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56 EXPERT OPINION "Dodd-Frank and the Interim Final Rules have set the minimum requirements for state regulation of AMCs. While the federal requirements provide a clear road map for registration and oversight of AMCs, it has enabled states to add their own twists on the minimum requirement. These twists have created 38 different ways AMCs must comply in order to do business in their states. Among these are varying bond and recovery fund requirements as well as Uniform Standards of Professional Appraisal Practice (USPAP) Standard 3 compliant reviews of a statistically significant sample of appraisals received." –TIM SCHERFF APPRAISAL MANAGEMENT TIM SCHERFF COO at PCV Murcor As with all businesses in our industry, compliance was the buzzword for valuations in 2014. Appraisal management businesses faced an increased regulatory burden full of new compliance rules that have become the fabric of banks and other lending institutions. Further, as an additional consequence of increased compliance requirements, appraisers now face increasing barriers to entry. While few would argue that regulations are necessary, as we reflect on 2014 we need to re-evaluate the cost of compliance. As an industry, we have made great strides toward normalized compliance at the national level, but it is the regulations at the state level that have had a greater impact on appraisal management companies (AMCs). Dodd-Frank and the Interim Final Rules have set the minimum requirements for state regulation of AMCs. While the federal requirements provide a clear road map for registration and oversight of AMCs, it has enabled states to add their own twists on the minimum requirement. ese twists have created 38 different ways AMCs must comply in order to do business in their states. Among these are varying bond and recovery fund requirements as well as Uniform Standards of Professional Appraisal Practice (USPAP) Standard 3 compliant reviews of a statistically significant sample of appraisals received. In addition, states have also established varying time requirements, for payments due to appraisers. e net result of all the new federal and state regulations is, unfortunately, an increase in costs that will ultimately impact consumers. Another impact to the AMC and financial services industry is the dwindling number of licensed and certified appraisers in the United States. e Appraisal Institute has estimated a 2.6-percent annual decrease in the number of active appraisers in the six years leading up to 2014. Further complicating this trend is the new college requirement effective January 1, 2015. Applicants for a residential license will be required to have a minimum of 30 college semester units, whereas applicants for either a certified residential or a certified general license will be required to have a four-year college degree. e net result will be a slowdown of new appraisers entering the profession with an additional barrier to entry. is will also result in increased costs that will ultimately affect the consumer. As the supply of appraisers decrease, the cost of services rendered will increase. As we move into 2015, practical and sensible regulations combined with responsible changes from the valuations industry are what will be required. We have begun the important work of change to modernize our industry. Let's ensure the future of valuations by working collaboratively and with an ever-present eye on the impact we make moving forward. ASSET MANAGEMENT/ ASSET DISPOSITION JOSEPH DAVILA President, Mortgage Services at Altisource In the coming year, I expect to see a declining, but very meaningful, inflow of distressed, pre-foreclosure and real estate owned properties–perhaps a longer runway than the industry may have originally thought. While the overall delinquency profile of the market has definitely improved, there is still a material backlog of pre-foreclosure cases moving through a system that has become arduous and time-consuming. At the same time, I anticipate we will see banks and servicers continue to downsize internal departments and rely more heavily on third-party providers to handle their asset management and disposition requirements. Compliance requirements will continue to increase and the associated costs of compliance will similarly rise, driving down operating margins in title, preservation, and other components of the asset disposition process. is will likely result in more exits from the space and market consolidation among providers. As a result, providers who deliver technology and processes that assist with compliance in an end-to-end, integrated fashion will persevere. As market constituents continue to seek out flexible and efficient technology solutions to assist with compliance, we expect to see clients rely more heavily on platforms such as our Equator® REO management platform and our Hubzu® online marketing and sales platform to enhance their

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