AMC Track Presentation Austin Christensen Founder & CCO - Validox. Appraisal Manager Compliance Techniques

Transcription

1 AMC Track Presentation Austin Christensen Founder & CCO - Validox Appraisal Manager Compliance Techniques

2 Who Is An Appraisal Manager? 1. Staff at an Appraisal Management Company 2. Chief Appraiser 3. Compliance Officer 4. Production Manager 5. Appraisal Order Desk Manager 6. Employee-in-Charge as Defined by State AMC Regulations 7. CEO, Operations or General Manager OR Any other person employed by a Lender or AMC who manages the overall ordering and receives receipt of appraisals for third party clients or for the institution itself. Appraisal Manager Compliance Techniques 2

3 Most Common Regulators & Auditors AMC s Lenders Servicers Lender Clients CFPB CFPB State Appraisal Boards OCC State Agencies ASC CFPB FDIC FRB NCUA State Agencies Fannie, Freddie, HUD Appraisal Manager Compliance Techniques 3

4 This Presentation Will Focus on Compliance Techniques for the Following: 1. Appraisal Management Companies 2. Lenders using Appraisal Management Companies 3. Lenders Using In-House Appraisal Fulfillment Systems/Departments Appraisal Manager Compliance Techniques 4

5 Highlighted Fannie Mae Guidelines January 27, 2015 Fannie Mae Selling Guide 1. Lenders must use appraisers that have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; 2. The lender is responsible for the selection of appraisers and for the qualifications and quality of work provided by the appraisers that are selected; 3. The lender must ensure that the state license or state certification is active as of the effective date of the appraisal report. 4. The lender (or its authorized agent) must ensure that an appraiser has demonstrated the ability to perform high quality appraisals before using an appraiser's services. The quality of an appraiser's work is a key criterion that must be used in determining which appraiser the lender (or its authorized agent) uses for its assignments. 5. Fannie Mae does allow lenders to use third-party vendors (for example, appraisal management companies) to manage the appraiser selection process. However, it should be noted that if a lender enters into a contract with any vendor, contractor, or third-party service provider, the lender is accountable for the quality of the work performed as if it was performed by an employee of the lender. Appraisal Manager Compliance Techniques 5

6 Interagency Appraisal & Evaluation Guidelines VI. Selection of Appraisers or Persons Who Perform Evaluations December 2, 2010 Highlights An institution s collateral valuation program should establish criteria to select, evaluate, and monitor the performance of appraisers and persons who perform evaluations. The criteria should ensure that: The person selected possesses the requisite education, expertise, and experience to competently complete the assignment. The work performed by appraisers and persons providing evaluation services is periodically reviewed by the institution. An institution s selection process should ensure that a qualified, competent and independent person is selected to perform a valuation assignment. An institution should maintain documentation to demonstrate that the appraiser or person performing an evaluation is competent, independent, and has the relevant experience and knowledge for the market, location, and type of real property being valued. Continued Next Page Appraisal Manager Compliance Techniques 6

7 Interagency Appraisal & Evaluation Guidelines A. Approved Appraiser List If an institution establishes an approved appraiser list for selecting an appraiser for a particular assignment, the institution should have appropriate procedures for the development and administration of the list. These procedures should include a process for qualifying an appraiser for initial placement on the list, as well as periodic monitoring of the appraiser s performance and credentials to assess whether to retain the appraiser on the list. XVI. Third Party Arrangements December 2, 2010 Highlights An institution also is responsible for ensuring that a third party selects an appraiser or a person to perform an evaluation who is competent and independent, has the requisite experience and training for the assignment, and thorough knowledge of the subject property s market. Appraisers must be appropriately certified or licensed, but this minimum credentialing requirement, although necessary, is not sufficient to determine that an appraiser is competent to perform an assignment for a particular property or geographic market. Appraisal Manager Compliance Techniques 6 - A

8 In Summary, these Highlighted Fannie Mae & Interagency Requirements Mandate the Following As It Relates to Appraiser Panel Compliance 1. Compliant Onboarding of Appraisers onto Appraiser Panel 2. Certifying and Ongoing Testing of Geographic Competence 3. Certifying and Ongoing Testing of Product Type Competence 4. Ongoing Monitoring of Appraiser Performance 5. Certifying Appraiser Good Standing Appraisal Manager Compliance Techniques 7

9 This Presentation s Focus for Compliance Techniques will Relate to Fannie, Interagency and State Requirements Covering: 1. Certifying and Ongoing Testing of Geographic Competence 2. Certifying and Ongoing Testing of Product Type Competence 3. Certifying Appraiser Good Standing 4. Complying With Prompt Payment Requirements 5. Obtaining Compliant State Regulatory USPAP Reviews 6. Reporting and Remediation of Appraiser USPAP Review Failures Appraisal Manager Compliance Techniques 8

10 What is Geographic Competence? GEOGRAPHIC COMPETENCE CERTIFICATION - By indicating the areas I am competent to perform appraisal assignments in I hereby certify to the following: (1) "I have knowledge and experience in appraising this type of property in this market area"; (2) "I am aware of, and have access to, the necessary and appropriate public and private data sources, such as but not limited to multiple listing services, tax assessment records, public land records and other such data sources for the area in which the property is located; (3) recognize and agree to comply with laws and regulations that apply to the appraiser and to the assignment conditions; (4) the scope of work outlined by the client and (5) agree to complete this assignment in compliance with USPAP." Appraisal Manager Compliance Techniques 9

11 Requirements from a Sampling of State Laws Requiring Confirmation of Geographic and Product Type Competence State AL KS KY MD NC SD TX Excerpt from State Requirements Require all appraisers have geographic competence for assignments-prior to addition to panel have written declaration that must be updated annually Process to verify that an appraiser is geographically competent and performs appraisals within the appraiser s scope of practice System to require that appraisers inform the AMC of their competency: geographic areas, types of properties and methodologies Require appraisers to comply with USPAP, including requirements for geographic and product Competence-require competence certification confirmation in writing and/or electronic means Before appraiser is added to panel, require appraiser to declare in writing areas of geographic, property type, and methodology competency. Require appraiser to update information at least annually Require each appraiser who performs appraisals to certify in writing the area of geographic competency and the specific appraisal assignments competent to appraise Obtain written certification, prior to making assignment of competencies in USPAP, geographic and property-type. AL AMC Code Title 34; KS AMC Act 58; KY AMC HB 13; MD SB 658; NC SubC 57D; SD AMC CL 36-21D; TX Chap 1104 Appraisal Manager Compliance Techniques 10

12 Compliance Technique # 1 Geographic Competence 1. Ensure that a statement and affirmation of Geographic Competence is included in every appraiser engagement letter. 2. Include language in appraiser agreements that includes the understanding and adherence to Geographic Competence. 3. Monitor Geographic Competence through State mandated USPAP Compliance Reviews and/or other reviews or appropriate methods on a consistent basis. Appraisal Manager Compliance Techniques 11

13 Compliance Technique # 2 Product-Type Competence 1. Ensure that a statement and affirmation of Product-type Competence is included in every appraiser engagement letter. 2. Include language in appraiser agreements that includes the understanding and adherence to Product-type Competence. 3. Monitor Product-type Competence through State mandated USPAP Compliance Reviews and/or other reviews or appropriate methods on a consistent basis. Appraisal Manager Compliance Techniques 12

14 Compliance Technique # 3 Good Standing Verification 1. Check asc.gov 2. Ping state appraiser board websites. 3. Review Background Checks Appraisal Manager Compliance Techniques 13

15 Requirements from a Sampling of State Laws of Timely Payment Deadlines State AL GA NC Sample State Requirements Must pay an appraiser within 45 days of receipt of completed appraisal, except in cases of a mutually agreed upon payment date, breach of contract, or violation of USPAP-must notify appraiser in writing, stating details and dispute process, within 30 days if AMC decides not to pay the appraiser Must satisfy payment obligations within 2 weeks from the date of the completion of the assignment, unless otherwise agreed in writing Payment is due to appraisers within 30 days. If AMC will not pay a fee to an appraiser for an appraisal, must notify the appraiser in writing of the reason for non-payment within 30 days after the date the appraiser transmits the appraisal Appraisal Manager Compliance Techniques 14

16 Compliance Technique # 4 Timely Payment Compliance 1. Use sources such as individual state appraiser board websites, amcregulationsummary.com, and subscriptions to Appraisal Board newsletters and administrative rules updates to keep up on current timely payment requirements. 2. Create timely payment policies of adherence. 3. If a decision for non-compensation to an appraiser is made, review the particular state s non-compensation rules to ensure compliance. Appraisal Manager Compliance Techniques 15

17 Requirements from a Sampling of State Laws Regarding Ongoing USPAP Competency and Review of Appraisers Appraisal Manager Compliance Techniques 16

18 Appraisal Manager Compliance Techniques 16-A

19 State Regulatory USPAP Compliance Reviews Can Require Specific Scope of Work and Intended Use Declarations Specific Scope of Work including state mandated language Specific Intended Use including state mandated language Appraisal Manager Compliance Techniques 17

20 State Regulatory USPAP Compliance Reviews Can Require Specific Scope of Work and Intended Use Declarations Texas Rule AMC Appraisal Review: USPAP Compliance Specific Scope of Work including state mandated language The reviewer has developed an opinion as to the quality of the reviewed work and as to the completeness and relevance of the content, analysis and methodology, and has included emphasis for compliance with the Uniform Standards of Professional appraisal practice. The reviewer has identified and noted discrepancies between the data sources and the appraisal under review and has attempted to determine if any material mistakes have been made in the appraiser's analysis of the information. The reviewer has not personally inspected the subject property or comparable sales. Absent conflicting information from other data sources, the reviewer assumes the facts as presented in the report under review are correct and that the condition of the property has been properly reported. This review was conducted within the context of the effective date of the work under review and in compliance with USPAP standard 3. The appraiser is to include a certification done in compliance with USPAP standard 3-6. The scope of work for this review is commensurate with the requirements of TX & Specific Intended Use including state mandated language The intended use for this review is to satisfy the requirements of the Texas AMC regulation and registration act specifically & Appraisal Manager Compliance Techniques 17-A

21 Compliance Technique # 5 Obtaining Compliant State Regulatory USPAP Reviews 1. Use sources such as individual state appraiser board websites, validox.com, amcregulationsummary.com, and subscriptions to Appraisal Board newsletters and administrative rules updates to keep up on current requirements for USPAP compliance reviews. 2. Remember that typical risk-based desk reviews are not compliant with most state requirements for AMC s responsibility of ensuring USPAP compliance. 3. For all USPAP reviews completed, make sure that if state has requirements for reviewers to be certified or general licensure in that state (Licensure Equivalency), that this condition is met. 4. Ensure that compliant scope of work and intended use language is utilized in the review form. 5. Verify that the frequency of State Regulatory USPAP Reviews are in compliance with each state s Specific requirements, i.e. 5% random sampling of production, 5% of all appraisals per appraiser, statistically significant sample, periodic system, 1 in first 5, annual minimums, etc. Appraisal Manager Compliance Techniques 18

22 Reporting & Remediation of Appraiser USPAP Review Failures Why this is becoming a Hot Topic for Lenders and their Compliance Officers The Rule of Should and Must for USPAP Violations (page 23 Interagency Appraisal and Evaluation Guidelines (12/2/2010) XVIII. Referrals An institution should file a complaint with the appropriate state appraiser regulatory officials when it suspects that a state certified or licensed appraiser failed to comply with USPAP, applicable state laws, or engaged in other unethical or unprofessional conduct. In addition, effective April 1, 2011, and institution must file a complaint with the appropriate state certifying and licensing agency under certain circumstances. 12 CFR (g) (Material defect likely to significantly affect value) Appraisal Manager Compliance Techniques 19

23 Most Common Appraiser USPAP Review Failures Ranking Review Failure Reason Highest and Best Use Contradictory Statements Exposure Time Prior Disclosure of Services Supporting Opinions & Conclusions Reconciliation 3 Approaches to Value Appraisal Manager Compliance Techniques 20

24 Compliance Technique # 6 Reporting & Remediation of Appraiser USPAP Review Failures 1. Use sources such as individual state appraiser board websites, validox.com, amcregulationsummary.com, and subscriptions to Appraisal Board newsletters and administrative rules updates to keep up on current requirements for USPAP failure reporting and remediation. 2. Remember some states require all USPAP failures to be submitted to the Appraisal Board while others require only material defects. 3. Be proactive when submitting USPAP failures to the State Boards by providing evidence of attempts at remediation and training for the appraiser. 4. After remediation of appraiser has occurred, follow-up on appraiser performance and USPAP competency with additional USPAP compliance review(s) and training if needed. Appraisal Manager Compliance Techniques 21

25 Compliance Technique # 6 (Cont) Reporting & Remediation of Appraiser USPAP Review Failures 5. Use due-diligence in understanding what your clients, the particular state appraisal board, a federal regulator or a secondary mortgage market investor requires of a failed USPAP review or other USPAP violation. AMC s, as agents of their lender clients, must ensure that they are in-synch with the Lender s policies and procedures as it relates to appraiser USPAP competency. (All appraisers on an AMC s panel that are used for a Lender s valuation needs are by default part of the Lender s own appraiser panel.) 6. When USPAP violations occur, take action. Document the action, report as necessary and employ follow-up training as discussed. Remediation helps create higher quality reports and better educated and qualified appraisers. Appraisal Manager Compliance Techniques 22

26 Summary of Compliance Techniques 1. Certifying and Ongoing Testing of Geographic Competence Engagement Letters, Agreements, USPAP Reviews and other monitoring procedures 2. Certifying and Ongoing Testing of Product Type Competence Engagement Letters, Agreements, USPAP Reviews and other monitoring procedures 3. Certifying Appraiser Good Standing - ASC.gov, Verify with Individual State Appraiser Boards, Background Checks 4. Complying With Prompt Payment Requirements Info at state appraiser boards, amcregulationsummary.com, subscriptions; policies of adherence; non-compensation compliance with state laws 5. Obtaining Compliant State Regulatory USPAP Reviews Get accurate info on each state s requirements, typical desk reviews don t work, proper level of licensing and state mandated licensing of reviewer (licensure equivalency), compliant scope of work & intended use, compliant state mandated frequency of reviews 6. Reporting and Remediation of Appraiser USPAP Review Failures Follow state and lender requirements to report either all failures or material defects, Document, Be proactive with training and remediation, follow-up with appraiser USPAP competency monitoring Appraisal Manager Compliance Techniques 23

27 End of Presentation Thank You! AMC Track Presentation Austin Christensen Appraisal Manager Compliance Techniques