What are Evaluations? Evaluations (“Evals”) are internal-use, appraisal-like reports concluding an “Estimate of Market Value”. They are used by lenders to review the status of certain real property collateralizing an existing loan. Evals are authorized by the Federal Inter Agency Appraisal Guidelines (“IAEG”) that apply to Federally-backed lending institutions and credit unions. Evals are not typically written to follow USPAP regulations, though they can be. When an Eval is written to conform with USPAP, the report becomes a Restricted Appraisal Report.

Evaluation laws vary greatly from State-to-State and have been slowly evolving as to their acceptance and use due to intense lobbying mounted by banks and credit unions to cut costs, improve the reporting quality, and speed the decision process. Lenders generally write them internally (or order them externally) most often for low-risk, simple, small existing commercial properties in a sub-$1,000,000 category, and they are most often requested as part of a renewal or extension of an existing low-risk loan.

Today, 31 States (including Washington, DC) allow Evals, but only 11 of the 31 States allow their licensed or certified appraisers to write Evals. Therefore, the remaining 20 States (out of 31) allow Evals to be written by someone who is not a licensed appraiser, but someone who has real estate knowledge such as an internal bank employee, a broker, etc. Twenty (20) States do not allow Evals to be written by anyone, whether a licensed appraiser or not. In the 20 States, the current minimum standard is a Restricted Appraisal Report that complies with USPAP.

Based upon feedback from community and regional banks, banks and credit unions need to have their commercial Appraiser Fee Panel provide Evals to more efficiently utilize expensive employee and appraisal department time, avoid bank audit conflicts-of-interest, and to gain seasoned, independent appraiser skills and market insights.

Modum Technologies (“Modum”), as a provider of Evaluation and Restricted Appraisal Report templates that are linked with the largest commercial real estate databases in the U.S. that are designed to cut costs, improve the analytical quality, and dramatically speed up the decision-making process. By linking the coded Modum templates with our database and 100% auto-populating software tools, lenders who wish to maintain the Evaluation process in-house can significantly reduce employee cost and time, increase report quality and relevance, and thereby speed up the loan decision process. Independent appraisers who lease our fully coded Modum templates can greatly expand their market base and revenues with lenders who want to outsource the Evaluation process by seriously reducing turn-time while greatly increasing report volume. Appraisers are thereby able to charge highly competitive fees.