Assigning appraiser for company with multiple appraisers

[alebrewer]

Can anyone cite the regulation that prohibits a lender from allowing an appraisal vendor to select which appraiser should complete each order?

It's not so much a single reg that says, "lenders can't assign orders to large appraisal shops." It has to do more with the oversight requirements put on lenders. Lenders are required to vet (and maintain active oversight) of all 3rd parties - generally, this will be the AMC's (unless the lender maintains a direct engagement platform). There is a requirement to ensure that the appraisal assignments are directed to appropriate appraisers, and this cannot be accomplished if the lender allows appraisal shops to assign orders willy nilly...

The following is from the Interagency Guidelines:

"An institution’s selection process should ensure that a qualified, competent and independent person is selected to perform a valuation assignment. An institution should maintain documentation to demonstrate that the appraiser or person performing an evaluation is competent, independent, and has the relevant experience and knowledge for the market, location, and type of real property being valued. Further, the person who selects or oversees the selection of appraisers or persons providing evaluation services should be independent from the loan production area. An institution’s use of a borrower-ordered or borrower-provided appraisal violates the Agencies’ appraisal regulations. However, a borrower can inform an institution that a current appraisal exists, and the institution may request it directly from the other financial services institution."

 

[CGinMN]

The G in guideline stands for requirement?

There is no such requirement to my knowledge. If an appraisal firm reaches out to a lender and says, "Hello, you assigned this to Appraiser A, but Appraiser B is more qualified to complete this assignment" then it is probably appropriate that they do allow a re-assignment. There's nothing willy nilly about that.

 

[alebrewer]

The G in guideline stands for requirement?

There is no such requirement to my knowledge. If an appraisal firm reaches out to a lender and says, "Hello, you assigned this to Appraiser A, but Appraiser B is more qualified to complete this assignment" then it is probably appropriate that they do allow a re-assignment. There's nothing willy nilly about that.

Haha! Yes - G stands for requirement in the regulatory world. Lenders and banks will ALWAYS go overboard in at least appearing to be compliant.

As to your scenario, let's turn it around... If an appraisal firm reaches out to a lender and says, "Hello, you assigned this to Appraiser A, but Appraiser B is more qualified to complete this assignment" then it is not appropriate at all that they allow a reassignment. Who is reaching out? The president of the company? The secretary? What happens if the loan officer plays golf with the owner of the appraisal firm and wants all his/her orders to go to appraiser C. If the lender is not maintaining adequate oversight, then yes - it's willy nilly.

Why not just get that better qualified appraiser on the lender's panel so that the lender can decide who is best qualified for the assignment?...

 

[CGinMN]

I'm assuming in the OPs case the the client already has a business relationship with all 3 appraisers. If not, then yeah they would probably need to establish those relationships.

What happens if the loan officer plays golf with the owner of the appraisal firm and wants all his/her orders to go to appraiser C. If the lender is not maintaining adequate oversight, then yes - it's willy nilly.

Lenders can maintain adequate oversight and use their judgment to re-assign orders based on feedback from their vendors. If they are, all order from one LO going to one appraiser would never arise. And if appraiser's are lying when signing a certification that says they have no interest and are unbiased, then that is a whole 'nother ball of wax.

I agree though, that when Lenders and AMCs impose their own requirements they quickly become the de facto standard. But not all lenders use AMCs, not all direct engagement lenders have a panel, some lenders use staff appraisers, etc.

 

[alebrewer]

I'm assuming in the OPs case the the client already has a business relationship with all 3 appraisers. If not, then yeah they would probably need to establish those relationships.

Lenders can maintain adequate oversight and use their judgment to re-assign orders based on feedback from their vendors. If they are, all order from one LO going to one appraiser would never arise. And if appraiser's are lying when signing a certification that says they have no interest and are unbiased, then that is a whole 'nother ball of wax.

I agree though, that when Lenders and AMCs impose their own requirements they quickly become the de facto standard. But not all lenders use AMCs, not all direct engagement lenders have a panel, some lenders use staff appraisers, etc.
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Kewl. I thought you were asking a question, not trying to start an argument. Whatever works for you, man.

 

[CGinMN]

K. I'm just trying to discuss it in factual terms, but whatever. I could be wrong, I don't pretend to know all the rules and regs, just shedding light on what I do know. We have appraisers complaining that AMCs' interpretations of the "requirements" are making appraisal businesses impossible to operate. It would seem to me this is a worthwhile discussion.

 

[alebrewer]

Here's an idea: Go tell the lenders that the Interagency guidelines aren't requirements at all - they're just suggestions...

 

[glenn walker]

In residential lending there is nothing to discuss due to the way Dodd-Frank and guidelines were established. The system is designed to try and stop orders from being assigned to specific appraisers where someone outside the ordering sytem is asking for a "certain appraiser " to be assigned the order. Also each order is going to that appraiser not the company he works for. In residential those days ended in end of 2012. No AMC or Direct Lender wants to get caught in the cross hairs of being accused of favorable treatment to a particular owner or appraiser.

 

[alebrewer]

In residential lending there is nothing to discuss due to the way Dodd-Frank and guidelines were established. The system is designed to try and stop orders from being assigned to specific appraisers where someone outside the ordering sytem is asking for a "certain appraiser " to be assigned the order. Also each order is going to that appraiser not the company he works for. In residential those days ended in end of 2012. No AMC or Direct Lender wants to get caught in the cross hairs of being accused of favorable treatment to a particular owner or appraiser.

As a matter of fact, in several of the audits I've been through, the warehouse folks are specifically looking for relationships between production folks and appraisers...

 

[Overimprovement]

Again, I ask, if appraisal companies, AMC's, etc, are NOT allowed to assign to whomever they will in for an appraisal, how is this getting done? Is there one supervisor signing off on thousands of reports monthly that another appraiser is simply 'providing material assistance' with?