How to Have Regulatory Compliant Appraisal Policy
Financial institutions make loans of all sizes. Collateral is obtained to provide the institution with some form of repayment in the event of borrower default. As such, collateralized loans are considered to have a lower risk than unsecured loans and longer amortization periods are made available when long-lasting real estate collateral is provided. But just having collateral does not necessarily ensure lower risk for the institution. Real estate values shift, due to market forces and specific property issues. Thus, bank regulators have embedded the valuation process within all real estate loan production. Further, institutions are mandated to install processes and personnel that can identify risk levels and effectively manage the appraisal program with greater due diligence when risk is higher. But real estate appraising is a different industry than banking, so institutions often face a steep learning curve in efforts to comply with appraisal regulations. This webinar provides introductory information for banks and credit unions to work toward meeting the regulator's appraisal program requirements.
This webinar will examine in detail what the regulations say about the content banks should have in an appraisal policy. Even more importantly, it will provide insight into how the regulators expect those policy statements to flow through to the overall credit decision environment and the day-to-day operations of the appraisal function. The focus will be on practical takeaways from an appraisal policy consultant.
Why Should You Attend:
When it comes to the appraisal function, financial institutions almost universally share two problems:
- Few bankers understand appraising: The work and process of valuing property and how to spot appraisal deficiencies, but often instead vet an appraisal report solely by whether it facilitates the loan, or not. When banks realize this deficiency, an appraiser is often hired to manage their appraisal program, but…
- Few appraisers who are hired from the field to manage an appraisal function understand the appraisal regulations, as applied to daily bank operations
This web session is intended to fill that gap in knowledge and understanding.
Objectives of the Presentation:
- Learn what the regulations say about appraisal policy content
- Learn where to begin crafting a regulatory-compliant appraisal policy
- Learn that the regulations are broad-brush in expectation of each bank crafting a detailed policy and written appraisal procedures: no one-size-fits-all for appraisal policies
- Learn the ten most common appraisal policy mistakes made by financial institutions
- Learn best practices for incorporating written, detailed appraisal procedures with your bank's appraisal policy
- Learn best practices for the interaction of lenders with the appraisal function: facilitating production, while maintaining crucial appraisal function independence
Areas Covered in the Session:
- Provides a regulatory background for the various appraisal policy requirements
- Covers common mistakes financial institutions make in their appraisal program
- Provides an overview of the connections between the appraisal function and other functions in the institution; how good linkages and communication fosters better production and prevents misunderstandings
- Discloses the importance of role identification, qualifications, and coordination
- Learn how to customize your bank's appraisal policy to accommodate your organizational structure, corporate culture, and personnel resources
- Learn the importance of a risk-based appraisal program
Who will Benefit:
- Chief Appraisers and Appraisal Managers
- Employees who bid and engage appraisers for the financial institution
- Employees who review appraisal reports
- Employees who perform evaluations and/or validations for the bank
- CEOs and Presidents of community banks or credit unions
- Credit Administration Officers
- Credit Officers involved in the appraisal function
Heidi Lee is a commercial review appraiser with 18 years' experience at Whitney National Bank, a mid-sized financial institution. Since retiring from Whitney Bank in 2011, Ms. Lee has founded Appraisal Review & Consultation to share her skills and appraisal regulatory knowledge base with other financial institutions. Her firm offers commercial review services and appraisal policy/procedures assistance to small- and medium-sized banks across the country.
Ms. Lee has earned the MAI and the AI-GRS designations issued by the Appraisal Institute and the MRICS designation issued by the Royal Institution of Chartered Surveyors. She holds a general appraiser certification in Louisiana and Texas and was appointed by two governors to serve on the Louisiana Real Estate Appraisers Board. Additionally, she is a member of RMA (Risk Management Associates), with a special interest in credit risk and operational risk.