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   ARTICLE   |   From Scotsman Guide Residential Edition   |   February 2014

Find the Right Tool for the Job

Use new appraisal-management technology to stay compliant

As is true in home maintenance, today’s mortgage-banking industry must use the right tools. But many financial institutions are not following this essential wisdom. Mortgage bankers often persist in using outmoded technology that is not designed for the task and no longer adequate for the job.

For example, new available appraisal-management software offers enhanced data-tracking and reporting capabilities and is not labor-intensive to use. And yet many financial institutions are relying on spreadsheets and e-mail to navigate through the complex processes of residential and commercial appraisals. It is akin to choosing a slotted screwdriver when a Phillips head is needed.

Banks are managing residential and commercial appraisals in an intense regulatory environment that requires a high degree of data tracking and reporting.

They also are keeping the workforce as lean as possible. With that in mind, lenders need technology that provides maximum operational insight to comply with existing and upcoming regulations, while keeping the operating margins in check.

Risks associated with the appraisal process were highlighted recently by regulators in the Office of the Comptroller of the Currency, which monitors threats to bank safety and soundness. Darrin Benhart, deputy comptroller for credit and market risk, spoke in Phoenix this past September about risks to lenders from deficiencies in the appraisal process.

Benhart said there was a need for “an even greater emphasis on risk-management techniques” and mentioned that there was “little oversight of appraisal-management companies,” noting that bankers “didn’t understand how appraisers were selected and engaged on behalf of the bank.” He also said that “oversight was missing,” and problems ranged from the independence and qualifications of the appraisers to the depth and scope of their reviews.

When regulators tell bankers in public forums that they are concerned with appraisal-management processes, it typically means they will be looking more closely at these issues in upcoming reviews and audits.

Lenders of all types, but mortgage banks in particular, know that they are expected to have a complete understanding and total management oversight of the collateral valuation process. Software-as-a-service (SaaS) mortgage-appraisal-management software provides this operational insight at low initial and ongoing costs.

Enhanced data tracking and reporting capabilities allow managers better visi-bility into all components of the appraisal-management process, simplifying a job that was labor-intensive in the past.

Management of residential and commercial appraisals is simply too complex and too central to risk management to perform via spreadsheets and e-mail. Mortgage bankers who persist on using outmoded technology are taking a risky approach.

Mortgage bankers can prepare themselves for regulatory scrutiny by evaluating if they are using the correct appraisal-management tool for the tasks at hand today. When they do, they are likely to find that modern, SaaS appraisal-management software is one of the best tools for getting the job done. 


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