Financial firms are not just responsible for ensuring appraisals are accurate in this post-Dodd-Frank world, they also are liable for the actions of individual appraisers who fail to provide quality assessments on property values.
The result of this change is a highly rigorous regulatory environment, where checking up on vendor partners is as critical as following up on an appraiser's final work product.
For this very reason, Comergence, a data analytics and risk management firm, launched a product called Eagle Eye.
This new tech tool allows institutions to conduct background checks on appraisers, so servicers and lenders don't end up taking heat from financial regulators over the work of outside appraisal professionals.
"The Consumer Financial Protection Bureau has made it clear that lenders are responsible for vendors that are in contact with consumers," said Greg Schroeder, president of Comergence.
In fact, CFPB guidelines on Regulation Z under the Truth In Lending Act specifically state "creditors or settlement service providers that have information about appraiser misconduct (need to) file reports with the appropriate state-licensing authorities."
Eagle Eye keeps its users constantly updated when changes hit the system, so clients will essentially receive alerts on individual appraisers that are evaluated and flagged through the system.
"More and more lenders are requiring appraisal management companies that they entrust with the order of their appraisals to perform a thorough background check on these appraisers," Schroeder said when the platform first launched. "The management of this process is a huge task for most AMCs and lenders."
It's expensive conducting this level of due diligence, but Eagle Eye is an affordable solution for financial firms since subscribers share the cost of the overhead, making the solution within reach of financial firms of all sizes. A central depository stores appraiser data, giving quality appraisers an advantage in the process if their profile within the system sets them apart as a quality appraiser.
An appraiser's profile is stored in the system, so it can be recalled multiple times.
Consumers who will eventually come in face-to-face contact with an appraiser also will appreciate the system since it allows the end-customer to review an appraiser's photo and information via e-mail.
"The consumers will hopefully become more comfortable with appraisers," said Schroeder. "We discovered the consumer would love the ability to validate and check out who is coming to their home."