MidLantic is the region’s largest independent appraisal review company, conducting substantive reviews on behalf of regulated bank clients since 2001. MidLantic currently conducts appraisal reviews on behalf of more than 50 bank clients located in the states of Maryland, Virginia, the District of Columbia, West Virginia, Delaware and Pennsylvania. Our reviews have covered properties throughout the United States.
The Goal of Each Review
The goal and purpose of MidLantic appraisal reviews is to determine that all requirements for an administrative review as set forth under regulatory guidelines and statements are met. Specifically, MidLantic appraisal reviews determine that the appraisal was prepared in conformance with USPAP, that the scope and methodologies are appropriate and that the market value conclusion is supported with market-extracted data. As required under the USPAP scope rules, we determine that the results are credible.
Why Use MidLantic?
In 2002, I interviewed a senior credit officer in a mid-sized community bank in Washington, DC who told me he’d been reviewing appraisals for more than 25 years. I was impressed. I then asked him, “So, how many do you normally send back, you, know, for corrections?”
He responded, “None, why?”
He showed me his 12-question checklist, with such gems as “Correct Market Value Definition?” followed by a “YES” or “NO” blank. I asked him if he ever checked it “NO.” He said, “No.”
Read MoreWhat Does MidLantic Do?
- Step 1. When an appraisal is received by MidLantic, we first conduct a fact check screening that confirms the information for all sales comparables.
- Step 2. The appraisal is then reviewed to determine that it was prepared utilizing an appropriate scope and that the methodologies employed were appropriate for the property type.
- Step 3. All math is double checked for accuracy
- Step 4. The review is formatted on one of three MidLantic review formats.
When corrections are required, MidLantic will either work directly with the appraiser or through the client bank to deal with corrections, weaknesses or deficiencies.
Why Are Reviews Necessary?
According to regulatory Guidelines, each appraisal prepared for a federally insured financial institution must meet Minimum Appraisal Standards, specifically “to comply with both USPAP and the regulatory appraisal requirement to provide sufficient information to support the institution’s credit decision.”
According to MidLantic appraisal review statistics, one in four appraisals requires a request for additional information or further analysis in order to meet these standards. Further, one in twelve, or at a rate of more than 8%, requires a value adjustment, usually based on unsupported analysis, unreasonable and unsupported comparable adjustments or simple mathematical errors.
The Guidelines emphasize the importance of an institution’s review function to promote quality appraisals and further state that institutions should “maintain a robust review process for ensuring that appraisals support the credit decisions.” For your additional consideration:
- It is MidLantic’s position, proven over and over again, that if you’re not finding what we’re finding, then your review process may be lacking.
- To employ the level of expertise required to conduct these reviews in-house is, for most institutions, cost prohibitive, and outsourcing actually saves money for banks and their clients.
- In almost every case, MidLantic’s clients pass the cost of the review back to the borrower, and borrowers have come to accept review fees as a part of doing business.
Review Formats
Midlantic offers three review formats, each designed to be modified when necessary to accommodate appraisal or property specifics. The formats are:
Residential: This comprehensive 2-page checklist with Comments section (and additional page when necessary) includes a check for accuracy of each comparable and a market data check to be sure that the comps were the best available for the analysis. We include as well a review of Fannie Mae 1004MC Addendum when included. It is MidLantic’s experience that more mistakes are made in residential appraisals than any other type of appraisal.
Commercial Non-Complex: This review is by far MidLantic’s most popular format whereby the results of the review are reported succinctly on a two-page combination checklist and full page of comments regarding the scope, the methodologies, the specific applications and the final value, all culminating in MidLantic’s overall rating and recommendation.
Commercial Complex: Approximately 20% of all MidLantic reviews are prepared on this detailed six-page format that offers checklist and narrative support for each section of the appraisal with a final page of conclusions, observations and MidLantic’s overall rating and recommendations.
Review Fees
MidLantic bases each of it fees on the amount of work required, it being an absolute fact that a well prepared appraisal is less expensive to review than a problematic one—the better the appraisal--the lower the fee.
Residential Review fees are currently priced from a low of $100 to a high of $125 depending on complexity and the issues encountered.
Commercial Non-Complex fees are currently priced from a low of $400 to a high of $500 depending on complexity and issues encountered.
Commercial Complex fees range from $550 to $700 depending on the property type, the complexity of the report and the issues encountered.
All MidLantic review fees are subject to change. All review fees are due within 30 days of delivery of the review. We charge a small fee for printing reports sent to us electronically.
Process and Turn-Around Time
MidLantic receives appraisals via over-night delivery services or electronically. Each appraisal is reviewed and returned within six business days, oftentimes sooner. We also offer an express turn-around when requested by our established clients. Each copy is labeled with a “Review Copy” sticker and returned to the client along with the formatted review. Even in the age of electronic submissions and document imaging, we continue to recommend that each client retain at least one hard copy—the Review Copy—for their files and use this copy for auditors, loan review and regulators, who have continually expressed a desire and preference to review hard copies vs. electronic copies on computer screens. All appraisals sent electronically to MidLantic are converted to hard copies (for a reasonable added fee) for the review process and returned to the client via common carrier delivery services at no additional charge.
All reviews are also submitted to clients in pdf format when requested.
Call MidLantic Financial at 410-549-5621 to discuss how we can provide this service or train your staff to conduct substantive appraisal reviews.