The mortgage industry has evolved to an unprecedented degree over the last few years, a tumultuous time that has spared no aspect of the lending business. Servicing has obviously been under great scrutiny, as regulators have pummeled the sector with penalties and new requirements. But what about the origination side? Between Dodd-Frank, the CFPB, and other state and federal agencies, the origination business has more new things to worry about than ever before.
One thing hasnít changed: the appraisal is still the most important document in the loan fileóeven if the file consists more of electrons than paper these days. The security underlying every loan is completely dependent on the 1004 to represent its value, and as such, the appraisal is the foundation for the transaction. If itís not up to snuff, neither is the loan, so itís no wonder that investors are more concerned about it these days. The private secondary market, which is starting to show some signs of life, must have complete confidence in the appraisal report if it is to come back in full force, and that includes visibility into the process.
So ďone size fits allĒ is not working as well for originations as it did prior to the meltdown. When property was appreciating rapidly and there was widespread confidence that next monthís valuation would exceed this monthís, the appraisal might not have seemed as critical somehow. Today, however, many markets are reviving, but without a great deal of confidence from consumers or lenders in most of the improving areas. Most of the loan volume is in refinances, not purchases. As consumer confidence in the housing market builds, appraisals are under the microscope for accuracy, so each lender needs a strategy that works for its particular business model.
Appraisal management companies have worked well for lenders for a long time, and they will continue to be important resources for years to come. They do all the heavy lifting when it comes to scheduling, monitoring and delivering reports. The stronger, more capable AMCs are the survivors in the post-crisis environment, but they arenít the only way for lenders to go and remain compliant with appraiser independence requirements.
More lenders of all sizes are taking their appraisal programs back in-house in order to gain closer control over processes. To do this compliantly and easily, they need technology. With the right technology, they can use their preferred AMCs, they can use appraisal companies directly from their own approved panels, or they can use any combination of the two, along with their own appraiser staffs if they have them.
At InHouse, we believe that different lenders have different needs, depending on lending strategies, business models and areas served. Thatís why we think itís important to offer the best of all worlds in our services and technology. With InHouse Solutions, lenders can use a national AMC. With InHouse Connexions, they can use the most advanced appraisal management software platform available. Use either. Use both. One size no longer fits all.
Important considerations like monitoring, tracking, performance metrics, verified licensing and credentials are more critical for lenders today than ever, as compliance concerns take center stage. Access to the UCDP and even the commerce aspects of accepting and processing payments are made simple and efficient by having a partner that understands both appraisers and lenders extremely well.