TriVALU- Assisting You With Your Loan Evaluation Needs

Did you know that while regulators are requiring that you keeo current information on the full market value of your loan collateral, the expense of a full appraisial is not always necessary?

Specifically this is the case when

The transaction has a value of $250,000 or less;
It involves an existing extension of credit at the lending institution

TriNovus cann offer:

Automated Valuation Model (AVM)
Traditional BPO (Broker Price Offering)
Appraiser Desktop Appraisal

And in the event that you do still need a full appraisal, we can help with that too!

Find out more at HERE!

Have You Heard About TriComply?

TriNovus has a great new compliance service to meet all of your community bank's compliance needs. It is headed by compliance guru Blair Rugh and features written bank policies and procedures, compliance questions and answers, weekly compliance newsletter, access to compliance knowledgeboard and advertising review for compliance. But enough of us telling you about it. Hear it from Blair in his own words in this short video clip!

Remote Deposit Capture Delivery Lags Customer Demand

by Trent Flemming, friend of TriNovus

For more than five years now, Remote Deposit Capture (RDC) technology has been widely available. Early efforts at deployment tended to focus on those customers who, by virtue of their distance from a branch, or the nature of their business, would seem to benefit most. Often, it was these customers, along with those who simply saw it as a “must have” technology, where banks focused their initial efforts. In some cases, banks acquired an RDC system to meet the needs of a single customer. As with most new technologies, the actual end users tend to teach us what the real value of the solution is, as they interact with it day to day. In the case of RDC, two things immediately became clear. First, the time and distance benefit was real: customers could avoid trips to the bank for deposit purposes. The second benefit was less intuitive though. The process of preparing the deposit electronically was superior to preparing a paper deposit. This was true for THREE reasons: 1) manual efforts to list large numbers of checks were eliminated, 2) accuracy and integrity of the deposits were improved, and 3) access to an electronic history of all deposited items was a tremendous benefit from a research standpoint. Put more simply, once a business began using RDC they were unlikely to give it up.

All of the benefits do not accrue to the customer, however. Banks can benefit through significantly reduced branch traffic, more accurate deposits, which are electronic in nature and require little handling, and include complete information allowing intelligent routing and immediate posting of on-us items.

Surprisingly, though, most banks have failed to to deploy RDC in a significant way. Customers embrace and rapidly adopt the technology when it is made available to them, but banks are generally failing to properly educate their employees and and promote the service to their customers who may benefit from it. RDC is an easy sell when employees are well trained regarding the benefits of the solution, and in how to anticipate and overcome potential objections.

An emerging threat to many bank's important business customer relationships are third parties who are selling RDC services directly to merchants, other commercial businesses, even churches. Using a sponsoring, clearing bank, these ISOs begin to take control of the customer relationship from the primary bank, by gaining the deposit business. Over time, the sponsoring clearing bank will no doubt attempt to take the deposit accounts away from those banks, as well. The quickest way to end this threat is to be sure that you are promoting a robust RDC offering to your business customers.

Trent Fleming (www.trentfleming.com, trent@trentfleming.com ) is a consultant who works with banks to address a variety of operational, technology, and regulatory issues. He has worked extensively with RDC systems, and is able to guide banks in successfully rolling out such programs to benefit the bank and its customers.

Please take a minute to answer our brief poll on compliance

Using Evaluation Alternatives for Real Estate Loans That Don’t Require an Appraisal

by Blair Rugh

Under the agencies real estate appraisal guidelines a complete appraisal prepared by a licensed or certified appraiser is not required for loans of $250,000 or less secured by 1- 4 family residential real estate. There is also an exemption for the renewal, modification or extension of certain real estate secured loans. In circumstances where a complete appraisal is not required banks have used what are referred to as evaluation alternatives, most prominent among them being Automated Valuation Models (“AVMs”).

In November, 2008 the agencies published proposed Interagency Appraisal and Evaluation Guidelines to replace the guidelines published in 1994. To date the proposed guidelines have not been finalized but I anticipate that they will be soon, fundamentally as written. One of the reasons that the proposed guidelines were promulgated was to provide guidance and standards for the use of AVMs. Appendix B to the proposed guidelines provides requirements for the use of AVMs as well as limited guidance on the use of Tax Assessment Valuations.

Many bankers misunderstood the thrust of the proposed guidance and believed it was a prohibition or discouragement on the use of AVMs until the guidance was finalized. That was not its purpose at all. The regulatory agencies recognized and approved the use of AVMs long before the proposed guidance was published. The purpose of the proposed guidance was not to approve the use of AVMs as that was already the agencies’ standard. The purpose of the proposed guidelines, and the final guidelines when they are published, is to provide a set of standards for using AVMs. Before the proposed guidance was published there were no standards or best practices for AVM use. Now there are. I recommend that banks using AVMs follow the standards set out in Appendix B to the proposed guidelines. Certainly do not use the fact that the final guidelines have not been published as a reason not to utilize AVMs.

Another excellent use of AVMs is in portfolio monitoring. For this purpose an AVM may be used for loans that exceed $250,000. Both the proposed and existing guidelines require that a bank have a program for monitoring and updating collateral valuations. AVMs are a useful tool for updating the value of residential real estate collateral, particularly for unseasoned loans that were made at higher loan to value ratios or loans that are experiencing payment delinquencies.

If a bank determines that it will utilize AVMs it should obtain from its provider information about its sources of data, the frequency it is updated and its modeling techniques. The bank should then establish standards for validation testing and monitoring. Also a bank using AVMs should establish standards for the types of property, location, condition and price range for which AVMs may be used.

AVMs can be a useful and relatively inexpensive tool in a bank’s real estate evaluation process. If a bank is not using AVMs it should investigate their usefulness and consider their use. TriNovus offers an excellent AVM resource called TriVALU. For information about TriVALU or to obtain a demonstration of the product go to TriNovus.com or call them at (205) 991-5636.

Ask Blair...Payment Order of Checks

Q. Blair, with all the talk about charges for overdrafts, what is your suggestion on the payment order of checks?


A. Relative to the payment order of checks, I have always recommended paying high to low. The regulations allow paying in any order that you wish and i think that high to low is reasonable. Many banks are now expanding that to all items if your automation system will accommodate it. That is you integrate all of your items and pay the largest first and so on regardless of whether the item is a check or an electronic item. One other thing, I recommend that you do not charge overdraft fees to the account until all items have been settled. For example, if I have $405 in my account and there are two items presented, one for $500 and one for $400. If you process the $500 item first and assess an overdraft fee then there are not enough funds remaining to process the $400 item because of the overdraft fee.

A Sneek Peek At Our Up Coming Webinar July 22

Here is just a brief glimpse of what will be covered in Blair Rugh's presentation on the The Ins and Outs of Bank Advertising Tuesday July 20 From 3-4 p.m. Central.


Register Now To Reserve Your Spot!

Now we get into the harder stuff. Let’s discuss Regulation DD and the advertisement ofdeposit products first. The general advertising rules of Regulation DD are in Section 230.8of the regulation. First they require that an advertisement not be inaccurate or deceptive, basically the same requirement as the FTC rule. Next they prohibit advertising an account as “free”, “no cost” or any similar term of any maintenance or activity fee may be charged to the account. A maintenance or activity fee is a charge that is imposed even though the customer did not violate any of the account terms or request any additional service. Examples are a minimum balance fee, a transaction fee or a monthly service charge. Charges imposed because a customer requested an additional service such as check printing fees, stop payment fees, a balance inquiry fee or fees for electronic access to the account such as an ATM fee or a fee for electronic banking are not maintenance or activity fees. Similarly fees charged for violating the terms of the account, such as an NSF or overdraft fee or a dormant account fee are not maintenance or activity fees. If a particular aspect of an account is free an advertisement may say so even though the account itself may not be advertised as free. For example if a bank offers free bill payment an advertisement could state that even though there were maintenance fees charged to the account. If an account is free for a limited period of time an advertisement may state that provided that the advertisement also states the time period for which the account is free. If an account is free based on a condition that has nothing to do with the account then an advertisement may state that. For example if you have a deposit account where you waive all fees for senior citizens you could advertise “Free for persons age 55 and older” even though you impose
fees on persons younger than that. The person’s age has nothing to do with the account. On the other hand if you waive fees if the customer maintains a certain balance you could not advertise the account as free if that balance is maintained. You could state that no fees would be imposed if the balance is maintained but you could not use the term “free”.

Cost is $95 for TriNovus Customers and $125 for non-customers.