Paper sheds light on lenders' appraisal requirements

An outfit called the Center for Responsible Appraisals and Valuations released an "Appraisal Compliance Paper" this month with the purpose of informing lenders about their responsibilities for overseeing their appraisal and valuation systems. It's sometimes not as "plain English" as it could be but is a good summary of what responsible lenders are being instructed to do by FIRREA and federal banking authority guidance.

The bank must have a compliant initial selection process for appraisers, staff or fee, and an ongoing monitoring process. It is generally not enough to choose approved appraisers based only on state license or certification: "Any determination of competency shall be based upon the individual’s experience and educational background as they relate to the particular appraisal assignment for which he or she is being considered."

As we've been discussing in recent editions of the newsletter, banks must also ensure the independence of its staff or fee appraisers. The CRAV notes, "this is one area where many banks are not complying with the regulation." It quotes 2003 federal interagency guidance: "Individuals independent from the loan production area should oversee the selection of appraisers and individuals providing evaluation services."

The paper suggests three ways to comply. One is to set up a section of or designated person in the bank's credit risk or credit policy area responsible for qualifying appraisers, maintaining the appraiser panel, selecting appraisers for assignments and reviewing their reports. Another is similar, but involves setting up a separate appraisal review department. While separate, it is suggested the department be under the supervision of the credit risk or credit policy department. "Financial institutions exceeding $5 billion should consider the need for an in-house appraisal review department," the paper states. A third option is contracting with an appraisal management company (AMC).

There is a lot to recommend one of the first two options, specifically that in-house operations are not apt to put turn time or fee pressure on their fee appraisers. Because AMCs' business models involve maximizing production and minimizing cost, that possibility exists in that scenario. But because there is no serious money to be made via the first two options, only the third is being touted as a definitive solution to complying with interagency guidance. Be careful of pronouncements that "federal regulations require lenders to use AMCs."

Mortgage brokers, the paper says, are forbidden from ordering, managing, influencing, reviewing or controlling the appraisal.

The paper considers, but does not definitively answer, the question whether collecting money from the borrower on site violates FIRREA or federal regulatory guidance.

You can download the CRAV paper in PDF format at this link: http://www.cravonline.com/crav_bc.pdf

Are you checking the Aurora Status Dashboard?

If you haven't visited that page, it's a rich resource for getting up to speed on what's happening with WinTOTAL. Each Instant Customer Update (ICU) improves WinTOTAL with bug fixes, usability improvements, new forms or features. We released more than 150 ICUs for WinTOTAL version 4 (Athena) over five years.

The Aurora Status Dashboard and regular e-mail communication to users represent our commitment to keeping you on top of what we're doing. If you ever wonder "are they working on this?" or "why haven't they done that?", the Status Dashboard page is a great place to start finding out. You can see a concise timeline of what we're working on and send suggestions and feedback.

The Aurora Status Dashboard will tell you what's coming in the next update, as well as some of the stuff we're working on for future updates. No need to wait for the ICU and Adam's e-mail to know what to expect.

You can also download pre-release versions and some "alpha" versions of modules. There are answers to common questions, a detailed update history and an archive of Adam's e-mails.

With Aurora as with everything else we do we're committed to being open with you and working constantly to get you the tools you need to be successful.

Generate more non-lender business now with new WinTOTAL plugin

Appraisers who primarily appraise for the mortgage market have found success as forensic appraisers — most often, testifying as expert witnesses on behalf of attorneys, as divorce or probate real property asset valuation specialists, doing reverse mortgage (also known as Home Equity Conversion Mortgage) work — loans to seniors secured by the future sale of their homes, and in many other areas. In future editions we'll talk about some of these and more.

But this cool new WinTOTAL plugin released last month is a simple way to market your services to homeowners themselves, who have been part of the historic mortgage boom of the last few years. The plugin is available now (you must have installed the July 17 Instant Customer Update) to anyone who wants to use it. (If you don't, it won't be in your way!) It works hand-in-hand with XSellerate, which Enterprise XSites owners and Elite bundle customers already have.

The concept is simple. With a couple clicks you can run a query of past appraised property addresses in your WinTOTAL database within a certain time range. The results get plugged right into XSellerate allowing you to print out and send owners of past appraised properties marketing content telling them they might benefit from getting their home re-appraised.

There are two letters and a postcard so you can quickly get started marketing to the "current resident" of these addresses. All pieces are high-quality and professionally written so you’ll make a great impression. A mailing label wizard for the property addresses is also available with information pulled direct from your WinTOTAL database.

Since you’ve appraised these homes before, you’ve got the least amount of work to do on a new appraisal. Plus homeowners are more likely to trust that you know what you're doing. You're not looking for a commission, and they're living in the house, so the last time it worked out well for them!

This is just one of the many revenue-generating features of XSellerate. If you haven't tried it before, this is a great low-maintenance way to get started, that could score you some new business.