Servicers Want Photos for Valuation Reassurance

AMCO is adding digitally-attached photographs to its eValu appraisal product in a move that will make it more attractive to servicers, according to Ceil Cohen, company director of marketing and communications.

The company planned to begin testing this summer, and the new eValu product will be available in the marketplace 60 days after these tests have been completed.

After conversations with its servicer clients, AMCO decided to add photographs to eValu late last year. Since servicers are often dealing with properties that may be in delinquency, they find the actual state of the house very relevant. When looking at a delinquent property, it's good to know whether the grass is not mowed, the mail is piling up, or the roof is caving in.

"Especially for servicing, lenders seem to have a need to have a recent view of the property," said Ms. Cohen. "It can certainly be used for home equity and origination where someone might want a photograph. But certainly, the servicing channel seems to be the channel that feels that they should have a current photograph of the property as well as a valuation."

In May, eValu reached the 50,000-order mark, with most business being done for home equity and quality control clients. Ms. Cohen also noted that recently the company's clients have been reporting that GSEs are buying first mortgage loans that used eValu for the valuation. A promising sign, since previously GSEs have been reluctant to accept AVMs at face value.

This is good news for AMCO in the origination market. Now it is turning its eye to servicing.

AMCO is trying to develop eValu to edge out the more complete appraisers' drive-by and another alternative valuation model, the broker price opinion. Both choices are popular with servicers. Since AMCO has been in the appraisal business for over 20 years, and since appraisers, and not real estate brokers, are the ones doing the appraisals, company officials believe that eValu can provide a quality of service that a BPO cannot match.

The slow speed and high cost of drive-bys also leaves room for a quick, cheap product that can offer a reasonably thorough appraisal. AMCO is currently working with its partners in the process to cut down the time it takes to get a photograph attached to eValu orders.

eValu was developed with the expectation that it would be of use to both the secondary and origination markets. But since its initial development in mid-2001, the product has been most popular for home equity and quality control. It is a hybrid - more thorough than an AVM, but with a lower cost and quicker turnaround time than a drive-by appraisal. AMCO uses an AVM to generate a valuation, then communicates with a network of local appraisers who can double check the results.

eValu was developed because people were "escalating from an AVM to a drive-by with nothing in the middle," said Ms. Cohen. "Drive-bys are expensive and they take time. You can't get a drive-by in a day. We said, 'What can you do to fill that gap?' So that's what eValu was created to do."

In a test conducted by AMCO, the product was found to be 94% accurate in comparison to a full appraisal. According to Ms. Cohen, it is $65-$70 cheaper than a full appraisal, and can be completed much more quickly.

When the process is complete and every eValu order comes with a digital photograph, there will be an increase in price, though AMCO has not yet determined just how much that increase will be.

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