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targeted at the issue of discrimination in valuations and with fair lending rules and other requirements, a well-
builds on both the ROV guidance and the lawsuits in constructed ROV process should feed into the bank’s
which federal agencies are participating. vendor management program. When an appraisal or
valuation is determined to be inaccurate or unreliable,
Taken together, these regulator actions demonstrate
that bank reviews of appraisals and valuations should be that information should be sent to those responsible
calibrated to detect discriminatory bias, and the lawsuits for vendor management to ensure that the bank does
suggest a few items that may be worth extra scrutiny. not continue to use appraisers that are not consistently
One of these is the selection of comparable properties providing quality appraisals. Reviewers of vendors that
or “comps,” as they are often called by appraisers and provide valuations should monitor those vendors for
lenders. Lawsuits have alleged that the comps selected quality, including any indicators of discriminatory bias.
for an appraisal have reflected the race or ethnicity of Finally, even where a challenged or disputed valuation
the homeowner more than specifics of the property is found to have been reliable and valid, the bank’s
itself. For banks, the takeaway is that when the selected adherence to the ROV process, including a thorough
comps are not the recently sold properties closest to the (and thoroughly documented) objective review of
appraised property, the bank should examine the reason valuations, as well as careful consideration of any issues
that more distant properties were used. raised about the valuation, demonstrate to regulators
(and, in the event of litigation, to courts) that the bank
The general trajectory of property values in the area
may also be worth a careful look. If area property values is committed to ensuring accurate valuations.
have generally increased since the subject property was
last sold or appraised, a valuation that shows a smaller Jessica Lamoreux, JD, works as Assistant Vice
increase or a decrease in value as compared to the last President and Associate General Counsel for
sale or valuation may raise eyebrows. In the lawsuits Compliance Alliance. She graduated magna cum
alleging valuation discrimination, plaintiffs consistently laude from Case Western Reserve University
School of Law, where she served as Contributing
argue that a valuation showing a change in value that Editor on the law review. She also holds a
is not in line with the general trend for area property is Bachelor’s degree in Political Science from Kenyon
an indicator that the valuation is unfairly biased. When College. Before her work in regulatory compliance,
reviewing an appraisal, it may be useful for banks to she served as a law clerk in the U.S. Bankruptcy
Court. She is licensed in the State of Ohio.
look at the last appraisal or sale of the property and
the general trend for area property values since that Ms. Lamoreux’s has a strong background in
time, ensuring that there is a reasonable basis for any consumer financial services; beginning as
the Compliance Attorney for a mid-size debt
divergence from that trend. collection law firm and later as Associate Counsel
for a consumer lender. Most recently, Jessica
The reconsideration of value process provides an was the Director of Risk & Compliance at an
additional opportunity for the bank to mitigate risk. In SaaS startup, where she advised on the design of
the immediate transaction, there is both fair lending and software for managing the placement of defaulted
safety and soundness risk to the bank if it does not fully receivables with third party collectors. Jessica’s
review the valuation and ensure that the value assigned to work has consistently focused on policy drafting
the property is accurate. Based on the conglomeration of and employee compliance training. She has also
frequently presented on regulatory issues at the
guidance and lawsuits on this topic, however, resolving National Creditors Bar Association and other
any issues with the valuation is only the first step. industry events. Along with her Hotline duties,
Jessica will also be a featured ACCESS magazine
Because of the bank’s obligation to oversee third party author.
service providers and ensure that they also comply

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