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Non-Banks' Top 3 Appraisal Needs

I wasn't surprised earlier this year when I heard that most of the top mortgage lenders are non-banks. Increased regulations on...

 Non-Banks' Top 3 Appraisal Needs

 I wasn't surprised earlier this year when I heard that most of the top mortgage lenders are non-banks. Increased regulations on banks after the housing crisis pushed many banks away from the business due to the associated risks, not to mention they are regulated differently than non-bank lenders.

With the CFPB steadily increasing its monitoring of non-banks, however, they too must be cognizant of risks, which includes working with third party partners. This means careful consideration when it comes to selecting an appraisal partner.


Here are three very important things they will need for compliant purchase appraisals.    

One reason non-banks have grown in popularity is by providing a more efficient mortgage experience. Yet appraisals are usually the most time-consuming part of the mortgage process. As the media has reported, many U.S. markets are experiencing a severe shortage of appraisers, and compliance concerns are slowing delivery times as well.


As the purchase market continues to heat up, non-banks need to be assured that the appraisal partner they choose has a system in place that identifies potential delays before they happen, so appraisals are delivered as soon as possible.


Communication. The best way to ensure timely appraisals in through a proactive communication process. Once an appraisal order is made, the lender must be kept informed of the process from beginning to end. This is accomplished through strict communication protocols that are built into each step.


The appraisal appointment itself should be scheduled within two business days, and should be coordinated with the listing agent for the property. If there are delays, the reason must be communicated to the lender, as well as the steps taken to expedite the process.


Compliance. Thanks to new rules regarding third-party vendors, mortgage bankers also need confidence that their appraisal partners will keep them informed and can assure them of a compliant valuation process. For example, Valuation Partners engineered a unique purchase appraisal process to consistently deliver high-quality purchase loan appraisals on time. This process includes strict communication protocols built into every step of appraisal transaction.


In addition, Valuation Partners has established guidelines and firewalls to ensure appraiser independence and that all relevant information involving the appraisal is shared between all parties. We also give all reports an accelerated quality review to ensure the values are well-supported, Finally, we confirm each appraiser’s qualifications before and after every assignment, including checking the appraiser’s licensing status and insurance.


While the mortgage industry is abuzz with talk of deregulation, no one really knows what’s in store. Even if changes occur, we’re not likely to see lenders take risks with appraisals. But if they choose an appraisal partner that delivers a timely, compliant appraisal process backed by strong communication protocols, they won’t have to worry about what happens next. They can keep doing what they do best—sell loans.