We’ve officially entered the spring home-buying season, and despite current low inventory the industry is preparing itself for what is forecasted to be a strong buying season. For this edition of Dart Board, I wanted to share a refresher on some key points of Appraisal Independence (AIR) that lenders need to be aware of whether you use an AMC or you manage your appraisal process internally.

Appraiser Engagement. No matter how you handle your appraisals, appraiser engagement is a key part of a compliant process. Independence is compromised when a borrower recommends an appraiser, a member of the production staff selects the appraiser, or if a mortgage broker had a role in selecting, retaining or compensating the appraiser.

Appraisers assigned to your orders should possess the necessary competency and licensure to complete the assignment. AMCs typically have a comprehensive process to verify licensure status, ensuring each appraiser’s license is active and in good standing. (At Dart, our system is directly integrated with ASC.gov and HUD.gov, so the appraiser information in our system is updated daily.)

Assignments should be based on the appraiser’s experience and geographic competency, the property type, and of course the appraiser’s availability. When it comes to “niche” products, such as jumbos or new construction homes, the appraiser’s experience with that particular property type should be confirmed by either your AMC or your staff member assigning that order. Appraisers should be given a written engagement letter with each assignment that outlines the requirements of the assignment, as well as any investor requirements or specific credentials necessary (certified residential, certified general, etc.).

Post-Delivery Requests. If you have any corrections or clarifications you would like to request from the appraiser after receiving the appraisal report, there are a few guidelines to follow. It is more than reasonable to ask an appraiser to correct objective, factual errors, such as significant Gross Living Area discrepancies between what is reported in the appraisal and public record. Other types of acceptable correction requests might be any missing remodeling/updating that has been done, omitting any views or amenities, or asking for commentary on across-the-board adjustments regarding comparable sales.

When making correction requests, either to the AMC or the appraiser directly, it’s important to ensure all commentary in your request is AIR compliant. Target values or specific adjustment amounts should never be sent to the appraiser, nor should any language violating the Fair Lending Act. Emotional language should also be avoided in a correction request or request for reconsideration of value. If you’re using an AMC, they should screen all post-delivery requests for AIR compliance before sending the request to the appraiser.

Upcoming AIR Webinar. Appraisal Independence is a broad and complex regulation, which is one reason many lenders choose to utilize an AMC. If you’d like to learn more about what lenders need to know about AIR, whether you use an AMC or not, I invite you to join a webinar we’re holding on this topic on Thursday, April 13 at 1:00pm (EST). I’ll be presenting this topic along with Dart’s Director of Quality Control, Tom Moser. Visit this link to register.

Dart on the Road. Dart has had a busy start to the year in terms of tradeshow activity. Earlier this month we attended The Mortgage Collaborative‘s Winter Conference (Dart is one of the Collaborative’s original preferred partners), which was a great place to exchange ideas with lenders and other vendors serving the industry. We also took part in the Collateral Risk Network’s 2nd Quarter Meeting earlier this week, an event we attend each quarter to discuss laws, regulations and procedures that apply to the valuation industry.

Next month I’ll be heading to the Association of Appraiser Regulatory Official’s Spring Conference, along with our Director of Compliance Tracey Volltrauer. Later in April, I’ll be speaking on a panel at NAMB’s Legislative & Regulatory Conference in Washington, DC.

Other events on Dart’s spring calendar include the MBA’s National Secondary Market Conference & Expo in New York, the Ohio MBA’s Annual Convention in Columbus, and the Texas MBA’s Annual Convention in San Antonio. If you would like to schedule a meeting at any of our upcoming events, please visit www.dartappraisal.com/events and fill out a short request form.

We look forward to working with our clients, brokers and appraisers as we kick off the spring buying season, as well as to forming new partnerships in the months ahead. If there is anything we can do to assist you, please don’t hesitate to contact us at info@dartappraisal.com. 

Thank you,

Michael Dresden
President
Dart Appraisal