Continue reading »]]> By Robert Landis

For the past few years, the term Appraisal Management Company has gained a troubled reputation. I want to take a moment to differentiate between LaSalle Commercial Appraisal Management (LCAM) as an appraisal management company and the associations that have become second-nature to the use of the term AMC.

The growth of large AMC’s grew out of the government efforts to limit fraud in the appraisal business – a clear result of the collapse in the home mortgage market. What was intended to streamline appraisal practices for the sake of providing less bloated appraisals became an opportunity for the growth of large appraisal management entities who often worked along with, if not actually within, the large banks to whom they provided appraisals. Even though the new regulations specifically demanded no conversation or influence be had between the two entities, there was little specific oversight to prevent such communications. More injurious to the industry, the quality of appraisals suffered as these wholesale AMC’s began to short change the appraiser’s on their fees as they held leverage in being able to easily switch from appraiser to appraiser to better fit their overall profit margins.

The large majority of these AMC’s were in the residential side of the appraisal market. But their practices and subsequent reputations have tainted appraisal management companies in the commercial market as well.

L-CAM is different. We are an agent for banks. We are appraiser-owned. The appraisers that provide the initial estimates for our evaluation have not been hired by us. We do not pay them.  We handle the roster of workloads and keep track of the appraisers. We provide input with respect to the appraiser. We engage them verbally, but appraisals are not addressed to us.

New initiatives at the state level are attempting to reverse some of the damage caused by AMC’s that have put profitability ahead of accountability. We are, of course, watching those initiatives carefully. Like most Americans, we support efforts to bring stability back to the appraisal and lending markets. We have always maintained an upright profile within the commercial appraisal industry. Our evaluations are informed by decades of experience and a keen understanding of how the industry works.

With L-CAM, you can count on a sophisticated approach to understanding a complex market. Our job as appraisers is to identify and address where the market is appreciating. It’s how we do business every day and why we’re proud to be in the commercial appraisal management business. When the others have moved on to the next big market scheme, we’ll still be probing the market for the true values.

Continue reading »]]> by George Sikorski

A friend of mine recently commented on the government’s handling of the current efforts to bring some measure of justice to those whose misconduct fueled our latest financial crisis. He observed that federal regulations didn’t appear to have the teeth to bite the worst offenders. Out-of-court settlements, at best, would only prove that the responsible parties get away while investors suffer.

I can’t disagree with this bit of common wisdom, yet I was interested to note the new tack presented by the Obama administration. It involves the invocation of FIRREA – or Financial Institutions Reform, Recovery, and Enforcement Act of 1989. With its longer statute of limitations and ability to gather the kind of testimony usually reserved for criminal cases, FIRREA may just give the government the ‘teeth’ it needs to bite a bit harder on those who pooled and sold the kind of home loans that ultimately led to the crisis. Good luck to them.

I know FIRREA intimately. One of our most beneficial services here at LaSalle is to provide guidance to banks as they write and implement policies and procedures related to the commercial appraisal process. Make no mistake, FIRREA is intended to protect banks. But it’s not written as a step-by-step guide. The regulations are meant to be interpreted by those of us with appraisal experience who understand the full process of writing, evaluating and submitting appraisals to financial institutions who expect thorough and valid estimates.

The Risk Management Association’s Chief Appraiser’s Roundtable was assembled to work with federal regulators to tease out the intents behind specific federal regulations that affect our industry. I sat on that round table for ten years. I also had numerous conversations with federal regulators on a one-to-one basis. The message was: these guidelines have to interpreted the right way. What is the right way? Number one: protect the bank.

Other LaSalle associates have been intimately tied to this process as well and one of our number has worked at the federal level as a writer of regulations.

We can guide your policy writing and help you implement the procedures. It’s a process that goes beyond the written policies. Your lenders have to embrace these procedures. Just recently we worked with American Enterprise Banks trainin their lenders in the meaning, application, and most importantly consequences that will occur if the regulations are not followed correctly. The penalties can take the form of civil money penalties, interrupted mergers, or, in the extreme, the ouster of high-level executives.

FIRREA does indeed have teeth – in the scenarios for which it was intended. Don’t get bitten. Let L-CAM help you prepare for that next review.

Continue reading »]]> Bankers across the United States are in fear that the flood of new paperwork will choke community banks, regulating many out of existence. We talk to bankers on a daily basis. We see the “deer in the headlights” look, when bankers – small community banks and large money center institutions – discuss their strategies for coping with the every rising tide of regulation.

A banker in Nebraska told Frank Keating in the Wall Street Journal that his bank now devotes more work hours to compliance than to lending. Specifically, he has 1.2 employees on compliance for every one employee focused on lending and bringing in business. <Banking in a Time of Over-Regulation – WSJ>

From USA Today Last year, reviewing the bank’s 455 home loan applications created more than two months of work for Alesia Harlan, a compliance officer at City State Bank in Norwalk, Iowa.<Small banks say new mortgage regulations too onerous – USA Today>

La Salle Commercial Appraisal Management has a suggestion for our friends at the bank. Let us help you manage your rules, regulations and compliance procedures. Do what you do best – talking and listening to your customers and let us take care of these pesky issues that are probably interfering with your priorities. Contact us today to get started.