Audit Solutions for Lender & AMC Appraiser Panels

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All Retail and Wholesale Mortgage Lenders Have Appraiser Panels, Whether They Engage Appraisers Directly or Through an Appraisal Management Company

Validox Helps You As a Mortgage Lender Establish & Maintain Regulatory Compliance and Audit Protection for Your Appraiser Panel

Access Individual Appraiser Competency for Internal and Auditor use with a Single Click, including:

Current USPAP Compliance

Geographic Certification

Product Type Verification

Capabilities and Specialties Disclosure

Real Time Good Standing Verification

Easily Search, Find and Add Appraisers in All 50 States that are Regulatory & Investor Compliant

Introducing the Validox Universal Compliance and Audit Solution for Mortgage Lenders

The first of its kind, Validox is an exceptional compliance and audit solution for lenders of all types including Mortgage Lenders. According to regulatory definitions from agencies such as CFPB, NCUA, FFIEC, FDIC, OCC, Fannie Mae, and HUD every real estate lender has an appraiser panel. As a Mortgage Lender originating real estate loans, this is true whether you use independent 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.

Important Appraisal and Appraiser Requirements from January 27, 2015 Fannie Mae Selling Guide

Fannie Mae requires a lender (or its authorized agent) to use appraisers that are state-licensed or state-certified (in accordance with the provisions of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and all applicable state laws).

The lender (or its authorized agent) must document that the appraisers it uses are licensed or certified as appropriate under the applicable state law. The lender must ensure that the state license or state certification is active as of the effective date of the appraisal report.

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;

Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility.

The lender is responsible for the selection of appraisers and for the qualifications and quality of work provided by the appraisers that are selected;

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.

The lender (or its authorized agent) must establish policies and procedures to ensure that qualified individuals are being selected in accordance with Fannie Mae requirements, including the Appraiser Independence Requirements.

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. The requirement for an appraiser to produce a high quality work product must always outweigh fee or turnaround time considerations.

Delegating these responsibilities to a third party does not relieve the lender of its responsibilities related to the appraisal or the value, condition, and marketability of the property. See B4-1.3-12, Quality Assurance, for information related to ongoing review of appraisals.”

Mortgage Lenders that use investors which are also banks and other depositories should note the requirements from their investors’ regulatiors. The FFIEC (Federal Financial Institutions Examination Council) helps regulate and monitor compliance with the Interagency Appraisal and Evaluation Guidelines of December 2010. The due diligence requirements for Third Party vendors such as individual appraisers and 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.“

Other regulations affecting Mortgage Lenders include:

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

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

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

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

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 Mortgage Lenders’ 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- Mortgagee Letter 09-28

As the requirement from the Interagency Guidelines

“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.”

All individual states have requirements that active real estate appraisers have competency in the most current version of the Uniform Standards of Professional Appraisal Practice (USPAP). Certain violations of USPAP are also required to be reported to state appraiser boards. As a Mortgage Lender, in order to be fully compliant with the Interagency Guidelines, the USPAP competency requirement is critical. Validox provides the solution to assist in a Mortgage Lender’s responsibility to assure USPAP competency, as well as other core competencies such as geographic and product-type proficiencies.

Many lenders may be unaware that state USPAP review requirements for AMC’s are also quite 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!

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. Audit Requests from the CFPB and Secondary Market Investors will be made much easier and 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 and 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 a Retail or Wholesale 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 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 regulations.

Contact us today and see how Validox can provide the services necessary to comply with the Mortgage Lender’s accountability for management and oversight of all individual appraisers performing valuation services.