Sign #3: Are you up to date on the latest banking regulations?

Are you current on the latest banking regulations? We know it can be a pain to keep track of and a huge headache for your team since it means updating your internal policies and procedures to remain compliant. Are these changes overworking your team and stretching them too thin? Over the past week, we’ve been sharing top pointers to spot when your team is stretched to the brink. Some of these signs can be sporadic turn times or under qualified appraisal reviewers. Today we’ll walk through the third sign and how you can stay compliant with the most recent regulations to keep your team ahead of the pack.

Establish a risk management framework for third-party relationships

In October 2013, the OCC (Office of the Comptroller) issued a Risk Management Guidance Bulletin recommending that banks adopt risk management processes that coincide with their third-party relationships. The bulletin defines a third-party relationship as, “any business arrangement between a bank and another entity, by contract or otherwise.”

The vagueness of the OCC’s definition places a lot of responsibility on financial institutions to regulate any third parties they work with. In 2017, the OCC published Supplemental Examination Procedures with updated risk management guidelines.

With financial institutions suffering a growing proportion of security risks from third parties – up from 20 percent of the total in 2010 to 28 percent in 2012 — banks must constantly evaluate third-party vendors and create a risk management framework in the event of a data breach. However, don’t let that scare your bank from turning to third parties. Just be sure to abide by the OCC’s best practices for third-party risk management and turn to the guidelines as a reliable resource for monitoring your third-party vendors.

Separate your loan production staff from the appraisal process

If your regulator does approach your bank or credit union with a potential compliance issue, it’s imperative that your structure is well-documented to show a separation between your loan production staff and your appraisal process. The FDIC recommends that valuation review staff report directly to your board or loan committee or your Chief Loan Officer.

Be aware of regulation changes — and how to adapt to them

Last year, the Appraisal Institute testified before a subcommittee of the House Financial Services Committee that Congress modernize U.S. appraisal regulations. The institute claimed that the “overwhelming” regulations drive potential appraisers from joining the profession.

Regulations could certainly become more streamlined, but in the meantime, financial institutions must stay on top of industry changes. Bookmark the FDIC Supervisory Insights and the OCC News Releases and check back often. When new regulations are posted, have a process in place to communicate those changes to your appraisal panel, and ensure that they stay compliant by updating their appraisals process as needed.

Staying informed on constant local, state, and federal regulation changes can be too much for a small, already busy staff to handle. If your appraisal panel requires assistance on regulation compliance, consider working with an AMC like MountainSeed to ease any disruptions caused by new regulations. MountainSeed even has a separate department to ensure all appraisals are compliant with the latest rules and regulations.

Now that you have a clear guide on how to stay compliant on the latest regulations, make sure your team isn’t affected by the other six signs of an overworked team. It’s in your hands to help your team to overcome these frequent appraisal process speed bumps.