Already facing mounting regulatory hurdles, Kemba Credit Union was left with a void when its 40-year veteran real estate appraiser retired, according to Kemba Vice President of CUSO Operations Andy Dunn.

“As we continued to grow, we quickly saw that it was a full-time position,” Dunn said.

And rather than fill that position, Dunn's West Chester, Ohio-based credit union, which has more than $758 million in assets, turned to CU Appraisal Services, a firm opened in 2012 by Ron Stickelman. At the time, Stickelman, who serves as executive chairman of CU Appraisal Services, had a major goal – to become the first appraisal management company that was also a CUSO.

Earlier this year, Stickelman achieved that goal when Kemba became its first investor.

“We really wanted to serve our core,” CU Appraisal Services President John Theobald said, adding that credit unions have a unique quality among financial institutions. “Once you get their business, you've got their loyalty.”

Banks, on the other hand, churn through the companies they work with.

“We just didn't want to get on that merry-go-round,” he added.

Stickelman is a veteran of the appraisal industry and previously ran Stickelman and Associates, the sixth largest appraisal company in the country. In 2000, believing that credit unions were the most responsible lenders in an extremely competitive business, he decided to work exclusively with cooperatives.

“Our competitors are generally large, impersonal organizations focused on serving the banking industry and the banking industry business model,” Stickelman said when he announced the company had become a CUSO. “Credit unions are an afterthought to them. We are an agile company that is able to nurture very personalized and focused relationships with our credit union partners – an extension of the credit unions' philosophy of collaboration and community-building.”

Theobald, a veteran of the credit union industry, was named president of the CUSO in January.

Dunn said the extensive experience CU Appraisal Services' leaders have had with the credit union industry was an essential selling point for Kemba.

“They understood what we were about,” he said. “We're essentially their members.”

He added since NCUA regulatory requirements differ from those in the banking industry, working with a credit union-focused company is far more effective than one that is focused on a variety of financial institutions.

Working with an outside appraisal company also allows Kemba to maintain a wall between itself and appraisers – something that NCUA examiners like to see.

The company has grown quickly, Theobald said – it's now in 35 states and has direct relationships with 65 credit unions.

Within the next 18 to 24 months, Theobald said the majority of the company will be owned by credit unions.

Theobald said currently, 89% of mortgage lending in the U.S. is done by banks and mortgage companies, leaving 11% of the market available to credit unions. Typical appraisal management companies simply don't bother to understand the unique relationship between credit unions and their members, he added.

Early on, Kemba officials realized the unique market that CU Appraisal Services offered. The credit union worked with the company for about 18 months before becoming an investor.

“This is something that every credit union was going to need,” Dunn said.

The decision to invest followed.

“I don't think these types of opportunities come along very often,” he said.

For Education First Credit Union in Westerville, Ohio, the decision to use an appraisal management company was one of efficiency, according to Mortgage Officer Sarah Mason. Education First has almost $100 million in assets.

“Our credit union has a small mortgage department so using an AMC is obviously a better option than having to designate an employee to order appraisals and manage a rotation,” Mason said. She added that using the appraisal management company also eases the burden of having to review potential appraisers.

At first, Education First chose CU Appraisal Services out of convenience – the company had a relationship with one of the credit union's vendors.

“We've maintained the relationship because they are prompt in their service, our members are pleased, and the quality control measures they use have resulted in very few additional underwriting requirements related to the appraisal,” she said.

She continued, “Ultimately, as far as the member is concerned, the appraiser is a reflection of their credit union, and there is a peace of mind in knowing that [CU Appraisal Services] strives to ensure that it is a positive experience for our members.”

When an appraisal is ordered from the company, it is assigned to an appraiser based on proximity and capacity. A site inspection is then scheduled within 24 hours and in most cases, will be uploaded to the company's system within 72 hours of the inspection.

Theobald said the company is attempting to harness new technology solutions to provide full appraisal reporting. Members often end up paying more for a compliant valuation of their homes, he added. A great deal of those efforts are aimed at satisfying the secondary markets.

In certain cases, the company wants to enable credit union members to post videos of their homes for appraisers to use.

Theobald said CU Appraisal Services is also attempting to tap into the growing home equity loan market. Eventually, appraisers may be able to rely on drones to do the actual property inspection for home equity loans, he said.

The business has a 99% retention rate, according to Theobald. He said that business has doubled year over year since it began, and given the projected growth of credit union mortgage market share, he said he expects that trend to continue into 2019.

In addition to serving the credit union industry exclusively, CU Appraisal Services is also trying to address a looming shortage of qualified appraisers, Theobald said. Today, the average age of an appraiser is 61 and there are few people entering the business. To address that need, the company is investing in scholarships, mentorships and apprentice efforts.

“There's no new blood coming in,” Theobald said.

Instant Insights /

CU Appraisal Services Fills Mortgage Lending Void

Related Stories

Recommended For You