Saturday , 28 November 2020

What is Appraisal Modernization Really?

Elizabeth Green
Elizabeth Green, Chief Data and Product Solutions Officer at LoanLogics

I recently had the opportunity to facilitate a panel discussion for the Collateral Risk Network on the topic of Appraisal Modernization. I posed a series of questions to panelists Jared Priesler (DataMaster), Jeff Bradford (Bradford Technologies), and Penny Reed (Wells Fargo) who addressed them from the vantage point of three key demographics in our industry: the appraiser, the AMC, and the Lender. Each of these groups were surveyed in research conducted by the Allterra Group (appraisers) and the Collateral Risk Network (Lenders & AMCs) for this purpose. In this article, I will share some of the survey’s key findings and provide you a link where you can obtain a copy of the survey summary reports.

I want to set the stage by providing a definition of Appraisal Modernization that was used for the purposes of the panel discussion. It can mean different things to different people. For example, Fannie Mae and Freddie Mac have adopted the term as the name of their new initiatives outside of traditional appraisal. However, for our purposes, we are using the term more broadly as a concept versus an initiative. It also does not mean the elimination of appraisers. In fact, trends in modern society are changing not only how appraisers provide expertise, but also how appraisers, lenders, AMCs and consumers can work together to define new and improved opportunities to engage and mutually benefit from appraiser expertise.

The following is a summary of the panel discussion from the October 1st Collateral Risk Network virtual quarterly meeting.

What Does Appraisal Modernization Mean To You?

Jared Appraiser – New opportunities to apply different tools, better data, gain efficiency, and offer other product types and services.
Penny Lender – Appraisals are used beyond just loan origination. Lenders calibrate valuation product to risk (e.g. hybrids, waivers) to full appraisal depending upon the loan circumstance and their need to evaluate the risk.
Jeff – AMCs – The ability to offer other services such as hybrids or branch into other verticals besides mortgage (e.g. cash transactions from realtors) to improve appraiser and client communications.

Outlook for the future
The takeaways from the session are encouraging!

Jared Appraiser – Look for ways to add value in the partnership with lenders and AMCs, as well as other business opportunities such as appraisals on cash sales. Key themes critical to your analysis are:

  • Fit to neighborhood
  • Market analysis
  • Resale potential

Jeff – AMCs – All participants need to understand market data usage and new technologies that help you visualize the data is plentiful.

Penny Lender – Tell me more! Understand your customer. Lenders look at everything from the perspective of what happens if the borrower doesn’t pay (will the value hold) and need to know anything that may impact the severity of the loss. What is the quantifiable risk if I have to buy back the loan for this property/market?

  • Pre/post adjustment analysis – to reduce outcome risk to lender
  • Is the property good for the transaction?
  • Appraiser expertise
  • Repurchase and Default (risk around appraisal)

The future belongs to those who adapt and thrive with new opportunities and its rewards! I believe it is imperative that appraisers take a lead role in crafting the future of the profession.

Download Allterra Appraisal Modernization 2020 Appraiser Survey Results Summary

Download CRN Appraisal Modernization Lender AMC 2020 Survey Results Summary

Have any comments or would you like to submit content of your own? Email comments@appraisalbuzz.com.

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About Elizabeth Green

Elizabeth Green
Elizabeth Green is Chief Data and Product Solutions Officer at LoanLogics. In this role, she is responsible for the development of the company’s solutions and data strategy, as well as expansion of products, including in the area of collateral risk assessment. Liz is a strategist, solutions architect, speaker, and valuation advocate. As a recognized mortgage technology veteran in software product leadership for solutions in residential property valuation, loan origination, mortgage servicing, and secondary marketing, she has helped to foster a new level of understanding in property valuation and collateral risk assessment through the application of digital intelligence. A 25-year veteran leader in the mortgage software and valuation sectors. Liz has led the MISMO Property and Valuation Services Group for the last 10 years and has been awarded the MISMO Staff Award and recognized as a Tech All Star by the Mortgage Bankers Association. Liz also serves as the Chair for the Collateral Risk Network Standards Committee.

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