The annual review helps confirm that each vendor continues to deliver independent, credible collateral valuations for your institution. The core documents are similar across all three services, and each service adds a few specific items. Depth of diligence often follows volume and risk, and many individual appraisers operate as sole practitioners, so alternative evidence frequently serves in place of a SOC report.
Core documents for all three services
- SOC 2 Type 2 report or equivalent, where available, with a bridge letter
- Financial statements and insurance certificates, including E&O and cyber coverage
- Information security, business continuity, and incident response summaries
- Complaint, litigation, and regulatory action disclosures
- Subcontractor list and independence and conflict of interest policies
- Performance data such as turnaround time and revision rates
Matching depth to volume and risk
The Interagency Guidance on Third-Party Relationships (2023) supports scaling diligence to the criticality of the relationship. Many institutions apply the full list to appraisal management companies, AVM providers, and high-volume vendors. For individual appraisers and lower-volume vendors, institutions often rely on license verification, current E&O coverage, an independence and USPAP attestation, and their own review of work product. Documenting your tiering criteria supports a consistent approach.
Appraisals
- License and certification verification with the state and the National Registry
- Evidence of USPAP adherence and independence from loan production
- For appraisal management companies, state registration and panel selection, rotation, and competency criteria
- A sample of completed appraisals for your own testing
Valuations (AVMs and evaluations)
- Model validation and back-testing results, data sources, and confidence score methodology
- Evidence supporting the five AVM quality control standards: confidence in estimates, protection against data manipulation, conflict avoidance, random sample testing, and nondiscrimination compliance
- For evaluations, evaluator qualifications and a methodology consistent with the Interagency Appraisal and Evaluation Guidelines
Reviews only
- Reviewer credentials and competency for the property type
- Independence from the original appraiser and the transaction
- Review methodology, sample review reports, and an escalation process
Your own testing
Annual sampling of vendor work product, with documented results, offers strong evidence that controls operate as intended. This approach is especially valuable for smaller vendors.
Specific citations vary by your charter and primary regulator, so please confirm which apply to your institution. This response is shared for general informational purposes, and your primary regulator and legal counsel are the best resources for determining the requirements that apply to your organization.
