2016Dart Board Logo

January 2018

MD2017

Michael Dresden
President
Dart Appraisal 

Hi everyone, welcome to our first Dart Board of 2018! I hope your year is off to a great start. This year marks Dart's 25th anniversary, and in each edition of Dart Board I'll share a little bit of backstory on how the company and valuation industry have evolved since our founding in 1993. For this issue, I'd
also like to recap Dart's 2017 and share information on big compliance changes coming this year for AMCs.

 

2017 in Review. At this time last year, none of us really knew what 2017 would look like. We were coming off record volumes in 2016, and trying to anticipate what mortgage lending would like under the new administration. Overall, last year was fairly even-keel (especially in comparison to Summer 2016!). As shown in the chart below, Dart's volume last year came from a variety of lending channels.

Dart17VolDist

Dart does business in all 50 states, as well as the US territories. In 2017, our top ten states in terms of overall volume were:

• Florida
• Michigan
• Wisconsin
• Washington
• Texas
• Illinois
• California
• New York
• Pennsylvania
• Virginia

Compliance Changes. 2018 will be a big year for AMCs as it relates to compliance. The Appraisal Subcommittee (ASC) will open the AMC Registry to States no later than June 4, 2018. The States will be collecting panel information from registered AMCs and will collect and then distribute a $25 fee to the ASC for each appraiser that completed an order for the AMC within a defined 12 month time period. For a national AMC like Dart, this will be a high 6-figure line item in the budget. We've known this was coming down the pike for a few years now, and have planned accordingly. I encourage you to make sure any AMC you work with is prepared for this major change. (Lenders should inquire about an AMC's financial stability as part of their annual due diligence review.)

Another change coming this year relates to State registration and supervision of AMCs. The AMC Final Rule, which was effective in August 2015, gives the States the option to implement an AMC program. Beginning 36 months from the effective date, an AMC may not provide services for Federally related transactions (FRTs) in a State unless the AMC is registered in that State. Therefore, if a State opts out of implementing an AMC program, AMCs (including Dart Appraisal) will not be able to provide appraisal management services for FRTs starting August 10, 2018. Sounds a little confusing, right? Here are some key elements to keep in mind:

  • FRTs represent only a small percentage of overall loan transactions. The banking agencies have noted that it is probably less than 10% of real estate transactions.
  • Washington DC is intending to opt out currently.
  • Vermont has passed an Act which would allow for a repeal of their current AMC Registration Program. This allows for an assessment to be made by the Director of the Office of Professional Regulation. The Director shall assess the current AMC regulation and report his findings to the Senate and House Committees. Based on these findings, the General Assembly shall decide whether the State should opt in or out of appraisal management company regulation in accordance with federal law.
  • Oklahoma is currently accepting written comments regarding their AMC Act to aid in a possible legislative repeal. There is no pending legislation, the comments will be used for discussion purposes only.
  • All other states have an AMC program in place or have legislation pending.
  • Transactions that are exempt from being considered a FRT include (but are not limited to) the following:
    • Transaction value is equal to or less than $250,000
    • Transactions insured or guaranteed by a US government agency or US government-sponsored agency OR
    • Transactions that qualify for sale to or meet the appraisal standards of a US government agency or US government-sponsored agency
    • (Full list of exemptions can be found in the Interagency Appraisal and Evaluation Guidelines - Appendix A)

Dart Appraisal wants to make sure all clients are prepared for this rule implementation. We will be contacting our clients in the near future to discuss how you will want to handle appraisal assignments for FRTs in states that decide to opt out. We are also actively looking into alternative solutions for FRT orders. Dart Appraisal is here as a resource for you on this and any other valuation compliance matter. We have a full-time VP of Compliance on staff to ensure we are abreast of all compliance issues, and are happy to answer questions and provide compliance-related guidance to our partners as it relates to appraisals and appraisal management.

Taking it back to '93. Let's lighten things up a bit shall we? In 1993, Bill Clinton was President, a gallon of gas cost $1.16 and the average car in America sold for about $12,000. It's also the year Dart Appraisal was founded as an AMC in metro Detroit, where we remain headquartered today (although in a much bigger building!). As one of the original AMCs (less than 10% of our direct competitors were established as AMCs before 2008), we've experienced first-hand just how much the industry has changed.

When Dart opened its doors, we were pasting real photos onto reports with real signatures, and sending physical copies of reports out to our clients. As digital cameras, the Internet and Pentium computers emerged in the marketplace, Founder and CEO Darton Case recognized the advantages in turn time that technology could offer. In 1995, Dart was one of the first AMCs to offer a website for appraisal orders. Case encouraged each one of our panel appraisers to invest in a digital camera, and when they couldn't, he loaned them the money to do so.

By 1996, Dart became one of the first AMCs to produce and ship reports with digital pictures and signatures, yet the final documents still had to be delivered in hard copy format. Dart invested in huge commercial printers stocked with extra RAM memory to print out 2 sets of appraisals per order. Dart incurred weekly costs into the thousands to overnight reports to its clients, not only to increase speed but also for tracking purposes.

It took several long years to get the digital appraisal process adopted by the main stream. All three pieces - digital photos, digital signature on the appraisal, and digital transmission of the appraisal - had to happen at the same time, without any breaks in the chain. The digitalization of appraisal delivery completely revolutionized how AMCs operate. Today, Dart continues to invest in technology to better serve our clients, brokers and appraisers.

So much has changed in the way we manage appraisals, but to me, the technological aspect is one of the most significant ways the industry has transformed.

We look forward to working together with our valued clients and brokers this year, as well as to forming new partnerships in the months ahead. If there is anything we can do to assist you, please don't hesitate to contact me at michael@dartappraisal.com.

Thank you,


Michael Dresden
President
Dart Appraisal