Audit Solutions for Lender & AMC Appraiser Panels

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All Real Estate Lenders Have An Appraiser Panel

Validox Helps You Establish & Maintain Regulatory Compliance and Audit Protection for Your Appraiser Panel

Introducing the Validox Universal Solution

The first of its kind, Validox is an exceptional compliance and audit solution for lenders of all types including Banks, Credit Unions, and both Retail and Wholesale Mortgage Lenders. Validox also works exceptionally well for appraisal management companies and appraisal firms.

According to regulatory definitions from agencies such as CFPB, OCC, NCUA, FDIC, Fannie Mae, and HUD every real estate lender has an appraiser panel. As a real estate lender, this is true whether you use appraisers through in-house methods or through third parties such as an appraisal management company or appraisal firm.

Pursuant to federal, state and secondary mortgage market regulations, all real estate Lenders are required to perform continuous due diligence, verifications and competency testing on their appraiser panel, which includes both residential and commercial appraisers. The purpose is to assure that all appraisers being utilized (directly or through an AMC) meet all of the mandatory state and federal requirements along with all secondary mortgage market demands.

There is a growing list of areas that require a lender’s constant diligence, with some of the more critical being USPAP Compliance, Geographic Competence, Appraisal Product Competence, and Appraisal Subcommittee Good Standing. It is especially noteworthy that appraisers’ USPAP compliance must be evaluated only with current edition USPAP reviews of their work files, and performed continuously to meet the standards of the most current revision of USPAP requirements.

Validox answers a common question you may be asking...

How can I be assured that I am in full compliance and ready for auditors at a moment’s notice?

Validox is the answer. Validox performs essential audit and compliance services for real estate lenders to meet ongoing regulator and auditor requirements. Indeed, Validox helps meet the needs of appraiser panel requirements by State, Federal and secondary Mortgage market investors for over 300 mandatory state and federal appraiser

The Regulatory Requirements

More than 300 separate regulations govern in one way or another, the necessity of performing due diligence and competency verifications for appraisers performing services for all types of real estate lenders.

The requirements are numerous, but some of the most important are:

CFPB- Bulletin 2012-03 ‘Service Providers; Bulletin 2013-06 ‘ Responsible Business Conduct: Self Policing, Self Reporting, Remediation, and Cooperation

OCC- OCC Bulletin 2013-29 ‘Third Party Relationships’

NCUA- NCUA Letter No.: 07-CU-13 ‘Supervisory Letter-Evaluating Third Party Relationships’; Ltr: 08-CU-09 ‘Third Party Relationships Questionaire’

FDIC- FDIC FIL 44-2008 Guidance for Managing Third-Party Risk

FFIEC- Interagency Appraisal and Evaluation Guidelines 12-10

Title XI FIRREA- Real Estate Reform [12 U.S.C. 3331-3351] as amended by the Dodd Frank Act

OIG/Dept of the Treasury- OIG-14-034 ‘OCC’s Review of Banks’ Use of Third Party Service Providers Is Not Sufficiently Documented’

Multi-State Mortgage Committee (CSBS-AARMR) - MMC Mortgage Examination Manual

Interagency(Dept Treasury; Federal Reserve; FDIC; NCUA; FHFA; CFPB) - Minimum Requirements for Appraisal Management Companies; OCC; FRB; FDIC; OTS; NCUA - Interagency Appraisal and Evaluation Guidelines

FNMA- Selling Guide Jan 27, 2015; Appraiser Quality Monitoring FAQ’s July 2014; Appraiser Quality Monitoring Notice Jan 6, 2014

HUD- Handbook 4000.1

State Appraiser Boards - All States including laws from: AL-SB320, AZ-SB1351, AK-AMCS, CA-SB237, CO- HB 12-1110, CT-PA10-77, FL-HB-303 , GA-HB1050, IL-HB 2956, IN-HA1235, KS-SB-345, KY-HB 288, LA-HA1235, MA-H 124, MI- HB 4975, MD-HB102, MN- SF2510,, MS- HB1337, MT – HB 188, NE- LB410, NV-AB287, NH- SB153, NJ- ASM 3827, NM-AMC1022, NC-SB 829, OH-HB515, OK- HB2772, OR-HB3624, PA-HB 398, SC-H.3717, TN-PC963, TX-HB1146, UT-HB152 & T61Chap2(e), VT-N103 ,VA-C508 & WA-HB3040.

Next...How Validox Makes You Compliant and Audit Ready

How Validox Works - Validox is a free access system for Lenders who adopt Validox as one of their compliance programs.

In the first step, Lenders wishing to utilize Validox as a compliance and audit solution must agree to adopt Validox as an integral part of their valuation vendor compliance and management system. Once the written agreement is in place, lenders are given credentials to for their use in managing their appraiser panel (direct-inhouse) or through third party/agent such as an AMC.

Lenders are not required to pay any set-up or annual fees to use all the features of the Validox system. The Lender’s firm commitment to Validox is sufficient for obtaining system credentials. Once the agreement is executed and the Lender is given credentials, the lender or its agent sends invitations to join Validox to all the appraisers on their panel. It is important to note that an appraiser only joins Validox once and their credentials are universal for all lenders, meaning that typically a new Validox client-lender will already have appraisers on their panel that are Validox members.

Each appraiser invited to Validox creates an online account. The appraiser is required to answer a full battery of questions and provide essential information, including licensure copies and a recent appraisal for USPAP review purposes.

Upon uploading the work sample (appraisal), the work sample is reviewed by experienced and geographically competent appraisers located in the state and area where the appraiser is licensed. The Validox proprietary 23 point regulatory compliant USPAP review is a USPAP current edition review (currently 2014-2015 USPAP Standard 3), that specifically focuses on USPAP critical competency.

Prior to activation, each appraiser is vetted in real time against the Appraisal Subcommittee national registry to assure current Good Standing status. Once the appraiser has finished the process and the Validox management and review team has been able to verify all pertinent information, the appraiser is activated upon paying their inscription and review fee, which is typically $179 in most areas in the United States. Once again, the appraiser does not pay this membership fee more than once per calendar year. All Validox review and certifications are valid for all lenders, including Banks, Credit Unions and their agents such as AMC’s.

As well as a full compliance and audit solution system, Validox gives you the ability to easily manage your appraiser panel and add the industry’s best and most compliant appraisers to your roster as you grow

Our ‘search and manage’ appraiser roster feature in the Validox system is invaluable to find and keep the industry’s best appraisers on your panel...only in Validox will you find appraisers* that are a no-cost addition to your panel due to their full compliance and current competency certifications. Adding an appraiser to your roster is as simple as a single click, and Validox keeps your panel organized and accessible for your everyday use.

* Appraisers in the geographic area can be searched for in many ways including competencies and proficiencies in commercial, agricultural, Green, complex and resort properties, etc.

Audit Documentation that is Universal, Consistent and Current.

As a Validox client one of the many benefits of using Validox is document consistency for the client, auditor and appraiser. You can have full confidence that you have the audit documents you need– removing the guesswork of auditor acceptability. An example of that issue is --- contrary to what some believe, a desk review used for lending is far different from the scope of work needed for a current edition and regulatory compliant Standard 3 USPAP review. Our USPAP Review is scope specific for regulators and is used only for the purpose of examining individual appraiser USPAP compliance as required by law.

Lenders that use the services of AMC’s are accountable for the AMC’s compliance to federal and state regulations

According to the Interagency Appraisal and Evaluation Guidelines 12.2.2010 the requirements for Third Parties such as AMC’s include the following: (pp18-19)

“An institution is accountable for ensuring that any services performed by a third party, both affiliated and unaffiliated entities, comply with applicable laws and regulations and are consistent with supervisory guidance. Therefore, an institution should have the resources and expertise necessary for performing ongoing oversight of third party arrangements.

If an institution outsources any part of the collateral valuation function, it should exercise appropriate due diligence in the selection of a third party. An institution should be able to demonstrate that its policies and procedures establish effective internal controls to monitor and periodically assess the collateral valuation functions performed by a third party.

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.

The compliance process should:

• Ensure the institution's practices result in the selection of appraisers and persons who perform evaluations with the appropriate qualifications and demonstrated competency for the assignment.“

Validox is an essential solution for any lender’s compliance with Interagency Guidelines by ensuring that their AMC’s are fully compliant with state and federal requirements.

Many lenders may be unaware that state USPAP review requirements for AMC’s are stringent, and many state appraiser boards include such requirements as multiple USPAP reviews per appraiser per year and USPAP review of 5% to 10% of all appraisals annually!

The Validox solution focuses on all of the critical components of each individual appraiser’s competency, and helps you as the Lender ensure that your AMC’s are compliant with the state requirements such as the quantity and consistency of USPAP reviews of appraisers’ work. Validox is a Win-Win for Individual Appraisers

Validox is a Win-Win for Individual Appraisers

The increased federal and state lender requirements for individual appraiser due diligence, competency and monitoring are fairly recent, and appraisers are just beginning to feel the significant cost of these regulations. Validox is a universal compliance and competency system that works for all lenders allowing appraisers a one-stop source of the documentation to help keep them in constant compliance with all their clients. In many ways, the Validox competency certifications are similar to errors and omissions insurance in its importance and universal value for all types of real estate lenders.

Some of the additional benefits to each individual appraiser with Validox Credentials:

Ability to prove competency & professionalism with proper documentation to existing and potential clients

Cost savings of potentially thousands per year. Like E & O Insurance, appraisers pay only one fee yearly and then share their documents and credentials with all clients rather than providing multiple appraisals for multiple USPAP reviews and having to pay for every client’s individual due diligence requirements.

All Validox appraisers are promoted and showcased to new clients and all Validox clients have the ability to search for any appraiser based on parameters such as geographic location, product competence, specialty capability, License type, and turn times to name a few.

Validox provides a universal Geographic Competence Certificate that can provide expanded assignment opportunities for individual appraisers.

The Validox Product Competency Certification highlights competency to perform different types of services

The Capabilities & Specialties Cert gives the appraiser the ability to showcase their unique capabilities.

The Good Standing Cert assures that the appraiser is in constant good standing with ASC and gives the client confidence that the appraiser is appropriate for selection.

Your Audit and Compliance Readiness is Only a ‘Yes’ Away!

Validox brings the lending industry’s only one source solution for valuation vendor compliance and audit readiness. A firm commitment to use Validox as an integral part of your risk management, compliance and audit response policies is all you need to get the Validox benefits and peace of mind.

  • As a Validox client, you no longer have to contemplate the answers to questions such as...
  • What is required for valuation vendor and appraiser due diligence?
  • How will I prove compliance when audited?
  • What will be the penalties for non-compliance?
  • How much will it cost to be compliant and audit-ready?
  • I wonder if my appraisal management company or other third party agent is fully compliant?

With Validox as part of your compliance program, you will be on a solid path towards a more complete compliance management system and audit readiness. Contact us today!

We look forward to having you as another one of our audit and compliance-ready clients.