If appraisers seek nothing else, they strive to work in a professional environment with clients and lenders all on the same page as far as compliance is concerned.
All parties must be aware of the regulations and requirements that coincide with a compliant report. Time is always of the essence, and if reports do not follow the rules of compliancy, then it will be time wasted going back to the assignment to make revisions further delaying the process.
Enforcement is on the rise in that for AMCs and appraisers, the expanding role of the state appraisal board means increased oversight and enforcement.
“Since AMC minimum rules were finalized in 2015, the number of states with rule modifications and new registration requirements has reached an all-time high. This onslaught of activity has been challenging for many lender and AMC compliance managers,” Validox Client Services Director Ryan Sedgwick told Valuation Review. “Moving from 2018 and beyond, we are now seeing an expansion of enforcement from the state boards and the commensurate disciplinary actions, consent orders and fines.”
From the Validox view, most of the state enforcement efforts had been focused on: timely payment deadlines for appraisers, documentation related to customary and reasonable fees, USPAP compliance reviewing and reporting of active appraisers on panel, policies governing appraiser removals from active panels and proper reporting of appraiser fee and AMC fee in appraisal reports
This is certainly not, according to Sedgwick, an exhaustive list of enforcement focus, but fines and penalties for violations of the above recently have been trending higher, making the cost of non-compliance increasingly greater.
For individual appraisers, states have appeared to be more active in their enforcement of USPAP standards and appraisal quality, especially in the areas of highest and best use, contradictory statements, exposure time and supporting opinions and conclusions,” he said.
“From the mortgage lender’s perspective, the increase in oversight and enforcement is helpful in maintaining a competent appraisal industry, but the risk that the lender bears for AMC and appraiser non-compliance falls directly on their shoulders,” Sedgwick added. “Their requirements for adequate third-party oversight are growing, and when action is taken against an approved AMC or individual appraiser on their panel, the action, by default creates liability for the lender as well.”
Creating an AMC environment of full compliance is certainly not cheap, but the cost for non-compliance, including monetary damages and loss of business, is much greater. AMCs that create an environment of full compliance can see gains in new clients and overall business.
“AMCs failing to comply with state and federal regulations risk fines and state disciplinary action – which creates tremendous reputational risk – while those AMCs investing in compliance grow organically. Appraisers who ignore ongoing training and competency improvement increasingly are risking removal from active panels with state board disciplinary action on the rise,” Sedgwick said.