VA RFI: LGY Automated Appraisal Management Services (AMS)

An RFI was posted to GSA eBuy this week with a due date of October 28, 2024.

RFQ ID:RFQ1730661

RFQ Title: Appraisal Management Services

Contact Joshua Gallien Department of Veterans Affairs Department of Veterans Affairs joshua.gallien@va.gov 4135844040 ex6460

U.S. Department of Veterans Affairs (VA) 

Appraisal Management Service (AMS)

DRAFT Performance Work Statement

1.0 BACKGROUND

The Construction and Valuation Section (C&V) of the Department of Veterans Affairs (VA)’s Loan Guaranty Service (LGY) is responsible for issuing the appraisal assignment to an appraiser approved by the Secretary, ensuring quality of appraisal reports on properties offered as security for VA guaranteed loans, management of the VA appraisal panel, and other assorted duties. Historically, lenders submitted appraisal requests by telephone to a local VA Regional Office (RO). Each RO managed a fee appraiser panel for its jurisdiction. The fee appraiser panel is comprised of VA-approved independent appraisers. VA assigned the appraisal to an approved fee appraiser located in or near the area where the subject property was located. The completed appraisal report was mailed or hand-delivered to the RO for review and subsequent issuance of a Certificate of Reasonable Value (CRV) by a VA Review Appraiser.

The CRV forms were later replaced by the Notice of Value (NOV). As automation advanced, lenders started requesting appraisals electronically and an automated VA System provided the name and contact information for the assigned appraiser.

Shortly thereafter, VA began authorizing lenders to perform reviews of completed appraisal reports and issue NOVs through the Lender Appraisal Processing Program (LAPP). The lender’s Staff Appraisal Reviewer (SAR), usually an underwriter employed by the lender, received training by VA staff on the review process and issuance of the NOV. This procedure currently remains in effect. Although LAPP is a voluntary program, currently approximately 97% of the total volume is processed under this program.

In 2002, VA completed a nationwide initiative that consolidated 46 ROs with loan guaranty operations to eight (8) Regional Loan Centers (RLCs). As C&V moves forward with a national workflow approach, it is essential that proven technological advances be taken advantage of to improve resource management and to continue providing quality benefits to our nation’s Veterans, in a more cost-efficient manner. The Construction and Valuation Value Stream is more centralized and will be operating out of the 8 offices under one vision.

In November 2013, VA awarded a 5-year contract for Appraisal Management Services (AMS) that included reading and scoring of VA appraisals and Automated Valuation Models (AVM) to allow VA to transition to a risk-based review platform. In June 2019, VA recompeted that work and awarded a 5-year contract to another contractor that added more services. This work, once again, is being recompeted, and will incorporate new services and functionality necessary to improve benefit delivery. The current C&V environment consists of approximately one hundred and thirty (130) VA staff members, over 10,000 SARs (Lenders and Servicers) and over 6,500 VA-approved independent real estate appraisers.

1.1 The Appraisal Process

C&V provides a value and eligibility determinations for all properties used as security for loans that are guaranteed by the VA. Additionally, C&V provides the value determinations for pre-liquidation properties. Before loans can be guaranteed by the VA, an appraisal of the security property being purchased by the Veteran must be ordered by the Veteran’s lender. Currently, lenders access WebLGY using the VA Loan Guaranty HUB where they order the appraisal. WebLGY automatically assign an appraiser from the VA fee panel, on a rotational basis, based upon variables such as appraiser availability and geographic location of the subject property. The system automatically sends an email notification of the assignment to the assigned appraiser. Upon completion of the appraisal report, the appraiser uploads the report into WebLGY and a system-generated email notifies the appropriate reviewer (lender’s SAR, servicer’s SAR, or VA review appraiser) that the appraisal report has been completed and is available for downloading. The same process applies to ordering a liquidation appraisal used for foreclosure purposes.

The VA provides access to WebLGY for lenders, servicers, other appraisal requestors (brokers and attorneys), appraisers, and internal VA users. Currently, over 36,000 individuals access WebLGY on a routine basis. All users have a predetermined level of authorization within the system, based upon their responsibility and need for access, to specific information.

The type of appraisal report requested will determine if the lender’s SAR, servicer’s SAR, or VA review appraiser will review the completed report and issue the NOV. The following are types of appraisals, which can be requested using WebLGY:

• Lender Appraisal Processing (LAP) – A purchase or cash-out refinance appraisal request ordered by a lender (or a broker that has a supervising lender) that has a SAR on staff to review the appraisal report and issue the NOV.
• Individual (IND) – A purchase appraisal request ordered by a lender that does not have a SAR on staff to review the appraisal report and issue the NOV. These appraisal reports are reviewed by a VA staff reviewer who issues the NOV.
• Liquidation Appraisal (LGI) – A liquidation appraisal request ordered by the loan servicer and reviewed by a VA staff appraiser who will issue the NOV.
• Servicer Appraisal Processing (SAP) – A liquidation appraisal request ordered by the loan servicer or its attorney that will be reviewed by a SAR who will issue the NOV.
• Partial Release – A partial release appraisal request is ordered when a Veteran who has a guaranteed VA loan requests to have a portion of the property released from the security. These requests are currently NOT being ordered through WebLGY.
• Construction to Perm and Renovation loans: These types of loans have a different assignment condition and may provide two reports on the same property with an As Is and as improved valuation.

The latest NOV remains in WebLGY as a permanent document. VA procedures require that a copy of the NOV and the reviewed appraisal report are provided to the Veteran by the reviewer, in the case of a purchase or refinance.

WebLGY is the permanent system of record for all C&V information. VA maintains detailed records for all appraisal requests, appraisals pending review, and NOVs issued. It also maintains a record of the quality reviews performed by VA staff, with deficiencies noted during the review, and whether they were substantive or non-substantive. Since November 2013, WebLGYis the permanent record for AMS data captured from the reading and scoring of each appraisal uploaded into WebLGY.

WebLGY maintains all quality review information captured from a desk review, the in-house review of an appraisal report and NOV issued by a VA Review Appraiser. The desk reviews assist VA Staff in their oversight responsibilities for appraisers and SARs. The results of the reviews are placed on a template form in WebLGY.

1.2 Purpose and Vision

The purpose of this Performance Work Statement (PWS) is to support the procurement of VA Automated Appraisal Management Services (AMS) to further enhance the appraisal review process, thereby improving the oversight functions of C&V. This will aid in the future of VA’s modernization objectives described at the Technology Knowledge Center – VA Home Loans.

C&V’s vision is to provide a phased approach to accomplish a fully integrated, seamless, and user- friendly solution encompassing the appraisal process from the initial request and assignment through the issuance of a VA guaranty. The contractor shall provide the C&V staff, lenders, and servicers in the United States (U.S.) with services that will improve standardization, risk management, timeliness, and performance, as well as the credibility and quality of valuation functions.

The contractor shall be able to accommodate an estimated 1,000,000 appraisals annually; however, VA anticipates average volume of approximately 750,000 annually. VA processes appraisals for Single Family Residential properties representing 91% of all appraisal assignments. Condominium assignments represent 7% while manufactured home appraisals represent 2% of total volume. Appraisals are completed on origination, cash out refinance, and liquidation transactions. Market conditions dictate actual volume.

The AMS process, in its current state, begins after the notification to the appraiser that an assignment has been made. The AMS system receives the appraisal report uploaded by the appraiser and provides a validation process to ensure that the report matches the assignment. The AMS then performs an electronic screening review function and scoring based on VA requirements and using data collected from VA appraisals and other sources. The AMS provides the data and results of the scoring and electronic screening review and collects the data from the appraisal reports for use by VA. Lastly, AMS will provide a desktop appraisal process using data from VA and other sources to develop a desktop valuation product.

An AMS contractor for future state with all modernization efforts in place will have a more active role. As appraisal orders are received from VA approved lenders to VA via an Application Programming Interface (API) interface. This request will then be sent to the AMS contractor. The contractor will receive, process and submit all data to VA on an API. Once the AMS contractor receives the appraisal order, they will assign the appraisal to a VA approved appraiser. The VA approved appraiser will log into a user interface (UI) that is designed and implemented by the contractor. All work, tracking of milestones and receiving of the appraisal will be done on the UI developed by the contractor.

The future state of VA and the AMS contractor will also have other roles such as Automated Clearing House (ACH) payment of fees between Lenders, Servicers, agents, and appraisers. They will enable industry proven technology for reinspection’s, hard stops on industry proven results with VA required policy. The contractor will also support VA’s 5-year vision of modernization.

VA performs targeted reviews based upon the risk issues and the AMS score generated for the appraisal. Automated risk-based scoring generated by the AMS enables the VA to perform enhanced analysis on those appraisals targeted by the AMS model. AMS will provide an integrated and standardized appraisal review process that is based on the VA risk profile.

Based on the score of the appraisal, authorized VA employees may elect to order Other Related Services (ORS). The ORS will provide VA staff with additional information regarding the property to evaluate the accuracy and credibility of the appraisal. ORS is comprised of desktop appraisal, AVM, Multiple Listing Data, Cost Data and Improved/Unimproved Land Data.

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