Stacey Caron is President of Appraisal Fee Services Inc. (AFS)

Buzz:  Hi Stacey, I am glad we have the opportunity to talk, I have been hearing a lot about Appraisal Fee Services lately and have been wanting to get more information.

Stacey:  Hi Joan.  I guess you could say that we have been getting a lot of attention lately.  Thank you for giving me the chance to clarify what our service is and how we benefit our clients.

Buzz:  So tell me about AFS.

Stacey:  Certainly, AFS is a payment processing company that has been developed specifically for the mortgage and appraisal services industries to support the acceptance of electronic payments with a compliant and streamlined process. Our service allows lenders and appraisal companies to gain the needed benefits of merchant services without all of the back office work that usually goes along with it.

Buzz:  So when you say merchant services and you mean credit cards?

Stacey:  Yes, but not just credit cards, we offer electronic check acceptance as well. The real benefit is being able to accept both. One of our clients had a check acceptance policy that required a physical check to clear their bank before they proceeded with an appraisal.  After converting to AFS, they saw an order increase of 8% due to online check acceptance.

Buzz:  So if an organization isn’t accepting checks electronically today they should expect an increase in business?

Stacey:  Absolutely; whether the company is a lender or an appraisal firm, the service is mutually beneficial.  Lender’s utilizing our real time authorization service for credit card and check transactions saw in increased pull through in origination. One of our clients experienced an increase to 6 out of every 10 loan files resulting in an appraisal order. Before that, they were at 3 out of every 10.  An appraisal company benefits from lenders using our service because payment is secured at the time of authorization.  No more chasing down money.

Buzz:  So who would be the consumer for services from AFS?

Stacey:  Our service has been designed to support lenders, appraisal management companies, appraisal firms as well as independent appraisers. We have developed a number of models that allow for companies to act as standalone entities or to create strategic partnerships with their vendors or clients.  We recently created a Limited Vendor Model which ties lenders to specified appraisal companies.

Buzz:  Could you give me more detail of your Limited Model?

Stacey:  Sure. The Limited model allows for partnership between the lender and company managing the appraisal order. The lender, being the point of contact with the borrower would obtain the account information to secure the needed funds from the borrower. Once the funds have been secured, they would place an order with the appraisal company or appraiser. Once the appraisal has been returned, the lender would tell us who to pay and we submit funds to that company based upon their payment schedule. Each time we pay, we provide a break down of all of the information needed to apply the payment to the correct invoice.

Buzz: So how different is AFS from the traditional model of accepting electronic payments?

Stacey:  Generally speaking, when a firm accepts credit cards, they are responsible for reconciling the payment to the order, reconciling chargebacks and retrieval requests, chasing down NSF and/or stop payment monies, conduct monthly billing reconciliation for outstanding invoices and then bill the companies they work with. This is labor intensive and requires back office staff to manage the process constantly. Aside from the fixed costs these processes require, most firms are not CISP and/or PCI compliant when conducting payment transactions.  Non-compliance within the Visa/MasterCard and NACHA worlds can be horribly expensive not to mention crippling since a firm could lose acceptance privileges if account holder data is compromised.

Buzz:  Chargebacks, you mean when the customer disputes the charge?

Stacey:  Yes! With our experience in the electronic payments industry we know how to manage chargebacks efficiently. We do it a bit differently by supplying the lender with a process and all of the needed forms to gain the necessary signatures and approvals along the way. Additionally, we provide notifications to the borrower throughout the process so there are no surprises. Because of our experience with chargeback management, we typically see a lesser chargeback percentage than even some of the larger appraisal firms that have direct contact with the account holder.  Our current statistic stands at .03% of chargebacks; that is 3 out of every 10,000 charges.

Buzz:  What about the old process of “cash at the door” where the appraiser picks up check?

Stacey:  That works to a certain extent, but can also cause problems as most have realized. The main problem comes from the non-sufficient funds (NSF) and borrowers stopping payment. When this happens, most lenders will be presented with an invoice from the appraiser and then they become liable for the appraisal fee, when initially they were under the perception that the appraisal was paid for. Our process at AFS is much simpler since the funds are authorized before the appraisal is even ordered. The borrower’s payment at that point is guaranteed and is much harder for them to dispute.

Buzz:  It sounds like your service helps the appraiser get paid much sooner than normal?

Stacey:  Good point, yes. Under normal circumstances, a lender would be billed every 30 days for work performed for the previous period. With a net 30, the opportunity for appraisal payments to be made up to 60 days after the appraisal is performed is possible. Our service generally will have the payment in the hands of the appraiser within 2 weeks. The other great benefit to all of this is there are much less invoices submitted. AFS eliminates the need for invoicing for appraisals and that creates much less work for everyone involved in the process.

Buzz:  Does your service have the ability to integrate with any LOS / POS applications?

Stacey:  Yes, AFS is able to integrate with LOS and POS applications. Additionally, we have the ability to take advantage of single sign on methodologies that many organizations are deploying today. This keeps username and password management simple and safe.

Buzz:  Has AFS had any impact on turn-around time of the appraisal?

Stacey:  Absolutely, AFS has been able to assist with reducing turn-around time because the appraisal order isn’t started until account authorization has been achieved. By securing payment upfront the borrower is just as committed to the process as everyone else. The next step is to schedule inspection and take it from there. Lenders deploying this model have seen up to 3 days cut off from the total turn time.

Buzz:  You mentioned compliance earlier, can you talk more about that?

Stacey:  Sure, AFS is compliant with CISP (Card Information Security Program) and PCI (Payment Card Industry) Security Standards. Visa/MasterCard and NACHA define the rules for accepting, storing and transmitting payment data. All merchants, regardless of size, type and volume are required to adhere to these standards. Unfortunately, the standards can be misunderstood and therefore leave lenders and appraisal companies vulnerable.  We have all heard of databases being compromised and information getting into the wrong hands. Compromises can result in fines from Visa/MasterCard, the card issuers or worse.  Depending on the severity of the compromise a merchant can lose their acceptance privileges as well as have their reputations damaged. 

Buzz:  Well it certainly sounds like AFS has got a service the industry should be using. Is there anything else you would like to tell us about?

Stacey:  Yes, readers should know that AFS has many different solutions and models available. We are always working on delivering custom solutions that meet the customer’s needs. Last year was a very exciting and 2007 is poised to be even better. We are working with many large organizations to create alliances that will benefit our customers. Furthermore, our senior leadership comes from many different backgrounds, including the mortgage industry, and brings a great perspective to our service. We look forward to the partnerships we will create in the future as a result of our ability to develop solutions for our clients.