nationwide appraisal network third party oversight compliance webinar part ii

Third Party Oversight Compliance & Best practices

www.Nationwide–Appraisal.com

888-760-8899

Director of Quality

Assurance

& Compliance

Cristy Conolly Joni Pilgrim

Director of Sales & Business

Development

Quick Poll

appraiser independence

In case you missed Part I… Topics Included…

appraiser selection

appraisal disputes

engagement letters

JGraham@Nationwide-Appraisal.com to request slides

What’s on the agenda?

• Appraisal Panel Management

• Proper Vetting

• Background Checks

• Customary & Reasonable Fees

• Approved Appraiser Lists

• Exclusionary Lists

• Mandatory Reporting

• Managing Communication

• Resolution of Deficiencies

• Ordering 2nd Appraisals

NAN Compliance Portal

www.Nationwide-Appraisal.com

Main Objectives

Challenge: Managing the risk involved in the appraisal process.

Goal: A better understanding of the regulatory requirements and best practices.

Get some clarity and relief: from the burden of the unknown.

Quick Poll What’s your biggest challenge with Panel

Management?

Proper Vetting - process ensures quality panel of appraisers

1. Establish criteria for approval

• Prior disciplinary actions

• Geographic Competency

• Data Sources

• Property Types

• Methodologies

• Education & Experience

• References

• Insurance

• Sample reports (or at NAN the “AAR”)

• Background Checks

Vetting at NAN

1.Register on-line through secure portal

2.Service Level Agreement

3.Complete online profile

4.“Preliminary Approval” status

5. Appraiser Approval Report (AAR)

NAN’s Appraisal Approval Report (AAR)

• # of QC revisions required

• # of attempts required to complete revisions

• # of files escalated to staff appraiser

• Communication (timeliness & professionalism)

• Adherence to due dates

• Accuracy of report

• Completeness of report

• Fannie Mae, Freddie Mac, FHA, USPAP

• Comments provided by Appraiser

• Required addendum page

Approved or Denied

1. Approved

2. Approved with Discretion

3. Denied

Monitoring Appraiser Performance 1.Periodic QC Review

2.Scoring System

3.Communicate expectations in SLA

4.Routine procedures for supervision

• Communication

• Quality of work

• Professionalism

• Turn times

5.Transparency in disciplinary actions

Monitoring Appraiser Performance at NAN

Best Practices

•Score appraisers on each assignment

•Take the opportunity to coach and improve

•Periodic Reviews

•Define status levels based on performance

• Active

• Hold

• Watch

• Terminated

• Disabled

Are Approved and/or

Exclusionary Lists allowed?

Examples of Infractions

• Continual violation of SLA

• Substantive violation of USPAP

• Fraud

• Unprofessionalism

• Poor customer service

Best practices for List Management

• Clear written policy

• Have a bonafide reason

• Coach Appraisers for better service

• Provide a written notice

• Allow for rebuttal

• Stay consistent

• Loan production staff not allowed to make determinations

Mandatory Reporting

Dodd-Frank:

•“reasonable basis to believe”

•Failed to comply w/ USPAP (ethical or professional)

•Significant affect on value

Interagency Guidelines:

•State regulatory officials • USPAP

• State Laws

• Unethical/Unprofessional

Mandatory Reporting Best Practices

• Pinpoint appropriate course of action

• Stay up-to-date on state laws

• Determine Appraiser status

• “Significant affect on value?”

At NAN…

• Terminate Appraiser

• Notify state agency

• Create separate incident report

• Notify appraiser

Background Checks

• AQB mandating use by state regulators in 2015

• Some lenders require use of background checks now

Best Practices

• Understand lender requirements: include in SLA

• Rebuttal Process

• Clear policy with specific offenses and actions

• Have a committee/ Be consistent

Customary & Reasonable Fees

The Dodd-Frank Act States…

“Lenders and their agents shall compensate fee appraisers at a rate that is

customary and reasonable for appraisal services performed in the market

area of the property being appraised. Evidence for such fees may be

established by objective third-party information, such as government

agency fee schedules, academic studies, and independent private sector

surveys. Fee studies shall exclude assignments ordered by known

appraisal management companies”

Presumption #1

1. Recent rates in geographic market

2. Adjust based on factors:

• Type of property

• Scope

• Qualifications

3. Anti-competitive acts

6 items to consider when determining C & R fees

1. Type of property

2. Scope of work

3. Fee Appraiser Qualifications

4. Membership on professional organizations

5. Experience/professional record

6. Work quality

Customary & Reasonable Fees

Second Presumption of Compliance

1. Objective Third Party Info

2. Recent rates in geographic markets

3. Exclude compensations paid to appraiser by AMC

At NAN…

•Presumption #2

•“Cost Plus” approach

“You get what you pay for”

Costs associated with poor quality appraisals

1. Repurchase Risk

2. Time on revisions

3. E & O claims

4. Lawsuits

5. And more…

Quick Poll

Unacceptable

• Coerce, influence, misrepresent value

• Predetermined estimate of value

• Remove information

Acceptable

• Consider additional info about subject property

• Consider info about additional comparable properties

• Correct factual errors

• Address UW Conditions

• Clarify Items

Resolution of Deficiencies

• Acknowledge lenders request

• Ensure Accuracy

• Provide security to all parties

• Acknowledge and document end result

Ordering 2nd Appraisals

When is it ok?

• Unable to resolve deficiencies

• Loan Requirement

• Expired first appraisal

When is it not ok?

• Value Shopping

Joni Pilgrim

jpilgrim@nationwide-appraisal.com

813-749-8849 - direct

Cristy Conolly

cconolly@nationwide-appraisal.com

813-749-8842 - direct

Jennifer Graham

JGraham@Nationwide-Appraisal.com

888-760-8899 x211

Learn more about NAN.

Email us today to receive a Video Introduction to NAN

KJohnson@Nationwide-Appraisal.com