Valuation Compliance: Past, Present, & Future

Valuation Compliance: Past,

Present, & Future

Valuation Compliance: Past, Present, & Future

Session Panelist:

• Matt McHale, Chief Revenue Officer, Global DMS, LLC

• Kevin Marconi, COO, United Fidelity Funding, LLC

• Vicky Thompson, President & CEO, Valuation Management Group, LLC

• James R Hawkins, SRA, Vice President/Senior Review Officer, Old

National Bank


Vicky Thompson

Vicky Thompson is the President and CEO of Valuation Management

Group, LLC (VMG).

Vicky holds over 30 years of valuable professional expertise within the mortgage and appraisal industries. Since its inception in 2006, Valuation

Management Group continues to grow and thrive. VMG remains steadfast by taking the appraisal process from ordinary to extraordinary.

Valuation Management Group ensures appraiser independence while delivering quality appraisal products.


Kevin Marconi

Kevin Marconi is the Chief Operating Officer for this Kansas City based

National Retail and Wholesale Mortgage Bank; United Fidelity Funding.

Kevin joined United Fidelity Funding in 2007 and has since implemented process and technology improvements which have built the company into a highly efficient, 100 percent paperless mid-tier mortgage bank.

United Fidelity has a reputation for originating quality loans and while under Kevin’s leadership, United Fidelity Funding has consistently grown year-over-year.


James R. Hawkins

James Hawkins, SRA, is the Vice President Residential Appraisal Manager and Senior Review Officer at Old National Bank which is headquartered in

Evansville, IN.

James manages the Residential Real Estate Appraisal Department which reflects $9.5 billion in assets. Old National Bank is the largest financial services holding company in Indiana and ranks among the top 100 banking firms in the nation.


Matt McHale

Matt McHale is Chief Revenue Officer and the Co-Founder of Global DMS.

Global DMS is a leading solution provider for mortgage backed office operations which includes the appraisal management process and paperless documentation.

Matt is an expert in the use of technology, outsourcing mortgage operations, the appraisal process, regulation and compliance, Dodd-

Frank, FHA appraisal guidelines and Fannie Mae’s Collateral Data Delivery initiative.


Compliance Laws, Rules, & Regulations

Reactive vs. Proactive: Does setting rules and regulations during a time of crisis solve issues or cause additional ones?

USPAP = Savings and Loan Crisis

HVCC = Mortgage Meltdown

Dodd Frank = Recession

If we look at both the current and historic regulations and laws that have been implemented, we can easily see results were based on reactivity and not proactive planning. This type of behavior leads to confusion in the market place and causes long term issues.


Past:

USPAP

Standards - A basis of comparison, a normal requirement, the lowest common denominator in a category.

Method - A procedure, a technique, a way of doing something.

While standards can utilize best practices, there is also room for interpretation.

Depending on how the standard is practiced and utilized, the potential disconnect can cause lenders fines and appraiser license suspensions.


Past:

HVCC (Home Value Code of Conduct)

May 1, st 2009: GSEs will no longer accept loans that are not prepared under “The Code”. The lack of clarity on HVCC expectations causes immediate reaction in the industry. Lenders and appraisers both fear fines and other repercussions.

The biggest questions and issues came from:

• Restrictions on Appraisals / Appraisers vs. BPOs and AVMs.

• Separation of appraiser and client on ordering; causing misinterpretation of having to use AMCs.

• Lender prohibited from owning more then 20% of valuation entity.

• IVPI


Present:

Dodd–Frank ( Dodd–Frank Wall Street Reform and

Consumer Protection Act ) Signed into law on July

21 st , 2010.

Within Dodd-Frank is Title XIV – Mortgage Reform and

Anti-Predatory Lending Act. This act and its subtitles set new standards and laws which allow HVCC to sunset.

The broad requirements of Dodd Frank have lead to numerous changes in the industry; specifically in the area of compliance. These changes have not only caused Lenders, AMCs, and Appraisers to ensure that their processes are compliant, but they have also required the formation of the CFPB (Consumer Financial Protection Bureau).


Present:

CFPB (Consumer Financial Protection Bureau) was formed

On July 21, st 2011 as a result of Dodd-Frank. As of July 17 th ,

2013 Richard Cordray was officially appointed as the

Director.

The jurisdiction of the bureau includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations as well as other financial companies.

The CFPB expects supervised banks and nonbanks to oversee their business relationships with service providers in a manner that ensures compliance with Federal consumer financial law.


Present:

Compliance Challenges with Dodd Frank & CFPB

Third Party Oversight (you cannot outsource responsibility)

• Requesting and reviewing service provider’s policies procedures and internal controls.

• Documenting clear expectations about compliance and what the consequences will be.

• Establishing internal controls to monitor if the service provider is complying with regulations and having a plan to take action when issues are identified.


Present:


Appraiser Independence & Management

• Ensure appraiser independence on appraisal ordering.

• Establish process for Customary & Reasonable Fees.

• Establish process for selection of appraisers

• Competent to complete the assignment

• Periodic reviews on work performed by appraisers


Present:


Reviewing Appraisals

• Ensure all appraisals conform to USPAP standards.

• Review should have a risk-focused approach.

• Review should be qualified and capable to assess methods, assumptions and data sources.

• Document policies and procedures for resolving any inaccuracies or issues.

• Have a process to document the review itself.


Present:

Compliance challenges with UMDP (Uniform Mortgage

Data Program). The program includes UAD (Uniform

Appraisal Dataset), UCDP (Uniform Collateral Data Portal)

And ULDD (Uniform Loan Delivery Dataset).

If Collateral is King… Is Data a Dictatorship?

• Managing XML data.

• Understanding hard stops for UAD & UCDP what are the differences?

• Upcoming changes from the GSEs.

• Using MISMO to standardize the data.


Present:

Additional issues, regulations, and policy’s

• Appraisals vs. BPOs vs. AVMs.

• What impact will state regulations have on the industry and federal regulations.

• Commercial appraisal compliance with and without residential impact.

• Reviewer should be qualified and capable to assess methods, assumptions and data sources.

• Continued education and knowledge of industry changes.


Future:

How are the regulations today going to effect the industry next month, in six months, 1, 2, 5 years from now?

• How will the decline in number of appraisers as well as a decline in new applications for appraisers change the appraisal industry?

• What role does technology have in appraisal reviews and overall quality of appraisals?

• Will more regulations from the CFPB, the GSEs, as well as state and federal regulators help or hurt the consumer?

Valuation Compliance: Past,

Present, & Future

Valuation Compliance: Past, Present, & Future

Valuation Compliance: Past,

Present, & Future