Hybrid Appraisals

[Surf Cat]

How many times were the trainees accompanied by their mentor?

I was accompanied quite a bit. But there's a lot of different setups here in Southern California. There's certainly lots of tracts with cookie cutter homes. But we have our fair share of estate properties, Hillside homes on stilts with caissons, jetliner view neighborhoods, beachfront properties.

As I gained more experience and became more adept, my mentor would just show up at the home, walk through it, view my comps that I chose, and leave me to it. He would drive by a couple of my comps as well.

My mentor never signed as did inspect and not show up. He would get frustrated sometimes with me as I took a lot of photos. Saved his behind more than once doing that.

I'm grateful that I was actually taught and mentored as opposed to being thrown into deep end of the pool and told to swim.

 

[J Grant]

How many times were the trainees accompanied by their mentor?

Back when I trained, near 100%. Lenders did not accept reports that the trainee inspected alone.

 

[TC]

Back when I trained, near 100%. Lenders did not accept reports that the trainee inspected alone.

I did it for 3 years, which was standard in PA until 1991. After that, it was how fast can you get a body in the field.

 

[alebrewer]

If a lender works with 10 appraisal firms in a given market, 8 independents and 2 larger firms with staff, and all appraisers are independently approved by the lender to ensure they are actively licensed and competent, and all reports are reviewed by underwriting to ensure compliance, and qll files are subject to random audit, but the lender assigns the appraisals on random basis to the firm level, what additional auditing do I have to do to the appraisal firm that I don’t have to do with the one-man shop or that I’m not already doing in the normal course of operation?

Your interpretation is the defiantly the most common one, and it is a big reason why AMCs proliferated. But I would ask, what additional burden is there on lenders on top of their existing requirements, and can you cite it?

I don't know that there's 'additional' burden - other than (most likely) a different procedure for vetting companies than individual appraisers. Just adds a layer that otherwise wouldn't be there (now you're vetting individual appraisers in some instances and companies in other). And where do you draw the line? For two appraiser shops - would it be easier to vet the individual appraisers or the company? Just not as clean - in my opinion.

Again, though, I doubt any auditor would be too concerned if a company interpreted the requirement in the way you propose.

 

[TC]

I was lucky, started at an office with 5 seasoned appraisers. Spent three years holding the dumb end of the tape. Saw just about every type of property both residential and commercial.

 

[Non Sequitur]

If a lender works with 10 appraisal firms in a given market, 8 independents and 2 larger firms with staff, and all appraisers are independently approved by the lender to ensure they are actively licensed and competent, and all reports are reviewed by underwriting to ensure compliance, and qll files are subject to random audit, but the lender assigns the appraisals on random basis to the firm level, what additional auditing do I have to do to the appraisal firm that I don’t have to do with the one-man shop or that I’m not already doing in the normal course of operation?

Your interpretation is the defiantly the most common one, and it is a big reason why AMCs proliferated. But I would ask, what additional burden is there on lenders on top of their existing requirements, and can you cite it?

Depends on the size of the regulated lender, smaller lenders have exemptions. But as I remember it, the audit would include policy and procedures, tech, record keeping, assignment flow, etc. Generally, since you are authorizing them to act in your place, you're expected to audit them (I forget the frequency) to ensure they are in compliance.

 

[CGinMN]

My thoughts are that not all third-party relationships require the same level or type of oversight or risk management. A full-service AMC, through which a significant amount of a large lender's appraisal work flows, might require that kind of oversight. A local staff firm that gets 5-10% of your appraisal volume in a given county or metro and maybe 1%-2% of a lender's total volume does not require that level of oversight. Yes, the size of the lender matters, but so does the size and nature of the relationship. Point being, if you delegate assignments on a firm-level basis, lenders shouldn't be dictating which staff must perform a given assignment, if and when the appraisal firm is in the best position to make that decision. At the very least, at the outset of an assignment, an appraisal firm should be able to provide their reasoning for selecting a specific staff and as long as that makes sense it should be acceptable.

 

[alebrewer]

Love it! That's just not the way folks I've worked for have interpreted the guidance.

 

[Non Sequitur]

My thoughts are that not all third-party relationships require the same level or type of oversight or risk management. A full-service AMC, through which a significant amount of a large lender's appraisal work flows, might require that kind of oversight. A local staff firm that gets 5-10% of your appraisal volume in a given county or metro and maybe 1%-2% of a lender's total volume does not require that level of oversight. Yes, the size of the lender matters, but so does the size and nature of the relationship. Point being, if you delegate assignments on a firm-level basis, lenders shouldn't be dictating which staff must perform a given assignment, if and when the appraisal firm is in the best position to make that decision. At the very least, at the outset of an assignment, an appraisal firm should be able to provide their reasoning for selecting a specific staff and as long as that makes sense it should be acceptable.

You aren’t alone in that interpretation. FWIW a lot of this depends on if an examiner smells something. If things are moving smoothly it’s usually a few questions and move on to the next topic.

 

[alebrewer]

In the audits I've been a part of, our investors DO look for evidence of third party oversight. Depending on the nature/operational risk of the relationship, there is a continuum of oversight required. For vendors who pose significant operational risk, annual on-site visits are required. For vendors who pose little to no operational risk (appraisers for example), annual credential checks and some manner of SLA measurement/oversight is about all that they look for.