If it becomes clear that an appraiser doesn’t take appraisal bias seriously, Morin will not bring them into his AMC pool. His advice to lenders is similar to the attorneys, which is to have their own process for vetting AMCs, as well as written procedures and policies on ROVs. The reverse mortgage industry should be comfortable with the ROV process because some HECM loans require second appraisals, he and the attorneys point out. “When you’re hiring an employee, you try to ask questions to see if they’re going to be a good fit,” Morin says. “They should make sure their AMCs are going to be a good fit.” “It’s very rare that a lender is going to have direct appraiser relationships,” he continues, noting the arm’slength requirements of lending laws. “It’s more about making sure your AMC vendor is focused on the conversation of bias, and they are taking steps to address that the best they can.” Written policies on handling bias complaints should include as much detail as possible, Morin adds. “How do you respond to it? Who responds to it? Who is part of the conversation?” he says. “When do you bring management into a call? What do you put in writing?” If companies are not prepared, that could reflect poorly on the organization and cause greater problems, he says. “If you skip a beat when a complaint is made, it’s either going to look like you are not responding in a timely fashion or you’re taking the time now to think through your plan. That’s at a minimum,” Morin says. “But they also might think you don’t care or, worse, they are going to think you are complicit.” As with most important company policies, the messages need to be clear from the top down, he adds, so everyone in a company is working toward shared goals. Lenders might want to train loan officers and others on appraisal bias, even if those workers might not be directly connected to the appraisal. Someone along a loan’s path might hear or see something that doesn’t sound right and send up an alert. For example, loan officers who become aware of borrowers who are not comfortable with an appraisal might help save the deal if they know the company’s policies, Morin says. Morin points out that he was a panel member on appraisal bias in July during the NRMLA Southern Regional Meeting in Austin, TX. He noticed attendees debating the various details and issues around the complexity of doing an appraisal. While there are varying opinions on the underlying issues, the premise of the panel discussion was not on whether bias exists or doesn’t exist, he says. “The premise is that it can affect your borrowers, and they might bring it up,” Morin says for this article. “So, you need to be prepared to respond to what they think may have been an issue of bias. It’s not one of those things where you want to be dealing with it when it happens.” Appraisal Bias continued from page 31 Pro Tips on Avoiding Appraisal Bias Here are some tips from two experts about how lenders can combat appraisal bias: • Educate borrowers: Enhance transparency by educating borrowers about the appraisal process and potential value differences in second appraisals; • Collaborate with bias-aware appraisal vendors: Partner with vendors who actively address bias to develop effective responses and solutions; • Develop a response plan: Establish a welldefined plan to address bias-related complaints proactively, ensuring swift and effective responses; and • Report bias findings: Promptly report bias findings to regulatory agencies to demonstrate a commitment to addressing bias issues. SOURCE: Erik Morin, president of Atlas Valuation Management Solutions, and Elly Johnson, co-chair of NRMLA’s HUD Issues Committee and president of All Reverse Pro. 32 REVERSE MORTGAGE / NOVEMBER–DECEMBER 2023
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