Importance of Appraisal Function Monitoring

Duration: 60 Minutes
Your bank policy has been revised to meet all the regulatory requirements. Your internal processes flow out from and reflect the regulatory mandates listed in your appraisal policy. Is that it? Are you done, leaving only day-to-day issues to contend with? Unfortunately, the regulators answer to that question is No. Banks must not only set up a framework for a regulatory compliant appraisal program, they must shine periodic attention on the nuts and bolts of the process to ensure vigilance has not been relaxed or independence impaired.
Appraisal Function Monitoring
Instructor: Heidi Lee
Product ID: 503910
Objectives of the Presentation
  • You will learn how the Interagency Appraisal and Evaluation Guidelines define appraisal function mentoring
  • A basic framework for what elements of the appraisal function must be monitored is provided
  • You will learn best practices for establishing your appraisal function monitoring process
  • You will be given tips in the implementation of your appraisal function monitoring process
  • You will learn how monitoring must be codified in the bank’s appraisal policy
  • You will learn the importance of proper reporting and oversight as an issue for mentoring
Why Should you Attend
  • Banks are astute in assessing credit risk, but often underestimate the risk to the institution from lack of full compliance with the Interagency Appraisal and Evaluation Guidelines
  • Most banks are not aware that appraisal function monitoring is a mandate of the regulations
  • Even banks who are aware that monitoring is required often limit the scope of monitoring to appraisal quality review, excluding the other mandated monitoring elements
  • Monitoring is not difficult, but the process has to be crafted and put in place, to be periodically implemented according to the planned process
  • This webinar provides context for a better understanding of appraisal function monitoring, in practice
Areas Covered
  • You will learn why appraisal function independence is a key element of appraisal function monitoring
  • You will discover the importance of education; within the appraisal function, within the lender groups, and up the food chain
  • You will learn best practices for lender involvement with the appraisal function
  • You will learn the real-world definitions and application of regulatory terms that applied to appraisal function monitoring
  • You will learn the regulatory focus on banks setting up risk-based appraisal function that corresponds to the size, corporate culture, lending practices, and personnel assets of your particular institution
  • You will get tips for monitoring and improving appraisal quality
Who will Benefit
  • CEOs and presidents of community banks
  • Credit administration officers
  • Chief appraisers/appraisal function managers
  • Credit officers involved in the appraisal function
  • Credit reviewers and other credit side personnel
  • Lending group managers
  • Employees tasked with elements of the appraisal function
Topic Background
Financial institutions (banks and credit unions) 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 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.
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  • Presentation handouts in downloadable PDF format will be updated on your OCP Account within 24 hours of the purchase of the product
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Instructor Profile:
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 special interest in credit risk and operational risk.
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