Assigning appraiser for company with multiple appraisers

[glenn walker]

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...

We once witnessed this when a owner of a five man company asked us to Reassign the order to another one of his appraisers, Found out a week later from the original appraiser that he had left the company and started his own and warned us that former owner was trying to squeeze him out of business. That was a real problem along with Loan Officers getting in bed with owners of small appraisal shops to give their preferred appraiser the orders. Its always a cat and mouse game as although some are legitimate request many are not. Our policy was Nope we assign to appraisers not your company.

 

[CGinMN]

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?

It is not the appraisal companies deciding. Lenders/AMCs can make the decision, when appropriate, to re-assign orders from one appraiser to another.

We once witnessed this when a owner of a five man company asked us to Reassign the order to another one of his appraisers, Found out a week later from the original appraiser that he had left the company and started his own and warned us that former owner was trying to squeeze him out of business. That was a real problem along with Loan Officers getting in bed with owners of small appraisal shops to give their preferred appraiser the orders. Its always a cat and mouse game as although some are legitimate request many are not. Our policy was Nope we assign to appraisers not your company.

Policy is the keyword.

 

[Overimprovement]

Lenders/AMCs can make the decision, when appropriate, to re-assign orders from one appraiser to another.

I don't think lenders are doing this for every assignment they send out to a large appraisal company.
For AMC's, do they somehow fall under different regs than say if you or I started a company with 50 appraisers working under us?

For the large appraisal shops that are NOT AMC's (at least not registered or regulated as such), are they somehow getting blanket permission to assign to whomever? If not, does a lender say "Hey, I got one for 123 Elm St, who do you want me to assign it to?", in exchange for lower fees, back alley deals, etc?

 

[BRCJR]

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

Not sure how you are defining "appraisal vendor". Appraisal firm does not necessarily equal AMC. An AMC equals institutions agent as alluded to below.

Interagency Appraisal and Evaluation Guidelines (December 10, 2010)

An institution or its agent must directly select and engage appraisers. The only exception to this requirement is that the Agencies’ appraisal regulations allow an institution to use an appraisal prepared for another financial services institution provided certain conditions are met. An institution or its agents also should directly select and engage persons who perform evaluations. Independence is compromised when a borrower recommends an appraiser or a person to perform an evaluation. Independence is also compromised when loan production staff selects a person to perform an appraisal or evaluation for a specific transaction. For certain transactions, an institution also must comply with the provisions addressing valuation independence in Regulation Z (Truth in Lending).

 

[Joe Flacco]

Firms with multiple appraisers will work for my clients.

Client 1 - Staff appraisers need to be pre-approved.
Client 2 - Appraiser assigned must sign the report as the appraiser or supervisory appraiser.

 

[Joe Flacco]

As far as I know, it's really an AMC thing that did away with assigning to firms.

 

[BRCJR]

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.

The lender or their agent still makes the decision.

The Interagency Appraisal and Evaluations are codified into law. Look up the Federal Registry and search for Appraisals.
In the "guidelines" should and shall mean must. No question whatsoever. I regularly attend meetings where the Federal Reserve has the Appraisal Manager present for Q&A.

I don't know it all but, I am very confident I understand the "guidelines" very well.

I teach a CE class in VA and TN, "What The Appraiser Needs To Know-Interagency Appraisal and Evaluation Guidelines".

 

[CGinMN]

If a direct lender with an independent appraisal department in charge of ordering has a panel of 50 vetted and approved appraisers in a given market area, many will be solo shops (say 30 appraisers), but assume they also do business with 3 larger firms who employ 5-10 appraisers each. If the assignments go out on a rotation, there is a 1 in 10 chance an LOs loan landing at their preferred appraisal firms doorstep, multiply that over many orders it basically eliminates the opportunity of funny business. An audit that falls outside these proportions would easily identify this order "gaming."

If an order falls into the queue of Appraiser #1 at Company #3, and they ask for permission to reassign it to another Appraiser #2 at Company #3 because that appraiser is more competent to perform the assignment, there is nothing that says the lender has to reassign it to a different appraiser in a different company. The lender is still the one in charge of making the decision of who to select and engage for the assignment. Not all lenders rely on stupid AMC metrics for determine who gets what order.

I am not saying all or even most lenders do this, clearly some take the easy way out. However, lenders with departments that independently order appraisals, who have positive working relationships with their trusted panel of appraisers, who know their panel by name and not a some meaningless score, these lenders treat their appraisers with respect and trust them as sources of information.

 

[Terrel L. Shields]

I'm just trying to discuss it in factual terms, but whatever.

Banks write their own "guidelines" within the IAG and that applies to a lot of things besides valuation. That's what I understand. If they write a guideline saying that regardless value, a CG must appraise a commercial property, then they will get dinged by the examiners for using a CR on a small cheap property that might be will within that CRs competence. The IAG is pretty much not to be violated. And ask any bank appraiser like @BRCJR . He's far more up to date on that.

 

[BRCJR]

Banks write their own "guidelines" within the IAG and that applies to a lot of things besides valuation. That's what I understand. If they write a guideline saying that regardless value, a CG must appraise a commercial property, then they will get dinged by the examiners for using a CR on a small cheap property that might be will within that CRs competence. The IAG is pretty much not to be violated. And ask any bank appraiser like @BRCJR . He's far more up to date on that.

You are correct, banks can and do write their own policy. They must be at a minimum, like USPAP, meeting the IAEG. When they violate their policy, even if still complying with the IAEG, they can and do get some level of reprimand from examiners.