Over the past 5 years the appraisal environment has seen many changes that have caused uncertainty and confusion. Despite the positive economic environment, the appraisal management and review process is still causing issues for financial institutions of all sizes. Sageworks has invited appraisal review and valuation management experts from MountainSeed to discuss the most common issues for lenders today.

1. Commercial Real Estate Appraisal: How lenders
can improve their CRE appraisal process
April 27, 2016
P R E S E N T E D B Y
Nathan Brown
MountainSeed
Terry Bowditch
MountainSeed

2. About the Webinar.
• Ask questions throughout
the session using the
GoToWebinar control panel
• We will answer as many
questions as we can at the
end of the presentation

3. • Risk management thought leader
for institutions and examiners
• Featured in national and trade
media
About Sageworks.
• Loan portfolio and risk
management solutions
• More than 1,000 financial
institution clients
• Founded in 1998

4. About MountainSeed and the Presenters.
MountainSeed serves several hundred community, regional, national and
international banks with their appraisal management and appraisal review
functions. Over the years MountainSeed has developed a specialty and industry
reputation of expertise in the commercial appraisal process and has assisted
hundreds of banks in all 50 states manage compliance, streamline appraisal
ordering, and improve appraisal review quality.
Learn more at mountainseed.com.
Nathan Brown
MountainSeed
Terry Bowditch
MountainSeed

5. Disclaimer.
This presentation may include statements that constitute “forward-looking statements” relative to publicly available
industry data. Forward-looking statements often contain words such as “believe,” “expect,” “plans,” “project,” “target,”
“anticipate,” “will,” “should,” “see,” “guidance,” “confident” and similar terms. There can be no assurance that any of the
future events discussed will occur as anticipated, if at all, or that actual results on the industry will be as expected.
Sageworks is not responsible for the accuracy or validity of this publicly available industry data, or the outcome of the use of
this data relative to business or investment decisions made by the recipients of this data. Sageworks disclaims all
representations and warranties, express or implied. Risks and uncertainties include risks related to the effect of economic
conditions and financial market conditions; fluctuation in commodity prices, interest rates and foreign currency exchange
rates. No Sageworks employee is authorized to make recommendations or give advice as to any course of action that should
be made as an outcome of this data. The forward-looking statements and data speak only as of the date of this presentation
and we undertake no obligation to update or revise this information as of a later date.

6. Agenda
• Structuring Your Appraisal Department
• Common Deficiencies in Appraisals
• High-Volatility Commercial Real Estate (HVCRE)
• Fee Disclosure
• Vendor Management
• Disclosing Valuations to Borrowers
• Lending on Another Bank’s Appraisal
• Appraisal Regulatory Outlook

7. Poll Question

8. Structuring Your Appraisal Department
• Who is Loan Production Staff?
• Check their comp
• Separate reporting lines
• But what if we’re a small bank?
• Appraisal-reviewer competency

9. Structuring Your Appraisal Department
Insufficient
Independence
Optimized
Chief Loan
Officer
Valuation
Review Staff
Resi RE Loan
Officers
CRE Loan
Officers
Valuation
Review Staff
Board / Loan
Committee
Chief Loan
Officer
Resi RE Loan
Officers
CRE Loan
Officers
FDIC Supervisory Insights (Winter 2011)

10. Common Deficiencies in Bank-Ordered Appraisals
• Math errors in DCF
• As-Is Value
• Leased Fee/Fee Simple
• Extraordinary Assumptions
• Hypothetical Conditions

11. HVCRE and the Appraisal Process
• Final regulatory capital rule
• Risk-based review scope
• As-Complete Value (vs. As-Stabilized)

12. HVCRE and the Appraisal Process
OCC/FDIC/Board: Regulatory Capital: Frequently Asked Questions

13. AMC- and Appraisal-Fee Disclosure
• Timing
• Zero Variance
• Changed Circumstances
• Appraiser vs. AMC Fees
• Don’t Forget: Customary & Reasonable Fees

14. Vendor Management of AMCs and Review Firms
• Review the review?
• Licensing requirements
• Contracts, guarantees and indemnities
• Reviewers vs. Firms

15. Poll Question

16. Providing Copies of Appraisals to Borrowers
• When does it apply?
• Timing
• What about evaluations?
• What about reviews?
• Can I deliver electronically?

17. Lending on Another Bank’s Appraisal
• Can I?
• Should I have the appraisal re-addressed or
assigned to my bank?
• Reviewing another bank’s appraisal

18. What’s Next on the Regulatory Front?
Supplemental Information to the Proposed Higher-Risk Mortgage Rule (Sep ‘12)
“The Dodd-Frank Act added a third standard—that real estate appraisals be
subject to appropriate review for compliance with USPAP— for which the
Federal banking agencies must prescribe implementing regulations.”

19. What’s Next on the Regulatory Front?
Dodd-Frank Amendments to FIRREA Title XI

20. Learn More About Sageworks & Mountainseed.
Nathan Brown
MountainSeed
Nathan@mountainseed.com
Terry Bowditch
MountainSeed
MountainSeed
www.mountainseed.com
sales@mountainseed.com
Sageworks
www.sageworksanalyst.com
sales@sageworks.com

21. 2016 Risk Management Summit.
• Topics include:
» CECL
» Current ALLL best practices
» Stress Testing
• Speakers from
CliftonLarsonAllen, Grant
Thornton, Sageworks and more
• sageworks.com/summit

22. Q&A.
Nathan Brown
MountainSeed
Nathan@mountainseed.com
Terry Bowditch
MountainSeed
MountainSeed
www.mountainseed.com
sales@mountainseed.com
Sageworks
www.sageworksanalyst.com
sales@sageworks.com

23. Presenters.
NATHAN BROWN
PRESIDENT
Nathan develops and executes the company vision and goals at MountainSeed. He
leads the core teams of sales, operations, technology, government-relations,
compliance functions as well as the research and execution of new products and
services.
Prior to MountainSeed, Nathan practiced law at Seyfarth Shaw LLP. While working
at the large law firm, he worked with David and Carl to organize the branches of
MountainSeed and structure compliance around new and emerging regulations.
As a published writer and sought-after speaker, Nathan frequently writes and
speaks on regulatory and real-estate valuation issues. He has articles and quotes in
state bank and national publications, such as American Banker, Mortgage Daily and
National Mortgage News.
nathan@mountainseed.com

24. Presenters.
TERRY BOWDITCH
CHIEF APPRAISER
Terry manages a team of senior review appraisers and oversees
MountainSeed appraisal review functions.
Terry works with hundreds of banks to assist them in appraisal related
issues, interface with regulators, and manage their panel of appraisers.
Terry has been in the appraisal business since 1984.
Before joining the MountainSeed team, Terry had a successful fee
appraisal company of his own. He was appointed by two governors to
hold the position of Vice Chairman for the state appraisal boards in 2002
and 2008. In his free time, you’ll find Terry practicing his swing on the
golf course.

25. Additional Resources.
• Learn more about MountainSeed – www.mountainseed.com
• Learn about Sageworks risk management suite – www.sageworksanalyst.com
• Interagency Appraisal and Evaluation Guidelines, 75 Fed. Reg. 77450 (Dec. 10, 2010)
http://www.occ.gov/news-issuances/federal-register/75fr77450.pdf
• “Navigating the Real Estate Valuation Process,” FDIC Supervisory Insights– Winter 2011
https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin11/siwin11.pdf
• Regulatory Capital: Frequently Asked Questions, FDIC/OCC/Board
https://www.fdic.gov/regulations/capital/capital/faq.pdf
• CFPB, Equal Credit Opportunity Act (ECOA) Valuations Rule, Small Entity Compliance Guide
http://files.consumerfinance.gov/f/201401_cfpb_compliance-guide_ecoa.pdf