Back to Basics – An Appraisal Process and Regulation Refresher

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Back to Basics – An Appraisal Process and Regulation Refresher

Vicky Thompson, CEO, and Patrick McMillen, COO of Valuation Management Group, spoke at the Georgia Bankers Association’s 2016 Compliance Conference on September 16th in Macon, Georgia.  Their presentation was titled Back to Basics – An Appraisal Process and Regulation Refresher.  They presented pertinent information that compliance officers, as well as other employees of the bank, should know about their Bank’s appraisal process.  They covered specific regulations and guidance that is applicable in today’s regulatory environment.

Thompson emphasized that every institution is responsible for establishing an effective real estate appraisal and evaluation program, with continued monitoring of the entire process.  She also stated that appraisal and evaluation programs should contain the following:

  • Assure independence of persons ordering, performing, and reviewing appraisals or evaluations.
  • Establish selection criteria and procedures to evaluate ongoing performance of appraisers and persons performing evaluations.
  • Ensure that appraisals comply with regulations and supervisory guidance.
  • Ensure that appraisals and evaluations contain sufficient supporting information.
  • Maintain criteria for the content and use of evaluations consistent with safe banking practices.
  • Provide for the timely receipt and review of the appraisal or evaluation report to facilitate credit decision. Develop criteria for whether an existing appraisal or evaluation may be used to support subsequent transactions.
  • Implement internal controls that promote compliance with these program standards.
  • Establish criteria for monitoring collateral values.
  • Establish criteria for valuations in transactions not otherwise covered by applicable appraisal regulations.

McMillen covered the importance of maintaining appraiser independence in the appraisal process, and conducting/obtaining robust reviews of the appraisals and/or evaluations. He also covered in detail the due diligence that is required of banks, whether they have an internal process or outsource appraisal functions to a third party.

Valuation Management Group has been a Georgia Bankers Association Strategic Partner, and its preferred provider of appraisal management services, for over 4 years. As an appraisal management company and to ensure appraisal compliance, Valuation Management Group handles the entire real estate appraisal process. This includes: approving the appraisers, managing the appraiser panel, handling the bid process for complex residential appraisal assignments and commercial appraisal assignments, ordering environmental risk assessments, engaging the appraisers and performing a robust, quality technical appraisal review. Valuation Management Group also offers commercial appraisal reviews and residential appraisal reviews for banks in need of review products only.

Valuation Management Group is a national, residential and commercial appraisal management services company that manages the appraisal process, including the appraisal review, for financial institutions, banks, mortgage bankers, and credit unions. VMG offers a full array of commercial and residential appraisal products and services. The company’s goal is to take the appraisal process from ordinary to extraordinary for its clients and appraisers.

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