Mortgage lending is a growingopportunity for credit unions to capture market share whilecontinuing to deepen the loyalty of their valued members. One ofthe key tools for securing a mortgage is the appraisal, which canmake or break the relationship between a credit union and itsmember.

Given the unique affiliation these financial institutions havewith their fields of membership, credit unions have a primeopportunity to deepen these bonds through the home-valuationprocess. When you consider the very essence of the credit unionmovement–“People Helping People”– credit unions also have theability to add to their member education efforts through theappraisal management procedure.

Members need to understand that the final loan commitment iscontingent on a satisfactory appraisal. In order to streamline andimprove the appraisal process, credit unions should consider threekey factors.

Employ a strong panel of independent, qualityappraisers. Credit unions are within their rights to setup their own appraisal department or panel of appraisers, but theymust have strong appraiser independence safeguards in place. Ratherthan adding an expensive independent staff person(s) to handlevaluations, an appraisal management company offers a variable costsolution and provides an arm's-length relationship to the creditunion and property owners to provide an accurate valuation.

While credit unions are not required to use an AMC, doing sohelps remove the possible consequences of not having a third-partyfacilitate and validate the valuation process, such as theunethical and illegal situation of influencing values that canresult from having direct access and communication withappraisers.

AMCs have a deep data base of knowledgeable and qualified agentsand appraisers that are experts at determining propertyvalues. They have nationwide access to professionals in everystate, region, city and county with experience in and access to avariety of lending products. A credit union in Chattanooga, Tenn.,for example, can quickly tap into an AMC's database and identifythe most fitting person(s) specializing in that region of Tennesseeto handle the assignment, while ensuring appropriate licensing andinsurance coverage.

AMCs perform the heavy lifting and remove many of theadministrative tasks from the credit union so it can focus on itscore competencies. Most important, a quality AMC partnerunderstands the importance of a credit unions' differentiator ofpremium service in the industry and are in the business to preservethat reputation. If your credit union decides against using theservices of an AMC, it must make sure that it is working with avery credible and independent team of appraisers as mandated by theAppraiser Independence Requirements.

Be aware of all the changing regulations.Credit unions are expected to comply with the same state andfederal regulations as banks, so they must be completely conversantwith the latest requirements of the Uniform Collateral Data Portal,Uniform Loan Delivery Dataset, Appraiser Independence Requirements,Uniform Standards of Professional Appraisal Practice, changes toTruth-in-Lending Act, etc.

The rules under the CFPB, Dodd-Frank financial reform bill andthe latest state licensing requirements have added to the qualitycontrol pressures on the appraisal industry. Not having thisknowledge puts the credit union at risk of hefty fines, penaltiesand failed loans.

It isn't enough for credit unions to have their own compliancemeasures securely in place; they also must ensure that each partnerand contractor they work with also has strong compliance processesand procedures. On an ongoing basis, credit unions should make surethat orders from their appraisers go through a thorough review toensure compliance with appropriate regulations. If a credit unionfinds even one instance of noncompliance, the order must get sentback immediately to the appraiser to rectify.

Focus on technology. Some credit unions maystruggle with labor- and paper-intensive appraisal managementprocesses. In order to optimize and accelerate the valuationordering procedure, credit unions should connect with a partnerutilizing a sufficient order management platform.

Technology automates the process from appraisal order to GSEsubmission via the UCDP. It also helps credit unions of all sizeseliminate duplicate orders and other manual errors associated withappraisals, which translate into significant cost savings for theinstitution.

Credit unions should not only look for technology that providescollateral valuation reports, but also provides supporting data inthe MISMO industry-standard format.

There is an increasing demand for mortgage lending servicesamong members, which translates into a growing opportunity forfinancial cooperatives. The key to capitalizing on this opportunityis for credit unions to offer its members painless mortgage lendingexperiences where they can acquire a loan with as little hassle aspossible. This means the appraisal process has to be fast, accurateand cost-effective.

Relying on AMCs for quality control purposes, staying aware ofthe new compliance changes and using enhanced technology is themost reliable way to do so.

Roger Beane is CEO ofLRES Corp. in Orange,Calif.