The current buzzword in the valuation industry is “appraisal modernization.” Lenders, appraisers, AMCs, and borrowers are regarding the interpretation of this initiative differently, making it critically important to get everyone on the same page as the industry moves forward.
Appraisal modernization represents the Federal Housing Finance Agency (FHFA) independent research, assessment, and planning to move the current appraisal process into the future. This review comes because of FHFA issuing a “request for input” on the policies and practices surrounding home appraisals.
Modernization efforts are focused on examining potential changes to many aspects of the appraisal process. Considerations of overhauling current appraisal forms, UAD reporting format and implementation/acceptance of hybrid appraisals are the primary elements of the exploration. Hybrid appraisals refers to the bifurcation of the appraisal process, whereby a third-party data collector gathers information regarding the subject property from an on-site visit and the appraiser performs the analysis from their desk, using the data collection for reference purposes. “Modernizing the appraisal process not only brings efficiencies, but also a more accurate collateral valuation process,” says Matthew Woodhouse, Managing Director, Valuations for ServiceLink. “ServiceLink is poised to bring a wealth of information and experience to the study.”
FHFA, along with FNMA and FHMC, already has some experience with hybrid appraisals. In addition to FNMA’s Value Verify pilot program, much of 2020’s Covid-caused environment opened up “appraisal flexibilities”, which permitted the bifurcation of the appraisal process to some extent. The fallout of COVID-19 paved the way for new allowable procedures, permitting appraisals to be completed using information about the subject property supplied by homeowners and other parties that may or may not have a financial interest in the transaction. This combined with an appraisal volume increase of 50% in 2020, and a 50% increase in appraisal waivers by Fannie Mae and Freddie Mac, created a perfect storm for innovation – and the initially temporary flexibility now appears to be permanent. Starting in early 2022, Fannie and Freddie will accept loans with desktop appraisals on a permanent basis.
ServiceLink is prepared to help lenders adapt to the new normal, as it’s been focused on finding better ways to complete the appraisal process in a timely, cost-effective way since long before the temporary flexibility resulting from Covid-19. ServiceLink, a pioneer in hybrid appraisals, has been providing these types of appraisal product(s) for its non-GSE clients for more than fifteen years. Continuing to evolve hybrid appraisal products and invest in inspection technology, further positions ServiceLink to be ahead of appraisal modernization opportunities well into the future.
ServiceLink’s continued investment into inspection technologies, keep ServiceLink poised to be ahead of the competition when modernization plans are finalized. EXOS Inspect, an industry-changing technology, is a tool that allows borrowers, or other approved property contacts, to conduct self-service virtual inspections using smartphones or tablets, and the like. EXOS Inspect uses leading industry data with geo-and time-stamped user-generated videos to streamline lending and servicing processes.
ServiceLink is also partnering with a best-in-class data and analytics company to further enhance our capabilities to meet and exceed the currently known demands for appraisal modernization. By aligning EXOS, ServiceLink’s leading production platform, along with our inspection tools, were able to leverage innovative technology and solutions to introduce opportunities for our customer’s benefit.
But what does appraisal modernization mean for the future of more than 40,000 appraisers across the country? “There's always going to be a need for a local valuation professional whose sole focus is providing supported opinions of value,” says Erin Reed-Esser, Vice President, Originations Valuations for ServiceLink. We are going to need local appraisers to provide their opinions. The way they approach that information, and that development of an appraisal is really what I think we'll see changing over the next few years.”
ServiceLink also takes an aggressive stance on cross-training employees within the company to continue building their appraiser network. Monty Marcus, Vice President of Desktop Operations at ServiceLink, has seen the benefits of this training program firsthand. “My two sons and my nephew entered our training program, obtained the appraisal licenses and are each working as full-time appraisers. They bring a fresh perspective, particularly with the technology component that ServiceLink brings to the table.”
ServiceLink consistently brings solutions to keep the industry flowing through this unique time in the mortgage industry.