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Appraiser Selection and Independence    
July 6, 2023
QUESTION
We had a problem recently with one of our appraisers. Long story short, he had a criminal background that we did not know about. We found out about it when he got caught falsifying his evaluations by getting bribed by a loan officer. 

Both the appraiser and the loan officer were fired. As the one and only compliance manager in our company, it is up to me to revise our appraiser independence policy. I need to know how to select appraisers and how to manage our appraiser list. 

What criteria should I use to select appraisers? 

How do I manage the appraiser list?
ANSWER
Don't be too hard on yourself. You might have a decent appraiser independence policy; however, people who are set on committing crimes will tend to ignore your standards and do whatever they can to defeat your protective systems. 

This is why it is not sufficient just to have a good appraiser independence policy. You must monitor it and conduct risk assessments. We offer the AIR Tune-up to give you the feedback you need about Appraiser Independence Requirements. Contact us and we'll send you information about it. 

An institution's collateral valuation program should establish criteria to select, evaluate, and monitor the performance of appraisers and persons who perform evaluations.
 
The criteria should ensure that:
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Did You Know?

What are the
seven primary factors
to consider in
prefunding
quality control audits?

A full file review to confirm that the following documents are present and complete, the data relied upon in making the underwriting decision is accurate, and the underwriting decision is adequately supported:*

  1. AUS data integrity;
  2. Employment;
  3. Social Security Number ;
  4. Assets;
  5. Appraisal;
  6. Income calculation documentation;
  7. Mortgage Insurance.

*Source: Fannie Mae: Quality Control Self-Assessment (2021)
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