Credit unions face a challenging environment. Focused on peoplerather than profits, credit unions have fought to preserve thevalue and service standards that have always differentiated themfrom other financial institutions. Many of these other institutionshave simply increased fees and reduced services in the face of thedramatic economic and regulatory challenges over the past fiveyears.

One area of business that presents both an opportunity and achallenge for credit unions is mortgage lending. A 2010 white paperon best practices in credit unions covered how a significantopportunity existed for credit unions in mortgage lending. Thewhite paper stated, “Importantly, the financial crisis in Americahas consumers more aware of how a mortgage loan fits into theiroverall financial plan – building broadbased financialrelationships using the mortgage as an entry point is a growingopportunity for credit unions.”

One of the more important aspects of the mortgage lendingfunction is the efficient and compliant management of the propertyappraisal process. However, most credit unions are still managingthe appraisal process through a combination of spreadsheets andemail. The inefficiencies and risks associated with such a systemcannot be overstated.

To take advantage of the mortgage lending opportunity, creditunions need a process and appraisal management technology solutionthat provides the following value propositions:

• Low-cost transactional fee model – High costper use systems or expensive start-up costs are out of step withcredit union demands for cost-effectiveness.
  

• Customizable technology that permits adaptation toindividual process variations –Inflexible systems thatfail to allow customization do not fit credit union needs forefficiency.

• Integration with other key systems – It isimperative that appraisal management systems integrate with acredit union's loan origination system, merchant account managementsystem for credit card processing, and accounting system.
  

• Single-solution to manage both residential andcommercial appraisals – Credit unions must becost-conscious consumers of technology and simply cannot afford twoseparate technology solutions for appraisal management.
  

• Capability to facilitate appraiser sign-up and trackappraiser credentials, specialties, and fees – Compliancerequires that all appraiser information be up to date, easilysearchable, and retrievable. Efficiency requirements demand apaperless process that can produce time savings for personnel andincrease productivity. Capturing images electronically, directingthem automatically to the appropriate locations, organizing themfor easy access, and storing them for easy retrieval changes datafrom analog to digital and empowers workflow improvements.
  

• Process to manage the appraisal bid procedure(selection of specific appraisers from pool, delivery of request tobid and bid response receipt) – Compliance and efficiencydemands require that the bid process be completely transparent andself-contained. It is simply not acceptable to have to use multiplesoftware products to manage an appraisal bid process.
  

• Ability to manage all communication and documentsrelative to assigned appraisals (date/time stamp, image storage,search) – Once an appraisal assignment is made, compliancerequirements necessitate an easily retrievable history ofcommunication and documents exchanged between lenders andappraisers. Improving efficiency in these types of communicationsis a necessary step credit unions can take that will pay dividendsacross the enterprise. The ability to document and retrieve, withina few keystrokes, records of interactions with customers andvendors not only delivers quality service, but also savessignificant time, increases transparency, and providesaccountability.

• Capability to automate the status reporting of all bidsand assignments – Efficiency and management insightrequire automated status reporting at various steps in theappraisal process. Moving compliance reporting from a manual to anautomated process is not only efficient — it is essential tosurvival in the new regulatory reality. Benchmarking data indicatesthat credit unions have on average one risk management relatedemployee for every 42 employees in the organization. Theseemployees spend considerable time searching for data in disparatesystems and putting together reports. However, many credit unionsmay not have the ability, or will find it difficult, to maintainthis current level of risk management staffing. The question thenbecomes, “How can we do more with the same or less resources?” Oneanswer lies in employing technology, including appraisal managementtechnology, with auto-report generation capabilities.

• Ability to manage internal appraisal reviews andcommercial evaluations – Good management of lendingfunctions requires periodic reviews of the asset valuation ofselected properties backing loans in the credit union's portfolio.Internally generated appraisal reviews and commercial evaluationsmust follow the same protocols and reside in the same system ifefficiency is to be maximized.

Today, appraisal management technology is available that meetsthe imperatives for cost effectiveness, compliance assurance, andefficiency enhancement. With those requirements addressed, creditunions are in a position to capitalize on the mortgage lendingopportunity.

ClintCornett is founder and CEO of ValuTrac Software Inc. inFlower Mound, Texas.