Editors Note: The following is the first in a series of profiles featuring the many industry experts that make up Pro Teck Valuation Services. As a national residential real estate valuation company, Pro Teck works with top mortgage originators, servicers and investors in the country to confidently manage the risk associated with real estate valuation. These profiles are meant to help paint a more thorough picture of how our residential real estate valuation specialists produce top tier valuation services and reports.
In today’s ever-evolving world of real estate regulatory compliance, it’s imperative for originators, servicers and investors to understand and embrace all elements of appraisal/real estate valuation regulation—both at the state and federal level.
For many, however, the regulatory ecosystem represents a complicated web of relationships and interdependencies—the likes of which take years of experience to truly comprehend. This is where Pro Teck’s Chief Regulatory & Compliance Officer Jeff Dickstein comes into play.
Having spent his entire professional career within the mortgage industry, Dickstein has worked in such capacities as loan funder, underwriter, processor, loan officer and residential appraiser. For the past nine years, however, Dickstein has specialized in all aspects of regulatory compliance on behalf of Pro Teck’s robust portfolio of clients. The task of determining what regulations/statutes/laws a client must adhere to is a tall one, which is why Dickstein recommends never going at it alone.
“It’s like a mine field,” says Dickstein when describing the regulatory landscape. The reason being is that there’s a huge difference between federal regulations and state laws or statutes. And for Dickstein, this is where the bulk of his attention has been focused as of late. “The industry has become so much more regulated over the last 5-6 years,” said Dickstein. “Our industry and our clients are more heavily regulated than ever before.”
Interagency Appraisal Regulation vs. State Law
One area in which Dickstein said he is ever vigilant involves lending agencies adherence to Interagency Appraisal and Evaluation Guidelines, which is a series of guidelines issued jointly by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the National Credit Union Administration (NCUA). The document, the latest version of which came out in Dec. 2010, outlines appraiser evaluation and compliance requirements that a lending institution must follow.
Within the document are guidelines related to evaluations that Dickstein believes can be misleading to lenders. Dickstein said he’s beginning to notice issues involving his clients that have interpreted the guidelines in a way that actually violates individual state statutes.
For instance, the 2010 version states that a broker price opinion is neither an evaluation nor an appraisal, because it does not render a market value, it renders a price opinion. However, in order for a valuation tool to be acceptable, for most purposes, it must contain a market value (i.e. An appraisal or evaluation). A client may read the guidelines and assume they can use their broker price opinion from a licensed broker or real estate professional as a way of demonstrating market value. This happens because from a regulatory point of view the guidelines don’t necessarily say who must complete an evaluation as long as they are qualified. While common sense suggests that an appraiser must do an appraisal, the guidelines are ambiguous and don’t explicitly state who must conduct an evaluation. Therefore, a lot of clients assume they can use a broker price opinion as an evaluation tool to determine market value. This in turn violates some state law because an individual giving an opinion of market value must maintain an appraisal credential within the state where the property is located.
“There’s a real disconnect between regulation and law,” said Dickstein. “Right now the biggest item on my radar is educating clients about the difference between being compliant with regulations and being compliant with state and federal law.”
Keeping Up With Changes in Appraisal Regulation/Laws
A huge part of what makes Dickstein so valuable to Pro Teck and its client base are the relationships he’s been able to build over the years as a part of numerous trade organizations, advocacy groups, industry boards and associations. These include:
- REVAA, the Real Estate Valuation Advocacy Association (Pro Teck is a founding member and CEO Tom O’Grady is a board member)
- The Appraisal Foundation – Industry Advisory Council (Dickstein is Chairman for 2015-16)
- CRN (Collateral Risk Network)
- NAA (National Association of Appraisers); Government Affairs Committee
- AARO (Association of Appraisal Regulatory Officials).
- Executive Board member of NAC (National Appraisal Congress)
As a member of these many organizations Dickstein is able to help shape and monitor state and federal regulations affecting appraisal management companies like Pro Teck and its clients.
“Through all of my membership, partnership and positions with these different groups I definitely get my fill of up to date information,” he said. Just in this month, Jeff has been to a meeting in Washington, DC with the ASC, The Appraisal Foundation and the CFPB (Consumer Financial Protection Bureau) to counsel on the needs of Pro Teck’s clients.
Contact us to learn more about Pro Teck’s compliance efforts, most notably state licensing and registration information.