Page 21 - Summer 2023.2_Neat

PERSPECTIVES A New Risk Management

Tool for Community Banks

BY BRENT MELTON •

H Traditionally you would have a
ISTORY - Over the years Methods, Policies
Is your ingress/egress
located properly?
and Procedures in Banking have changed
due to competition, regulations,
property description similar to
customer demands, risks and finally
the one below in your closing
economics. The banks of old, along with
reading this description can
the policies and procedures are not the file. The question is, by
you answer the questions
above with a high level of
same in the banks of today. In order to stay
confidence? Some of you
relevant, banks have had to evolve with market conditions, customer
might be saying “I use county
trends, advances in technologies, and different types of risks.
online mapping systems so I
TODAY, we will discuss how DATA VISUALIZATION has allowed the am ok”. Whereas county
banking industry to evolve in managing exposure to RISKS hidden in records are a great way to get Brent Melton is CEO and co-
Property Descriptions. Banks typically use One of Four methods below an idea of what you might be founder of Vizaline, LLC, a
to validate a written property description. lending on, they do not use the company specializing in
same information that you are converting property descriptions
Action Risk Level about to put in your file. into pictures. Vizaline is an ACB
They hire a surveyor Low Remember you need to ensure Associate Member. You may
the document in your file is the
connect with Brent at
They rely on title insurance Moderate correct description for what brent@vizaline.com.
you are lending on.
They assume the description is correct High 1. LEGAL DESCRIPTION: 575 +/- acres being in the N 1/2 (Less area

east of Hwy. 16) & NE 1/4 of SW 1/4, & N 1/2 of SE 1/4 of Section 1 &
Use County online maps High NE 1/4 of Section 2, T9N, R2E, & parts of W 1/2 of Section 6, T9N, R3E,

Madison County, Mississippi, together with all oil, gas, and mineral
The best option here is to hire a surveyor to reduce RISKS regarding rights, if any
errors, however a new RISK has now been introduced – increasing the
cost to the customer. Title Insurance ranked moderate due to the fact Visualization of a property description
that most policies have a schedule B that eliminates coverage for The text has been transformed into a picture then placed
property descriptions. County Maps rated high in risks because the geographically on an image. The picture was generated using all of the
county does not have the description that the bank has on file. Lastly information found in the deed and polygons are created representing
assuming the description is correct ranked HIGH because well, you the target parcel (s), less and excepts, easements etc…. The image
know why. also allows you to be able to improvements located on the property.
In a matter of seconds, the loan officer should be able to confirm the
THERE IS NOW A FIFTH OPTION - DATA VISUALIZATIOIN? answers to the questions we discussed earlier resulting in faster loan
What is Data Visualization? Simply put – Data Visualization is: Pictures processing.
instead of letter and numbers, Layers instead of file
folders, Legacy data merged with current data to create “DV has identified many problems in
and understand the operating picture. our legal descriptions which in turn
allowed us to have the issues
Real use example of a type of data visualization – corrected before closing. It has also
“Property Descriptions”. These descriptions are a very helped us clean up our existing loan
important part of the loan process. Without a solid portfolio by examining legal
property description, the banks’ exposure increases descriptions during the refinance
dramatically. Analysis over the last 8 years has found that process.”
17 to 20 percent of property descriptions studied had at least one With every passing year there Wesley Morgan, VP
error causing the property description to be invalid. (Sample size are new technologies and new First Choice Bank
20,000 descriptions) processes that improve on the

In order to reduce the banks RISK, you must be able to answer these time-tested ways of years past. Data Visualization has emerged in
questions at a minimum. numerous other sectors and has been proven very successful in
• Does your polygon close? managing expectations, quantifying data and reducing risks. Now this
• Are there multiple parcels? technology is available to the community banking industry.
• Is the acreage correct? Benefits of Data Visualization – Reduced RISK to the BANK – Reduced
• Is your property located where you think it is? RISK to the CUSTOMER- Fast turnaround time – Repeatable Results –
• Are your improvements on your property? Low-Cost Solution.
• Are your partial releases correct?

A COMMUNITY BANKER | 21 | Summer 2023
RKANSAS