Since they were promulgated in the 1994 FIRREA revisions and then expanded in the 2010 Interagency Guidelines, evaluations have always been an integral part in banking for CRE valuation and collateral analysis in addition to full-blown narrative appraisal reports. However, considering impending changes to banking guidelines, evaluations are likely to become even more common.
In particular, the coming increase in the transaction for requiring appraisals on commercial real estate from $250,000 to $500,000, (increased from the $400,000 originally proposed last July), will mean fewer appraisals and more evaluations. While many of those evaluations are currently outsourced to external vendors, we believe a major opportunity exists for banks to take advantage of new changes in technology and changes within the appraisal industry to bring this function in-house saving both time and money and assisting with compliance and annual examinations.
Although most lending institutions have always employed skilled appraisal staff, we have found that the lack of a comprehensive technology platform has been one of the major reasons that evaluations have been outsourced rather than brought in-house. Narrative1, the report writing solution by ExactBid, has been used by commercial appraisers for over 10 years and is now increasingly being used internally by banks as well. In fact, banks represent one of our fastest growing market segments.
Narrative1 has all the necessary tools to complete a real estate evaluation, whether for loan origination or more importantly for any subsequent transactions. In addition, the underlying tools of the N1 framework, particularly the property database for sale, lease, expense and cap rate comps can also help the larger risk management, appraisal review and collateral monitoring functions within a bank. Since loans originated or renewed on properties qualifying for an evaluation are often lower margin, an in-house system can help manage costs and maintain profitability.
From our experience with our RIMS platform, we understand the due diligence needs of banks from origination to monitoring and compliance. At ExactBid, we’re focused on simplifying all aspects of the lending due diligence process. Our solutions help lenders and appraisers gain efficiencies, improve data accuracy, and meeting increasing regulatory demands in an ever-competitive market. Bringing Narrative1 to banks is another way we’re helping lenders streamline their processes to do more with less.
Other banks have already started to complete evaluation projects internally leveraging Narrative1 in minutes instead of wasting time and money hiring outside personnel. Schedule a Narrative1 Demo today and learn how you can bring the evaluation process internally to save your bank time and money!