Valuation Management Group has been made aware of a trend recently whereby some financial institutions have been cited for not having the appropriate level of review commiserate with the loan amount or credit risk. We strive to be proactive on the behalf of our clients and want to address the trend. We urge each of our clients to review their bank policy and ensure that their guidelines address the need for a more comprehensive review on high dollar loans and complex appraisals.
Interagency Appraisal and Evaluation Guidelines (December 2010) state that “an institution should ensure that appraisals or evaluations for commercial real estate transactions are subject to an appropriate level of review. Transactions involving complex property or high-risk commercial loans should be reviewed more comprehensively to assess the technical quality of the appraiser’s analysis. For example, an institution should perform a more comprehensive review of transactions involving large-dollar credits, loans secured by complex or specialized properties, and properties outside the institution’s traditional lending market. Persons performing such review should have the appropriate expertise and knowledge relative to the type of property and its market.”
Some financial institutions refer to this more-detailed review as a “second tier” review or an “enhanced” review. The products that we offer to accommodate our clients are a Commercial Desk Review and a Residential Desk Review. VMG’s Desk Review product is a detailed review of the appraisal report, along with our independent data research, and an opinion as to the reasonableness of the value conclusion in the appraisal report. We can save our clients both time and money if they know they will need a desk review at the time they engage the appraiser. VMG can then begin our independent research to occur simultaneously as the appraiser completes their appraisal. This saves the client time at the end of the appraisal process if the desk review has already been ordered. Also, the combination of appraisal and desk review fees allows for increased efficiencies for our VMG Quality Assurance Reviewer and therefore saves the client money on pricing.
Valuation Management Group strives to ensure our clients are fully informed of all industry rules and regulations, while at the same time, saving our clients money and time. Please contact us today with any questions you may have regarding our Desk Review products.
Valuation Management Group is a national, full service appraisal management service company that manages the appraisal process for community banks, mortgage bankers, and credit unions. We offer the full array of commercial and residential appraisal products and services. We take the appraisal process from ordinary to extraordinary.