staring to crack down on them by requiring them to also market for outside business. This would ensure that the AMC was not in business solely for the lender, something the CFPB wants to discourage, the source said.
However, the source said that the CFPB doesn’t simply say ‘don’t do this.’ Instead, "they just make everything such a pain to deal with," he said. This serves as a disincentive to some firms to keep certain businesses.
Meanwhile on the other side, Prospect is expanding and announced back in mid-January that closed on a deal to acquire retail mortgage branch operations from Impac Mortgage, acquiring 40 loan officers across 12 branches.