HVCC Compliance and Non - Influence Certificate

The mandate by Fannie and Freddie for HVCC Compliance has caused the appraisal and lending industry to make some major changes to the way they do business. One of the most important aspects in ensuring the appraisal was done in compliance with the HVCC is that no influence of value was place on the appraiser who inspected the property and the appraisal was ordered through and delivered from the correct management company.

One way to ensure authenticity of the appraisal and compliance with the code is to have the national vendor attach an HVCC Compliance Certificate to the appraisal to guarantee it was delivered from the appropriate vendor and the appraisal was done in full compliance with the HVCC.

Fannie Mae and Freddie Mac clearly state the responsibility of assuring the appraisal was done in compliance with the HVCC falls 100% on the lender. However the majority of lenders are looking for a little assistance with the ensuring the appraisal was delivered in compliance with HVCC for the loan file. The HVCC Compliance and Non-Influence Certificate can be one way of achieving this. The certificate can be placed in the reps and warrants and attach to the loan file as a guarantee that the appraisal is fully compliant with the HVCC.

So what should an HVCC Compliant certificate include?

Things to remember: This should be a custom certificate that is specifically for the property and borrower, a standard "stamp" certificate is not a sufficient security measure.

1. The borrowers name, address and date of the appraisal.
2. A unique original key code that is specific to that compliance certificate. Similar to a what you use to register new software on a computer.
3.A link to the original appraisal that is on the vendors website. This will assure you have a copy of the original unaltered appraisal directly from the vendor.
4. Link to a copy of the original request that was sent to the appraiser.Having a copy of the request that the appraiser was sent will be proof that no pressure to "hit the number" was put on the appraiser and that truly no influence occurred.
5. Copy of the e-mail log from the appraisers office. This will allow the underwriter, compliance coordinator and investors to see the communication back and forth from the appraiser and assure there is no undo influence on the appraiser to hit the number or threats to get a higher value.


The above is a starting point for most companies as to what to look for in an HVCC Compliance Certificate. If you would like to see a copy of ours. Please e-mail bcoester@coesterappraisals.com and I will send you one.

HVCC Compliance - Top 5 must for a headache free solution

HVCC Compliance is causing major headaches and massive delays within the industry. Currently the industry is scrambling for a headache free solution which will enable them to get the best possible service and for the client and the customer to be satisfied with the overall transaction. Currently there are very few companies which offer a totally HVCC Compliance solution that meets any reasonable customer service expectations.

As always its not just about getting the appraisal done but "how" the appraisal gets done is just as important as the appraisal document itself. Most borrowers and loan officers aren't in total illusion to the market and most understand that property values are declining and that the majority of homeowners owe more than there home is worth. What they don't understand is why it takes so long to get the appraisal scheduled, inspected and final report delivered. Another compliant throughout the industry is that if the appraisal is going to take as long as it does why does the appraisal have errors and seems as if the appraisal was just "thrown" together. These are valid concerns as typically once the appraisal is ordered its pretty much a done deal if the value is sufficient to support a loan.

Back to Basics

Its essentially about communication,attention to detail,service and pull through. Everyone claims they have the best customer service, the latest technology and the most experience. But where they drop the ball is the effectiveness in which these processes relate to each other and how they leverage these technologies and process to enable a better overall deliver and a quality product done in a timely and professional manner.

So what is are the 5 must for a headache free compliance solution?

1. Its not in the size of the company but in the relationships with the vendors that make the difference. Look for a company that has truly established relationships with vendors throughout the nation that can get your appraisals done fast and correctly. Without the relationships you have nothing,its really that simple. An appraisal company could have a staff of 50,000 customer service representatives but if the appraiser thinks the person is not knowledgeable about the business and is just a CSR in a call center making a routine call you can forget about the vendor wanting to deliver and preform.

2. Vendor Fees - A company that will pay the appraiser a reasonable fee for there work will not only have better vendor relations but much better appraisals and apprasiers on there fee panel. Regardless of what USPAP requires and standard underwriter requirements. The cheaper the appraiser the worse the quality of the work will be. Having minimum's for vendor payment as well as a clear pricing structure will ensure that when things do get busy all of your work isn't pushed to the side in replace of higher paying FHA or attorney work.

3. Experienced Staff is just as important as the appraiser doing the appraisal the reason is simple, respect. Having staff who are in contact with the vendor who are experienced, knowledgeable, organized and proactive will make sure the vendor understands that this is serious business and that we are in no position to try and pull anything or slack off because these guys are pros. We often get complements from our lenders and appraisers that when someone has a question there is always someone in our office who knows the answer or can get the answer very easily. This will incentive the appraiser to do a better job but also the lender will truly feel as if they have a person and a company they can rely on.

4. Team focused account management - As they say when you chase two rabbits you lose both. This goes for the appraisal world just as much. A typical appraisal requires a minimum of 30 - 45 minutes of hands on work. Some more complex propeties might take up to a 8 hours of work one on one with the vendor. This can be collecting payment, assigning the appraisal, scheduling the appraisal, checking on the stauts, communicating revisions, review, invoicing and final delivery. All clients have a different way of doing things and a different way there account should be managed. Without having a designated team to manage the account things will slip up and slip up fast. The reason is simple, focus and extreme focus is what is needed for properly managing the appraisal process from start to finish.

5. A written, signeed, service level agreement. A document outlying the entire process, expectations, assignment, delivery, billing, QC, review, turnaround, vendors, customer service and pull through is vital to a win-win relationship. This is one of our main focuses when starting with a new customer. Hammering out the details will let the customers really figure out what they want but also assist you in managing your expectations to what good service really is and what the default resolution procedures should be for the account management process.

All of these are very important and focusing on the above 5 when choosing a vendor to work will enable your company to be successful.

Coester Appraisal Group in route to 2009 America Credit Uniion National Association

Coester Appraisal Group, goes to BOSTON!!

The Hynes Convention center is the hose to the annual CUNA conference held in the historic town of Boston, MA. Coester Appraisal Group will be attending in our continual effort to service our clients to the best of our ability. Newly appointed National Sales Director, Brian King will also be in attendance and we both are looking forward to a great trip, meeting with some great clients and seeing the great historic city. Please look for updates and photos soon.

Brian King named National Sales Director of Coester Appraisal Group

The hard working dedicated team at Coester Appraisal Group would like to welcome Brian king to the team. Brian, is a seasoned veteran with over 18 years of experience in the industry and brings a wealth of knowledge and insight on the industry. Brian will be acting as our national sales director and ensuring our clients get the best service possible.

He has extensive knowledge in Prime, Alt-A and Sub Prime product sales, design, implementation, performance, profitability and liquidity analysis. He has over twelve years specializing in risk management and product development. Brian was the Vice President of Correspondent Lending for Emax Financial Group. His primary role was to develop the conduit platform to purchase non-prime assets from originators nationwide. Brian also worked as Manager of Credit Analysis for Luminent Mortgage Capital. He was responsible for credit decisions surrounding new investments for the REIT as well as surveillance on Luminent's credit sensitive bond portfolio. From 1991-2006, Mr. King was employed with PHH Mortgage where he held various management positions in trading and product development. He was responsible for trading, deal management, daily pricing, loan sales and pipeline management for well over 65 "Specialty" products including Alt-A, Sub Prime, Agency and Bond/Community Lending. Brian's understanding of the whole transaction will ensure that our client’s expectations are always exceeded

If you need to contact Brian he can be reached at 888-485-1999 ext 2 or at bking@coesterappraisals.com.

HVCC Compliance

The importance of properly understanding HVCC compliance is more important now then ever before. By understanding what it takes to effectively manage the appraisal process will empower you to make an educated decision regarding your appraisal needs and your HVCC Complian solution.

There are multiple way to become compliant but ultimately it comes down to just two. Either you:
1. Handle HVCC Compliance internally or
2. You outsource the process to a third party vendor.

Answering this questions of what to do really depends on your business model. Also what your goal as a company is should be considered heavily.If your a small bank completing loans in only one or two states with relatively low volume (50 or less)it might be feasible to keep the compliance process in house. However once you get into multiple states with multiple offices and a larger volume hiring a third party vendors becomes the best option by far.

The reason is simple, experience and money.

To efficetively manage an office moving 100 or more units per months its going to take a team of at least three people. Two admin and I staff apprasier for Quality Control. These three people alone would cost upwards of $200,000 as an expense to the company.

A third party vendor could handle the exact same thing for no cost. Also by hiring a third party company it allows you to not only get a HVCC Compliant solution at no cost but also enable the spirit of compeition among vendors and customer service.

From what I have experinced and the industry leaders I am in contact with the third party management company is the best option for most companies. The appraisal process is a very involved process and hiring a professional third party firm to manage the process is extremely effective way and the best way.

Our clients love working with us because they know that we are experinced, responsive and timely. Having a go-to company with a strong realtionship is not only vital to your sucess as a company but to the sucess of your loan officers and your customers.

Best Pratices for Working with an AMC

Obviously the HVCC has caused a major impact to the mortgage industry. An entire industry is dealing with a new workflow and delivery process and people are still getting adjusted to the changes. From what was once just a simple vendor management (block and tackle) operational procedure, now is much more complicated as people deal with multiple offices, various delivery requirements, rapidly changing legislation and on top a distressed market.

There are various options that a lender can choose to be compliant with the HVCC. One of these being hiring a third party appraisal management company to facilitate the process and ensure HVCC compliance.

There is no best option, but only an option that fits your companies needs the best.

Depending on what type of business model you have will determine the best solution for you and your business. Banks, correspondent’s, mortgage bankers or wholesale lender involved in TPO business all have various compliance needs and requirements. To effectively manage the appraisal process they must work hand and hand with the appraisal management companies to ensure a quality delivery process.

What your business model is will help determine what type of solutions an AMC will offer you. This will also determine the scope of work necessary to commence commerce.

If you do decided to use and AMC understanding what they are is extremely important to an effective relationship.

So what is an AMC?

An AMC typically doesn't do the appraisal, but rather finds the best appraiser to complete the appraisal for the transaction. They establish relationships with vendors nationally and are able to ensure a quality products delivered timely. For some companies they might even manage a panel of appraisers and assign orders on a random or rotating basis working from a list.


What an appraisal management company does is manage the valuation process for you.


Things to remember:
They aren’t the appraisers, nor do they always have access to all of the information the local appraiser have.

Many offer a variety of products such as AVM’s, BPO’s, Review, and other various services that should be taken advantage of.

What are the best practices to work with an AMC?

CRITICAL SUCCESS FACTORS:

From our clients relationships we have found the more time invested upfront will enable a better overall relationship and better fulfillment from both companies.

Outlying exactly what is expected and what is required is best for both business relationships. Having a service level agreement outlying the entire process from start to finish is vital to a establishing a win-win relationship that will last.

Problems, and major problems will occur and having procedures in place to prevent thing is extremely important to long term success.

Things to consider, and that must be addressed:
1. Review & QC Procedures
• Helping the AMC with what you require and expect for appraisal quality is important if you expect the AMC to perform to your standards. Thinking they will “know what to do” is not a good approach as different clients have very different management processes and procedures and by letting them do what they want and what is expected is extremely important.

2. Panel Management
• Other than just simply appraisals most AMC’s will offer some appraiser panel management specifically for your company. Managing your Approved or “do not use” vendors and ensuring the appraisals are sent or not sent is something you should consider letting the AMC do. We handle panel management for some banks and lenders we work with, and have had great success with the process. By setting it up so you only have specific approved vendors you limit the amount of exposure your company has to dealing with, too many vendors. Also if your company requires appraisers with specific qualification criteria or appraisals written in a certain way this will aide in the process of ensuring all appraisals are done right the first time.

3. Escalading and default resolution procedures
• Everyone knows problems will occur and having a procedure in place for addressing these issues beforehand is critical for a long term working relationship. Just as simple as what to do when the appraiser doesn’t show up, or if they feel the value is way too low or the appraiser goes MIA is extremely important to have. By having these procedures in place it will ensure that rather than just pointing figures at each other steps are taken to resolve the issue and continue commerce.

4. Compliance and reporting procedures
• Staying in compliance with the HVCC is a must for all Fannie Mar and Freddie Mac sellers and knowing that the AMC is responsible for and what your responsible for is extremely important. Most AMC’s will include a “compliance certificate” on all appraisals. This is not the same certification of compliance you as a lender will have to provide to Fannie Mae and Freddie Mac, but more to ensure the report ordered is completed by an appropriate vendor and not someone impersonating the vendor.

5. Delivery Process
• There are various web portals that can handle the delivery process for lenders. Companies like GlobalDMS, AppraisalPort, and Real EC all offer compliant delivery process for lenders to manage multiple national vendors all with a customizable delivery process.

6. Borrower Delivery
• The borrower is now required to get a copy of the appraisal 3 days after completion which means that someone is going to be responsible for delivering the report to them. E-mail is usually the best way and providing the AMC with the e-mail address of the borrower is extremely important. Yes and AMC can call and get it however some AMC’s process 100’s of orders per day and calling all of the borrowers as well as ensuring delivery can be near impossible if the representative of the company is trying to track down a borrower to get an e-mail address.

7. Secondary review and QC procedures.
• After the initial appraisal is done typically its not a one and done process. Underwriters will have conditions and questions and having an expected turnaround as well as “best effort” procedure In place is extremely important.

8. Billing Arrangements
• This is probably the single most preventive delaying process of all. Having the loan officer collect payment from the borrower or a charge card number before the actual appraisal is scheduled or ordered is a huge time saver. Many often appraisals get delayed several days or even weeks trying to collect payment from the borrower.

9. Certificate of compliance.
• Even though Fannie and Freddie require the lender to ultimately be compliant with the HVCC. A lender involved in TPO business has appraisals coming from multiple channels and sometimes it can hard to say who the appraisal was from really. We have had issues with people saying the appraisal was done by Coester Appraisal Group however we did not do the appraisal they just put an invoice with our name on it. We issue a certificate of compliance on all of our appraisals. This allows a security measure in place that you know the appraisal was done by us.


From an appraisers prospective:

Allot of appraisers think that all an AMC wants is an appraiser that will do an appraisal for peanuts. This may be true with some companies however the majority are looking to pay an appraiser a fair fee for their work and just want a quality appraisal done right in a professional timely manner.

Critical Success Factors;

1. Communication
2. Updating the web and online portals daily
3. Being reasonable with the fees
4. Thinking win - win for a relationship
5. Responding to conditions and revisions quickly and thoroughly.


The ideal vendor

Someone who will deliver on their promises, and not flake out. Be a "go to person" for the company. We all want the same thing, to make money and work with great people. The better the relationship and product, the more work you will receive. It’s not about being on "the list" we have 22,000 vendors on our list we only use maybe 1,000 on a regular basis. We get over 100 calls a day from appraisers looking for work but very few that are looking to do business together with a win-win relationship in mind.