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mented by GPS- and time-stamping, has revolutionized our ability to ensure real-time quality control. The who is more of a challenge; however, through a rigorous system of vendor registrations that require background checks and photo identification of all workers, property preservation firms can create a system that provides the best possible assurance that vendors are compliant. These efforts should begin with a vendor contract that clearly articulates all of the vendors' compliance obligations, including code of conduct, licensing, confidentiality, and hiring and training standards. Vendors should also be required to warrant that they understand the consumer protection regulations that they (and the property preservation firm as well as its clients) are bound by. Also vital in the compliance chain is a team of regional vendor managers who are in constant contact with the property preservation firm's major vendors. Additionally, a QC team should maintain vendor scorecards, conduct ghost audits of vendors' work, and perform spot property visits. Periodic site audits should be conducted as well to ensure vendors' operations centers possess the proper security systems and that they are adhering to training programs and documented policies and procedures. If vendors come up short on any of the prescribed standards, it's a good idea to engage in a robust coaching and remediation program to get them back on track. We anticipate regulatory compliance will only get stricter in the coming years, which makes it crucial to build a compliance system that not only meets the current standards, but can also be adapted to meet future regulations. Marc Hinkle joined Mortgage Contracting Services in 2011 and has been instrumental in the company's efforts to enhance the client experience and integrate new technologies. He previously spent 17 years in senior loan servicing positions and was involved in negotiating and implementing outsourcing solutions through the servicer's third-party vendors. PROPERTY VALUATION Tami Rund President ASSET VALUATION & MARKETING Impervious to New Regs? No one, including valuations providers, can escape the changes and requirements stemming from Dodd-Frank. Sweeping changes generated by the DoddFrank Act have fundamentally changed every aspect of the mortgage business, including the valuation industry. Valuations providers who expect to compete in this era of greater oversight and regulation must update their policies and procedures to include stricter business practices. Companies should perform an internal risk assessment audit and identify areas that can impact their client's security or compliance. If your company receives any client non-public information (NPI), it might be beneficial to undergo an SSAE 16 audit. Valuation companies can assist their clients by organizing and having available the documents they need to demonstrate compliance, including but not limited to certificates of insurance, SSAE 16 report, policy and procedures manual, business continuity/disaster recovery plan, and your contract or service agreement. Forward-thinking companies are also using this time to assess their diversity policies and practices. The Consumer Financial Protection Bureau (CFPB) and five other federal agencies recently proposed joint standards to guide regulated entities in evaluating how they contract with third-party companies owned by women and/or minorities. Given the scrutiny, it wouldn't be surprising to see regulation replace policy at some point in the future. Although most Dodd-Frank changes that specifically impact the valuation industry were finalized in April 2011, two additional rules that will affect origination and servicing processes become effective on January 18, 2014. The first rule requires creditors to provide all applicants with a free copy of every appraisal and other written valuation developed in connection with a new loan secured by a first lien. This also applies to loss mitigation — OCC Bulletin 2013-29, Oct. 30, 2013 transactions, including: "The OCC expects a bank to practice effective risk management regardless of whether the bank performs the activity internally or through a third party." 50 »» Loan modifications »» Short sales »» Deeds-in-lieu »» Reverse mortgages »» Time-share loans covered by Reg B While creditors may charge a reasonable fee for the valuation, they cannot upcharge or charge for the copies provided to the applicant. The rule defines a valuation as an appraisal, automated valuation model (AVM), broker price opinion (BPO), or any other internal document that assigns value to a property—with all attachments or exhibits—whether or not the valuation is used or considered. »» Delivery of all valuation documentation is required if: »» Credit is extended »» Credit is denied »» Application is incomplete »» Application is withdrawn »» Applicant does not pay the reasonable fee The second rule affects higher risk mortgages (HRMs) defined as non-QM loans with an annual percentage rate (APR) that exceeds prime by at least 1.5 percent for conforming loans and 2.5 percent for nonconforming loans. This rule requires an interior written appraisal, completed by a fully licensed or certified appraiser, for all HRMs. A second appraisal, to be paid by the creditor, is required if the home was acquired during the previous 90-180 days with a price increase of more than 10 percent in 90 days or 20 percent in 180 days. Numerous, severe market cycles have brought significant changes over the last 20 years that I've been working in the industry. And, while it might be argued that DoddFrank and the CFPB have produced the most dramatic changes yet, there is no question our industry will adapt and thrive. The challenges we face can be overcome if we engage in coordinated efforts through our industry partnerships and the organizations that foster meaningful dialogue between mortgage industry representatives and government oversight entities. Valuations providers who provide accurate, reliable reports that comply with the new regulatory requirements will emerge an even more vital partner in the new landscape.   Asset Valuation & Marketing, Inc., was founded in 1995. Tami Rund joined the firm in 1996 and was instrumental in growing its business. She played a key role in developing the company's proprietary valuation platform for the BPO market.

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