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Maintaining independence is not enough, though. Originators and lenders also must ensure the appraiser is competent, which includes having the required education, expertise and experience to produce a quality appraisal. In addition, the originating company must occasionally review the valuation work. The guidelines insist that state licensing should be the minimum standard, not the sole determinant of appraiser selection and engagement.
Originators can use validation tools to track individual loans and the quality of appraisals over time. Tracking this information for months and years provides the insight needed to ensure only the best AMCs, appraisers and AVMs are used to evaluate homes.
Building the process
Building a process that ensures compliance with the IAEG doesn’t have to be overly complicated or time-consuming. The first step is to develop parameters to identify quickly which loans need full appraisals and which could be evaluated using a nonappraisal evaluation.
Next, the appropriate evaluation tool must be ordered. The internal policy guidelines should outline how the appraiser or valuation provider is selected to ensure no bias or undue influence from the originator. As part of the ongoing policy, quality reviews also must be built in. There are many quality-review tools that can help originators achieve compliance, including AVMs, home-price indexes and appraisal-audit reviews.
To drive consistency, many lenders and originators have adopted automated work-flow platforms that use rule-based logic to automate the selection of the appropriate product and of a competent provider. The leading platforms are configurable, allowing lenders to set policy parameters by origination channel, loan types or geography. These platforms also support quick transitions in response to business rules and policy changes that may be required.
Although the IAEG provides yet another set of regulatory standards and policies, mortgage professionals can pursue several options that enable compliance while also better managing origination risk.
By taking a measured, process-driven approach, lenders and originators can enhance their underwriting controls and improve collateral quality without expending additional time or money.
Rich Kuegler is vice president of
business development for San Diego-based DataQuick. DataQuick delivers advanced information solutions powered by higher-quality data, innovative analytics and advanced decisioning across a national footprint. DataQuick’s integrated solutions include property data and analytics, appraisals and nonappraisal evaluations, flood determinations, mortgage credit reports, automated valuation models, automated decisioning software, title insurance, property information, property research portals and marketing tools. Visit dataquick.com or twitter.com/DataQuick. Contact Kuegler at (302) 433-8014 or firstname.lastname@example.org.
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