SoCal Direct is an independent, third party appraisal management company and has reviewed Dodd-Frank Act Appraiser Independence regulations. We have adopted written policies and procedures to ensure full compliance with Appraiser Independence standards. These policies and procedures were written in compliance with Appraiser Independence. Based on these policies and procedures, the SoCal Direct staff effectively manages all aspects of lender-appraiser communication to ensure that lender clients are in compliance with Appraiser Independence standards.
1. Appraiser Independence Safeguards
2. Borrower Receipt of Appraisal
Current regulations state that the lender shall ensure the borrower is provided with a copy of the appraisal in no less than three days prior to the closing of the loan unless the borrower waives the three day requirement.
3. Appraiser Engagement
SoCal Direct is fully responsible for the selection, retention, and compensation of the appraiser. All members of the lender’s loan production staff will be forbidden from communication with the appraiser with regard to loan amount, target value, or loan-to-value ratio, as well as the selection, retention and compensation of the appraiser. Appraiser selection criteria considers the following attributes: competency to perform the order, appraiser’s approval status with a specific lender, appraiser availability, appraiser performance, turn time requirement, distance from the property, and current capacity. SoCal Direct has adopted written policies and procedures implementing Appraiser Independence, including the mandatory reporting provision for any possible USPAP violations and/or errors that result in a significant mischaracterization of value.
4. Prevention of Improper Influences on Appraiser
SoCal Direct is an independent third party appraisal management company and does not have any ownership affiliation with any lender. SoCal Direct will not provide “any estimated or target value of the property or the loan amount applied” to the appraiser. SoCal Direct ensures that compensation “does not depend in any way on the value arrived at in any appraisal”.
5. Referrals of Appraisal Misconduct Reports
SoCal Direct is aware that if any lender has a reasonable basis to believe that an appraiser or appraisal management company (AMC) is violating applicable laws, the lender will refer the matter to the appropriate state or federal authorities.
6. Representations and Warrants
SoCal Direct policies and procedures are in full compliance with the Appraiser Independence standards. Therefore, lenders can certify, warrant, and represent that the appraisal report was obtained in a manner compliant with Appraiser Independence provisions, as established in the Dodd-Frank Act.
7. Scope of Code
SoCal Direct is aware of nothing in Appraiser Independence provisions that should be construed to establish new requirements or obligations that:
(a) require a lender to obtain a property valuation or use a particular method for property valuation
(b) affect the acceptable scope of work for an appraiser for a particular assignment
(c) require the lender or third party to take any action prohibited by law.
8. Customary & Reasonable Fees
SoCal Direct is paying a fee to the appraiser it considers to be Customary and Reasonable in compliance with Presumption One of the Dodd-Frank Act. Fees paid are based on fee schedules obtained from independent third party surveys with consideration given to complexity, geographic market, type of property, scope of work, appraiser qualifications & experience, appraiser professional record, and volume-based discounts. SoCal Direct encourages appraisers to comment to management if they do not agree that fees assigned to specific geographical locations and property types are Customary and Reasonable. These comments will be collected and considered on a regular basis.
9. Appraiser Independence & Competency Statement
The appraiser will include the following statement (or something very similar) in appraisals completed for SoCal Direct:
The appraiser understands Appraiser Independence provisions which are required for FHA financing and have replaced HVCC, as per the Dodd-Frank Act. The appraiser is aware of no acts of coercion, extortion, inducement, bribery or intimidation of, compensation or instruction to, or collusion with a person that performs valuation management functions. The appraiser has not been provided by the AMC or loan production staff with an estimated or target value, the loan amount, or loan-to-value ratio for the subject property. There has been no communication with the loan production staff or AMC that violate Appraiser Independence standards. In the event of a purchase transaction, the appraiser has been provided with and reviewed the sales agreement. By accepting & completing this assignment, the appraiser is certifying to the AMC that s/he is competent with the specific property type and geographic location of the subject property.
10. Appraiser Independence Certification
The Appraiser Independence and Competency Statement included in each report by the appraiser, combined with full confidence that SoCal Direct has appropriately followed all policies & procedures to remain compliance with Appraiser Independence regulation, will result in an Appraiser Independence Certification accompanying each appraisal report delivered by SoCal Direct.