Center Management Firms

Within the lending and valuation industries, management companies have come to play a major role in the creation of compliant and accurate valuations and appraisals. As management companies have positioned themselves as the outsourcers of the valuation process for lenders, it is assumed, often wrongly in the present environment, that they are a force for independent, accurate and compliant appraisals and valuations, simply put, some are such a force and others are not.

In the present environment the lending customers of management companies have come under much more stringent scrutiny in the area of valuation compliance. As most management firms are aware, there has been a rash of memoranda from federal regulators, lawsuits and regulatory audits that have impacted the lending community.

The Center for Responsible Appraisals and Valuations

The National Community Reinvestment Coalition (NCRC) is the nation's largest consumer interest group that focuses on real estate lending. A coalition of over 600 local consumer groups, we are dedicated to ending the valuation abuse, that has become a major form of predatory lending. We have formed the Center For Responsible Appraisals and Valuations (The Center) to accomplish together what legislators and regulators have failed to do.

The center has created a Code of Conduct, within voluntary compliance agreements for industry participants, that reinforces the Federal and State laws, rules, regulations and guidelines and gives signatories a means of alternative dispute resolution when they claim that they have been harmed by a breach of that code. By becoming an center signatory, a management company agrees to that code of conduct and to the alternative dispute resolution method that has been created through the American Arbitration Association (AAA). That method offers complainants an online, quick and inexpensive means of reaching voluntary resolution with a respondent. Where necessary, specialized mediators will be chosen to assist in the settlement of disputes online and by phone in an inexpensive and time efficient manner. Finally, if all efforts fail, the parties can choose to have a more formal arbitration of the dispute, under modified commercial guidelines of the AAA.

Participation and Benefits to Management Companies

The ability to respond to claims of improper influence and retaliation under the Alternative Dispute Resolution methods. Non-signatory management firms will be placed in the position of having to respond to complaints through regulators, organized consumer and center local affiliates' activities. Alternative Dispute Resolution can only create injunctory relief and not monetary damages and, thus, the management company need only remediate instances of improper conduct rather than face claims of monetary damages from center signatories.

The ability to compel review of what is believed to be poor appraisal results through the center center review process and to insulate themselves from claims of improper retaliation if they simply insist on an appraiser generally following the recommendations of the center.
As management companies proclaim themselves to be compliant outsourcers of a function that is regulated, they themselves are generally not subject to such regulation, thus, must qualify for signatory status in a manner that goes well beyond the standards set for lenders:

1. Management firms must agree that neither they nor any entity or person with whom they are affiliated (a) has an interest in the property being valued, (b) in the transaction that is the subject of the valuation; (2) is receiving any form of revenues or remuneration within the transaction for which the valuation is being obtained.
2. Management firms must agree to set up an auditable internal review system to insure that no improper influence or retaliation has occurred.
3. Within 2 years a management firm must submit to an independent audit of its valuation results, methods and practices to insure accuracy and compliance
   
4. Within 2 years, at preset levels, the management firm must agree to, in 90% of assignments, use center signatory appraisers who have agreed to the code of conduct and alternative dispute resolution.
5. Management firms must pay a small percentage of the amount they receive for valuations from center signatory lenders to defray the costs of audit and review.
6. Management firms must agree to publish and police a policy of discipline against employees and appraisers who violate the code of conduct.
   

Cost of Signatory Status for Staff Appraisers/Valuation Personnel

Less than 10- $500 per year
11 to 100 - $5,000 per year
101 to 500 - $25,000 per year
501 or higher $50,000 per year
Cost of Complaints
File a new dispute: $125

To Find Out More click here or call us at 866-244-9708

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