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appraisal world
AN ANALYSIS CONDUCTED BY THE
APPRAISAL INSTITUTE of failed banks shows
that nearly two-thirds had been previously cited by
federal bank examiners or had ongoing appraisal
administration problems, highlighting a significant
weakness in many struggling financial institutions.
Of the 35 Federal Deposit Insurance Corpora-
tion Inspector General Material Loss Reviews of
failed banks nationwide, 22 contained concerns
or unheeded recommendations from previous
reviews regarding the appraisal practices of the
banks. These results were analyzed from Material
Loss Reviews conducted by the FDIC Inspector Gen-
eral between 2009 and early 2010. Examples of such
concerns include: “Failure to obtain current apprais-
als or perform adequate appraisal reviews”; “Bank
frequently relied on stale appraisals”; “Inadequate
control of the lending function, including appraisals”;
and “Poorly explained upward
adjustments to the appraisal
values.”
“The findings of the Material
Loss Reviews illustrate that many
institutions have not adequately
invested in critical risk-management functions like
appraisal administration and oversight,” says Bill
Garber, director of government and external rela-
tions of the Appraisal Institute. “Moving forward,
if we are going to have any success in stabilizing
mortgage markets, preventing mortgage fraud
and kick-starting the secondary
markets, bank examiners must
place more emphasis on risk
management, mitigation, meaning-
ful oversight and enforcement of
these critical issues.”
CRACKS IN THE FOUNDATION
Two-thirds of failed banks cited for lax appraisal administration
For a copy of the analysis,
visit www.appraisalinstitute.
org/newsadvocacy/downloads/
key_documents/FDIC_Material
LossReview_Appraisal.pdf.
About 350 people attended the
fourth annual Federal Agency
Update public real estate sym-
posium, co-sponsored by the
Appraisal Institute and the
International Right of Way Association, Jan. 26–28
in Las Vegas. Eric Schwartz, MAI, SRA, and Randy
Williams, MAI, served as co-chairs of the event.
During the opening address, U.S. Department of
Housing and Urban Development Deputy Secretary
Ron Sims called on appraisers to join HUD in seeking to meet livability and sustainability goals. He
chatting with uncle sam
Fourth annual Federal
Agency Update caters
to appraisers
focused on seeking a unity of purpose.
“I don’t know how to appraise, how to do eminent domain; I don’t have the skills you have. But
I know you can do them well,” said Sims, adding,
“Great nations can’t be great if they’re divided.
For too long, we’ve had too many acrimonious
debates. It’s important to have you as allies for
Gloria Shepherd, associate administrator for
planning, environment and realty at the Federal
Highway Administration, answers questions after
her address at the Federal Agency Update real
estate symposium Jan. 27 in Las Vegas.
