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Executive Summary

The role of appraisal management companies (AMCs) is to manage the appraisal fulfillment process on behalf of mortgage lending clients. Regulatory focus on third-party risk management has increased as banks and credit unions expand the number and complexity of relationships with third party vendors, including AMCs. The U.S. Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) has focused on heightened examination and guidance in this area, characterizing increased regulatory scrutiny of how institutions must manage the third?party oversight (TPO) process. The guidance defines a "third-party relationship" as any business arrangement between a financial institution and another entity, by contract or otherwise. (OCC Bulletin 2013-29, Third-Party Relationships: Risk Management Guidance, dated October 30, 2013)

Appraisal Compliance Review, Inc. (ACR) is an appraisal management company created by a credentialed real estate appraiser in 2006. Our offices are located in the downtown central business district of Sheboygan, Wisconsin. ACR operates a centralized processing center providing residential and commercial property appraisal management, appraisal quality assurance, appraisal validations and collateral evaluation services to regulated financial institutions located throughout the state of Wisconsin. ACR manages and oversees networks of independent, third-party service appraisers (‘appraisers") as well as ordering, tracking, reviewing and delivering assignments to lenders for mortgage lending use.

ACR understands the intent of, and adheres to, the regulatory requirements of the Interagency Appraisal and Evaluation Guidelines dated December, 2010 (IAG); Fannie Mae Appraiser Independence Requirements (AIR); and Section 129E of the federal Truth in Lending Act. As an agent, ACR carefully administers our federally regulated mortgage lending clients' internal appraisal policies and procedures. To foster transparency, ACR's Standards of Good Practice ensure that ACR remains diligent and compliant. As the agent of, and in compliance with safe and sound operating rules of its financial institution clients, ACR will:

  • recruit and qualify appraiser partners
  • verify their licensure and/or certification
  • check references
  • audit appraiser work samples
  • set service level expectations with individual appraisers
  • assume administrative duties for all transactions including order entry and assignment
  • track order status
  • update clients on progress or property concerns
  • perform pre- and post-delivery quality assurance reviews
  • secure electronic transmission of confidential information and final appraisal reports
  • archive appraisal reports for clients
  • handle payment
  • provide dispute resolution between lenders and appraisers
  • ensure proper record retention
  • provide a single point of contact for lenders
  • perform quality assurance reviews of completed appraisal reports to ensure conformity to appraisal guidelines of Government Sponsored Enterprises (GSE) such as Fannie Mae or Freddie Mac
  • work with appraiser partners to ensure the quality of appraisal assignments
  • develop and offer technology interfacing that permits auto assigning, tracking, and reviewing and the electronic delivery of reports to increase the efficiency of the appraisal process
  • develop and offer new products, risk scoring models, MISMO-compliant delivery options and other process improvements

Section 1 - Standard of Good Practice - Recruitment and Coordination


Recruiting and coordinating appraisers for independent appraiser rosters is the primary task of appraisal management companies. In tactical recruitment, ACR will recruit an appraiser to fulfill an assignment in an area lacking coverage. In strategic recruitment, additional appraisers are recruited to fill service gaps or to augment or replace existing appraisers. Although the same due diligence and care apply to both situations, tactical recruiting often requires quicker decisions, since there is an appraisal order in the queue awaiting assignment.

ACR will adhere to Standards of Good Practice by:

  • maintaining, reviewing and updating policies and procedures for recruiting and transitioning qualified certified and licensed appraisers to its appraiser panel. Policies and procedures include standards and guidelines for appraiser minimum education and experience, licensure or certification, work sample review, background checks, fee and service level agreements, and references.
  • regularly reviewing vendor recruitment procedures to be sure that they are relevant and are being followed; ensuring that staff are trained on appropriate standards and guidelines, and that appraiser files are audited to verify that the recruiting procedures are being used. Recruiting guidelines are regularly updated based on audit results.
  • confirming, prior to engaging an appraiser, that the appraiser is appropriately licensed or certified, geographically competent and qualified to perform the assignment. Recognize that licensing or certification is a minimum qualification for eligibility for an appraisal assignment and will consider an appraiser's experience, education, designation, proximity to and geographic competency.
  • complying with all state and federal appraisal regulations applicable to appraiser background checks and fingerprinting.
  • basing the engagement decision on the qualifications of the appraiser consistent with ACR recruiting standards and guidelines. While the appraiser fee may be considered, it is not be the exclusive factor in the assignment decision. Geographic competency, timeliness and equitable distribution of assignments are given as much weight as the appraiser's fee.
  • monitoring and documenting the performance of appraisers over time. Such monitoring ensures that measurements of customer service, timeliness, and work quality are fair and accurate. ACR will consider an appraiser's past performance in determining eligibility for an appraisal assignment.
  • complying with the reporting requirements of Dodd-Frank when there is reason to believe an appraiser has not complied with Appraiser Independence Requirements, USPAP or other applicable appraisal regulations. Failure by any appraiser or ACR staff member to comply with any requirement of AIR will result in the suspension or termination of the violator.

Section 2 – Standard of Good Practice - Appraisal Order Assignment


In order to effectively select an appraiser for an assignment, ACR staff will review the capabilities, geographic proximity, expertise, appraiser scorecards and availability of potential appraisers in relation to these appraisal assignments. While the appraisal fee may be considered, it will not be the exclusive factor. See customary and reasonable fees (Section 8).

ACR will adhere to Standards of Good Practice by:

  • considering an appraiser's proximity, experience, education, responsiveness and level of expertise in complex properties, modular, multifamily, acreage, FHA, REO, and review appraisal.
  • ensuring the equitable distribution of appraisal assignments to qualified appraisers.
  • ensuring that ACR staff understands and complies with Fannie Mae Appraisal Independence requirements

Section 3 – Standard of Good Practice - Order Tracking and Workflow Management


Order tracking and workflow management is accomplished using the internet-based ValuTrac transaction management system (TMS). This allows ACR staff to focus on "triage" management – the prioritizing of assignments that fall out of the normal production continuum. The following Standard of Good Practice relates to situations in which ACR staff members interact with their appraisers during the assignment, tracking and completion of appraisal assignments.

ACR will adhere to Standards of Good Practice by:

  • utilizing the ValuTrac transaction management system (TMS) which is secure-hosted at a certified SSAE 16 (SOC) data center and provides:
    • real-time status of all appraisal orders
    • automated status update emails
    • track all appraisers' service levels and appraisal quality
    • automated tracking of expired appraiser license and E&O
    • date and time stamped communication and notes
  • requiring the appraiser to enter status updates into the TMS as the assignment progresses from appointment to inspection to completion. If appraisers do not provide updates, ACR will contact the appraiser to request a status report.
  • ensuring that instructions and agreements are clear and specific as to ACR expectations of quality, service and cost.
  • Documenting all communications, instructions and agreements with appraiser in the ValuTrac TMS.

Section 4 – Standard of Good Practice - Pre- and Post-Delivery Quality Assurance


These standards focus on the important functional aspects of pre- and post-delivery quality assurance within ACR's production, quality assurance and risk management operations.

ACR will adhere to Standards of Good Practice by:

  • requiring the appraiser's completed assignments to conform to the lender's requirements as documented in the engagement letter and any supplemental conditions related to the assignment.
  • implementing and managing a quality assurance program to assess the work submitted by the appraiser panel.
  • reviewing the report for adherence to the lender's internal appraisal compliance criteria; and reviewing the appraisal report for compliance with Fannie Mae Property and Appraisal Guidelines and
  • verifying subject and comparable data in the appraisal through Multiple Listing Service and public records.
  • checking that math calculations are correct.
  • expertly and objectively forming an opinion of the credibility of the value conclusion by reviewing the appraiser's analysis, logic, rationale and sourced support for opinions and conclusions.
  • flagging and documenting patterns of non-compliant appraisal reports with the intention to assist the appraiser to improve the work product through education, resources and/or one-on-one tutoring and mentoring. Assignments may be suspended while an appraiser satisfactorily completes an ACR Performance Improvement Plan. Failure to comply with PIP requirements will result in the appraiser's suspension or removal from consideration for assignments.
  • maintaining a list of approved and disapproved appraisers. With this entitlement comes a responsibility for ethical and professional management of appraisers. ACR will not place an appraiser on the disapproved list unless such action is based upon substantiated and documented complaints and after the appraiser has an opportunity to respond to the complaint.
  • advocating for appraisers who have been disapproved by lenders, GSEs or placed on other "do not use" lists, including the Fannie Mae "do not use" list. This will occur only where appropriate and at the sole discretion of ACR and its financial institution client.
  • adopting a "zero tolerance" policy when there is a violation by an appraiser of Fannie Mae Appraiser Independence Requirements (AIR). Any indication that the appraiser fails to grasp the importance of AIR is grounds for immediate removal from the ACR appraiser roster. Neither ACR nor its clients will tolerate even the appearance of an AIR violation.
  • temporarily limiting appraisal assignments if an appraiser demonstrates decreasing work quality, or if the appraiser exhibits a pattern of non-responsiveness to ACR and/or lender concerns. If an appraiser is given an opportunity to improve work quality and/or responsiveness, but fails to make any meaningful improvement, at the sole discretion of ACR and its financial institution client the appraiser will be permanently removed from the institution's appraiser roster.

Section 5 - Standard of Good Practice - Appraisal Delivery


Appraisals will be delivered by the appraiser to ACR by electronically uploading the appraisal report into the ValuTrac TMS system. When ACR's quality assurance review is complete, the client will be notified that the appraisal may be retrieved from the ValuTrac TMS.

ACR will adhere to Standards of Good Practice by:

  • delivering the appraisal to ACR by uploading the report in digital format, including both XML and PDF, or other format as agreed to by ACR, the lender, and the appraiser. To comply with XXXXX security requirements, all completed appraisal reports, supplemental documentation and revisions must be uploaded into the ACR ValuTrac transaction management system.
  • complying with ECOA, Regulation B requirements for delivery of the appraisal report and acknowledgement of receipt by the borrower

Section 6 – Standard of Good Practice - Dispute Resolution


The standards within this section describe ACR procedures in interactions with appraisers, homeowners, realtors and other participants in the mortgage lending transaction.

ACR will adhere to Standards of Good Practice by:

  • providing lenders with a secure electronic forum to request corrections, explanations, or resolution of value disputes through a managed, responsive, non-pressure based process.
  • providing appraisal expertise through ACR staff who are knowledgeable of appraisal requirements in addition to being sensitive to the appearance of undue influence.
  • providing roster appraisers with access to a phone number and email address through which they can report undue influence by anyone in the appraisal process. This includes lenders, mortgage brokers, borrowers, appraisal management companies, real estate brokers and home builders.
  • The following controls are in place to ensure that no undue influence occurs in the appraisal procurement process:
    • A dedicated telephone and email "appraiser hotline" and AIR complaint activity log.
    • Documentation of any and all actions taken in response to complaints.
    • Written policies prohibiting ACR staff from providing things of value, threats or promises, directly or indirectly, to any appraiser for the purpose of influencing independent judgment of any opinions and conclusions.
    • Written policies that strictly prohibit anyone within ACR, and any client of ACR, from attempting to influence an appraiser with the goal of influencing or altering the outcome of an appraisal report.
    • Written policies documenting internal sanctions that will be taken if an AIR violation occurs.
    • ACR's written appraiser independence policy is embedded in independent contractor agreements that place a strong emphasis on the appraiser as an independent third-party.
    • ACR's ValuTrac TMS is the vehicle by which appropriate, non-pressured market data from other parties (builder, real estate agent, etc.) will be transmitted through ACR to the appraiser for consideration in the valuation analysis.
    • ACR will encourage appraisers to make reports of inappropriate contact on the part of the ACR or financial institution staff to appropriate regulatory authorities.
    • ACR maintains a list of unacceptable actions when, if undertaken by roster appraisers, will result in termination from the ACR appraiser roster.
    • ACR utilizes a standardized dispute resolution process which it provides to each appraiser at the time of inclusion on the ACR appraiser roster.
    • ACR will resolve disputes with panel appraisers through an internal rather than public process unless it is determined that mandatory reporting requirements under Dodd-Frank are applicable to the dispute.
    • ACR will provide written notice to an appraiser who is the subject of possible removal from the ACR appraisal roster, including a detailed description of the alleged infraction, error or regulatory violation.
    • ACR strongly encourages an appraiser who has been identified for possible removal from the ACR appraiser roster to respond or rebut in written form.

Section 7 – Standard of Good Practice - Customary and Reasonable Fees/Assignment Deadlines


ACR believes that the marketplace best determines what is customary and reasonable in terms of appraisal fees. The appraisal fee is the result of a business decision between the appraiser and ACR. Given that a reasonable and customary fee depends on the complexity of the assignment and the expertise needed, the fee will vary and, therefore, cannot be easily defined as an objective number.

ACR does not set unacceptable deadlines for completion of appraisal assignments. Appraisers are familiar with the terms of an assignment and do not accept assignments which have unrealistic deadlines.

ACR will adhere to Standards of Good Practice by:

  • not influencing appraisal fees
  • paying appraisers the amount on the invoice submitted for the assignment
  • not requiring unrealistic deadlines for appraisal assignments

Section 8 – Standard of Good Practice - Product and Technology Development and Utilization


The Gramm-Leach-Bliley Act (GLB) addresses overall financial industry reforms as well as emerging consumer privacy and security issues. Therefore, it affects the technology and information system policies used by anyone engaged in providing financial services either directly or indirectly to consumers.

Under GLB, both the security and the privacy of a consumer's non-public personal information are protected. The Federal Trade Commission addressed the security and privacy components separately by issuing two distinct rules, the "Safeguards Rule", and the "Privacy Rule". Under these rules, the transmission, receipt and storage of confidential information must be secured at all times.

ACR will adhere to the following Standards of Good Practice by:

  • having policies and systems in place to ensure the confidentiality of the data that is received upon engagement for an appraisal assignment.
  • requiring that appraisal reports are submitted in a secure format.
  • investing in technological infrastructure and information security specifically suited for the appraisal process.
  • disclosing the gathering, sharing, and security of confidential data, as well as providing a method for the consumer to opt-out of sharing of the data.

Section 9 – Standard of Good Practice - Sales, Marketing and Administration


There are numerous functions and roles that AMCs assume on behalf of both clients and appraisers. The AMC typically performs all sales, marketing and administrative functions.

ACR will adhere to the following Standards of Good Practice:

  • emphasizing to clients the benefits of having an appraisal that is performed by a qualified and competent appraiser.
  • accurately portraying in print, online marketing materials, and all client communications the role of AMCs in the real estate mortgage finance settlement services industry.
  • educating clients that fees for services are based on intended use, intended users and the complexity of the property, and not on an appraisal form type.
  • paying fairly and promptly for assignments completed within USPAP and client specific guidelines and is compliant with state and federal law. The value opinion will not be the basis for not paying an appraiser for an appraisal report.
  • encouraging methods and procedures for appraisers and lenders that allows for better communication, compliance, and efficiency.

Section 10 – Standard of Good Practice – Training and Development


Training and employee development are key aspects of an appraisal management operation. Personnel well trained in various aspects of appraisal management and professional appraisal practices are a valuable asset to the company and the appraisal management profession.

ACR will adhere to the following Standards of Good Practice by:

For staff:

  • providing on-going education to personnel on various state and federal laws, regulations, standards, and documents that guide the real estate valuation process.
  • creating an atmosphere that encourages education beyond minimum requirements

For appraisers:

  • creating an atmosphere that encourages education beyond minimum requirements
  • developing and presenting quality educational courses and seminars which offer appraisers practical and effective information that will improve their appraisal skills.

In recognition of the importance of preserving the integrity of the mortgage lending process for the benefit of the general public and the parties involved, ACR subscribes to the following principles for the management of the appraisal process as a third party appraisal management company. This statement identifies business related principles we have adopted, intended to promote mutually beneficial business relationships between management companies and professional appraisers. Adherence to these principles will help ensure that??

  1. quality compliant appraisals are prepared by competent appraisers for financial institutions in a timely manner and
  2. that appraisers are compensated with customary and reasonable fees commensurate with their experience, geographic area and work quality.

By agreeing to promote these principles and display this statement, ACR commits to the following principles:

  1. An independent appraisal process is a necessary and important part of the mortgage finance system and ACR adheres to the highest ethical standards in providing appraisals performed by competent appraisers free of improper influence.??
  2. Appraisers must be compensated by appraisal management companies at a rate that is customary and reasonable in the market area of the property being appraised. Quality takes priority over price; however, ACR would be negligent if it overpaid for appraisals on behalf of its clients’ borrowers.?
  3. ACR supports full disclosure of all appraisal related fees, including the separate disclosure of administrative fees, to consumers, clients and users of our services.
  4. ACR acknowledges that each appraisal assignment is different and that sufficient time and compensation reflecting the uniqueness and complexity of the assignment are necessary for the development and delivery of a quality appraisal.?
  5. Competent professional appraisers are required to ensure a safe and sound system of mortgage finance and effective consumer protection. An appraiser who pursues advanced appraisal education and certifications will receive more assignments than an appraiser who meets minimum certification and license requirements.??
  6. ACR supports a reasonable and fair dispute resolution process and procedures for resolving issues that might arise between appraisers and appraisal management companies as a necessary component of a sound business relationship.?
  7. An appraisal and an appraisal review require experience, geographic and market competence and must comply with the Uniform Standards of Professional Appraisal Practice.
  8. Appraisal reviews shall be prepared by competent qualified ACR staff and independent review appraisers. Formal requests for reconsideration of value shall be based on verifiable information and data.??
  9. Quality assurance reviews shall be prepared by competent qualified ACR staff and independent review appraisers.?
  10. ACR supports continuing professional education as a necessary requirement and encourage consistent participation in programs through incentives and promotion.??
  11. ACR affirms that local market data, concessions, and other relevant information regarding the sale, utility or marketability of a subject property or comparable property must be made available and be considered.??
  12. ACR supports periodic audits for compliance with generally accepted appraisal standards and state and federal requirements.
  13. The process for inclusion and exclusion of appraisal professionals, and the policies and costs associated with being part of an appraiser panel, are clearly disclosed in writing and include a reasonable and fair dispute resolution process.??
  14. To maintain and ensure the confidentiality and security of data, modification of appraisal reports and the use of an appraiser’s digital signature is prohibited for any purpose other than those expressly authorized by the appraiser.??
  15. ACR commits to reporting all violations of law and standards by any party involved to the appropriate agency and authority.?
  16. ACR supports appraiser licensure and adherence to the Uniform Standards of Professional Appraisal Practice for all real estate valuation services provided for compensation.
  17. ACR’s expects its appraiser partners to:
    • maintain an independent appraisal process by adhering to Uniform Standards of Professional Appraisal Practice??
    • accept assignments with geographical competence
    • exhibit and promote professionalism in appraisal business manners
    • provide meaningful data, analysis and conclusions when completing appraisal assignments for ACR
    • be responsive during a value dispute resolution process??
    • maintain good public relations for ACR