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Appraisal Management & Appraisals: Compliance & Best Practices for Vendor Selection

Appraisal Management & Appraisals: Compliance & Best Practices for Vendor Selection. Kristin LaPlante National Account Executive. May 14, 2014. Oldie but goodie . . . Agenda. In-house vs. AMC management Third-Party Oversight Best Practices in Selecting a Vendor Appraiser Independence

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Appraisal Management & Appraisals: Compliance & Best Practices for Vendor Selection

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  1. Appraisal Management & Appraisals:Compliance & Best Practices for Vendor Selection Kristin LaPlanteNational Account Executive May 14, 2014

  2. Oldie but goodie . . .

  3. Agenda • In-house vs. AMC management • Third-Party Oversight • Best Practices in Selecting a Vendor • Appraiser Independence • Recruitment • Engagement • Summary

  4. In-House Management vs. AMC?

  5. Best Practices for In-House Appraisal Management • Defined, written policies • Quality control • Internal audit • Internal appraisal and audit system • Monitoring of C&R fees • Audit trail for every file • Staff member dedicated to compliance • Absolute independence • Keep staff separate from loan production

  6. Third-Party Oversight • Lender is responsible for actions of their third-party relationships and will not be absolved from responsibility • Banks/non-banks expected to vet and monitor third-party vendors “You cannot outsource responsibility”

  7. Best Practices for AMC Selection & Vetting 1. Check referrals and experience • Have they been endorsed by other industry leaders? • Is the AMC handling significant volume? • How long have they been handling appraisal management? • Is their focus purely appraisal management? • Demand Performance Reporting • Third party oversight requires that you have the ability to monitor and report on performance of all vendors. • Access to performance stats such as quality, turn time, etc is mandatory.

  8. Best Practices for AMC Selection & Vetting 3. Payment to appraisers • Do they pay on time? • Ask for fee sheets by state • Interview local appraisers • How often does the AMC review C&R fees? • Consider a site visit • Integration Exploration • Is AMC integrated with your LOS? • Do they have the ability to assist you with UCDP uploading? • What type of system does the AMC have for ordering? • Ability to make quick changes? • Is system easy to use and understand?

  9. Best Practices for AMC Selection & Vetting 6. The AMC team • Are they readily accessible? • Dedicated account coordinator or customer relations manager? • Do they provide you with real-time updates and status? • Strong management team to oversee production and compliance? • Who is the management team? • What is their background? • Is the AMC truly National? • How are they managing state to state requirements? • What is their process for keeping up on those regulations? • Do they contract out to larger AMCs to fill voids in certain states?

  10. Best Practices for AMC Selection & Vetting 8. Compliance Processes • Is staff trained on regulatory and compliance issues? • How often are they trained? • Is the staff USPAP certified? • What procedures are in place to ensure policies are being followed? • What does their appraisal service agreement look like? • What is SOP for terminating an appraiser relationship? • Does the AMC have a dedicated compliance team? • Is there a documented disaster recovery plan?

  11. Best Practices for AMC Selection & Vetting • Financial Stability • Do they have working capital to support their business? • Do they have a large accounts payable balance? • Do they pay their appraisers in less than 30 days? • Quality Control • Does the AMC have a dedicated QC department? • What is their background? • What procedures are in place re: Fannie Mae warnings from UCDP? • What is the process when warnings or hard stops are given? • Is there a formal process in place for value rebuttal? • What is the process? • Does the process follow AIR?

  12. Appraiser Recruitment for AIR Compliance • Current license • Verify with government/state websites • Regularly monitor • Experience information • Geographic competency • E&O insurance

  13. Appraiser Engagement for AIR Compliance • Written engagement letter • Assignment should be based on: • Experience • Property Type • Scope of Work • Required certification • Geographic competency • Availability • Independence compromised when: • Borrower recommends an appraiser • Production staff selects a person to perform an appraisal for a specific transaction

  14. Summary • Whether your choice is in house or outsourced: • Clear, written policies and procedures • Person(s) dedicated to compliance • Audit trail for all appraisals • Appraiser Independence

  15. Benefits of using an AMC We are all aware of how important the collateral is to a loan transaction. In today’s ever-changing lending atmosphere, it is so important to have faith in the fact that you have a quality estimate of value; one that is in compliance with all federal and state regulations and one that you know you can firmly stand behind in terms of its data, integrity and content. Partnering with the right AMC(s) can help shoulder part of your growing valuation responsibilities.

  16. Questions? Kristin LaPlanteNational Account Executive Michael Dresden Executive Vice President

  17. Thank you! Kristin LaPlanteNational Account Executive207.590.1339klaplante@dartappraisal.com

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