U.S. Bancorp has moved all its home appraisals to an in-house unit overseen by a senior risk officer, breaking from the way most banks handle valuations of residential properties.
The Minneapolis bank made the move to streamline its operations and improve compliance with the Dodd-Frank Act, according to executives.
"This is part of an effort to establish a higher standard of compliance," says Todd Loudenslager, a senior vice president and senior risk officer for U.S. Bank's consumer banking division, who is overseeing the new unit.
Real estate appraisals determine the value of a property at a specific point in time, typically by looking at sales of comparable properties in the surrounding market. As banks have found themselves with more soured mortgages, their need for frequent property valuations has skyrocketed.
A few years ago, U.S. Bank had seven separate processes for assessing the value of the homes of its mortgage borrowers. But those separate appraisal processes, one for each business line, became redundant, according to Loudenslager.
In 2010, the company created its separate in-house appraisal unit, USB Lending Support Services LLC. The unit handled a small volume of appraisals last year, but now it is responsible for all appraisals of residential properties.
Loudenslager is chief executive of the unit and ultimately reports to Richard C. Hartnack, the bank's vice chairman of consumer banking.
U.S. Bank's focus on appraisal compliance has been accelerated by the 2010
Loudenslager says his bank's appraisal overhaul is part of an overall effort to improve "our ability to analyze, understand and measure the risk associated with appraisals."
"We look at the creditworthiness of the customer and the value of the collateral, which is an important part, and that's why we're giving it the attention," he says.
