February 3, 2020 – Twice last year I taught this 4-part webinar series for the Appraisal Institute. The intended audience is for bank/credit union employees, although appraisers who run an AMC might also be interested.
Please go to this link for information on content and how to register.
Feel free to pass this along to anyone you think might benefit from this webinar series.
Thanks so much!
The Mann
February 24, 2017 – The ASB has posted a summary of changes at the following link:
https://appraisalfoundation.sharefile.com/share?#/view/s305094efde84bbda
For those performing appraisal review, you will want to read about the changes and plan ahead if there will be changes needed for your review documents.
The definition changes are also worth noting. We have 10 months to get ready for the changes.
September 21, 2016 – Not too many people would use the above as a headline:) Let me explain…
About 8 years ago today in fact, the last review I did as Chief Appraiser for the fractional bank (as it was called…or Evil Empire by other banks) was an appraisal of a vacant residential lot in Detroit. The value conclusion was $100. It was well supported with two sales at $100 and a listing at $200 that the appraiser adjusted downward 50%.
I had spent 22 years appraising and reviewing. Made it to Chief Appraiser of a $100 Billion bank. And there I sat making the big bucks to review a $100 residential lot:) And, yes, the appraiser’s fee was higher than the value conclusion.
I have used that story many times over the years. Now, I can top it. I just got paid to review an appraisal of what has to be kept as a confidential property (and client). The value conclusion was $0! Yes, I have finally hit a new low! Now, I can finally say I have appraised and/or reviewed properties ranging in value from $0 to over $2 Billion. That is a resume builder! It was annoying to use $100 as the bottom of that range.
Oh, and yes again, my review fee was higher than the value conclusion. Thankfully, USPAP prohibited me from quoting a review fee that was a percentage of the value! LOL
Everyone have a great day:)
August 8, 2016 – I attended the Appraisal Institute’s national conference in Charlotte, NC a few weeks ago. One of the sessions was about compliance and a topic was called ‘Quality Assurance Reviews – Review of the Review.’
I believe I may have performed the first ever independent review of a bank’s staff reviews back in 2014. In March, 2015, The RMA Journal published my article on the topic. It is titled ‘What’s New In Appraisal Review’ and you can get to it on the Articles page of this web site. (NOTE: I call these Quality Control Audits (QCAs), but the task is the same regardless of the name.)
One of the slides at the AI session said ‘In layman’s terms, a Real Estate Assurance Review is a third party review, performed by a reviewer not tied to the institution’s review department, of an institution’s reviewer’s review of a real estate appraisal. This type of external review allows for a variety of credibility checks for the institution, as well as for the governmental banking regulation authorities.’
One of the slides asks the questions ‘How can my institution justify the additional cost?’ In my Chief Appraiser days at two $100+ Billion institutions this question was presented more than once a year by senior management. How can we recover the expense of the appraisal department? How can we get borrowers to pay the internal review fee your department is charging the lending groups?
I can see all of the Chief Appraisers reading this and nodding their head and saying yep I do this ever darn year! As I tried to explain to senior management, the appraisal department can pay for itself many times over by saving the bank a single large loan loss. e.g. I remember one of my reviewers finding a $4 million error in an ARGUS cash flow. That paid for the cost of my department for 4 years right there. And I am sure my staff found many more errors that saved the bank millions of dollars.
In one of my Quality Control Audits for a regional bank, I found a single appraisal report that was approved by the reviewer, but had a $10 million error in it! I found many other overlooked errors in the millions of dollars. The cost of a QCA/QAR is nominal in comparison to not doing one.
It is not just about approving erroneous appraisal values. A QCA/QAR is also about seeing if your internal policies and procedures are being followed. If they aren’t, you will have a lot of fun answering to bank examiners and internal audit about why not. Read my RMA Journal article to see the common issues I encounter.
You can try to do this internally. But, you likely lack the resources. My experience is it takes 10-12 hours per review – remember, you have to review the review AND the appraisal report. Only then can you know if the reviewer missed anything.
Not many of us ever have enough staff to just do our day jobs. Much less try to now perform reviews of reviews. Outsourcing this task is the way to go. Also, it provides an independent view of your staff.
Let me answer two questions I often get asked. Yes, a QCA/QAR can be performed remotely. This reduces the cost. No, every review does not need to be checked. A well-thought out sampling should let you know if there are any areas of concern.
Lastly, this does not apply to just banks/credit unions with internal review staff. This applies to financial institutions that use Appraisal Management Companies (AMCs). It would be prudent to know in advance of your next bank examination or internal audit if your appraisal review process is going to get high marks or has issues you can start addressing asap.
My focus is commercial real estate, so the above is mainly about that. I am sure there are many advanced ways of addressing the quality of residential appraisal reports and residential reviews.
Please contact me if you are in need of a QCA/QAR!