New demand for short sales is expected to renew concerns about property valuation methodologies and compliance.
Appetite for short sales and REO business support will be high at least for the next five years, said president of InHouse Inc. of Santa Ana, Calif., Jennifer Creech, a 23-year mortgage industry veteran who built her company based on an innovative approach. InHouse provides lender-servicer clients the option to use its appraisal management platform either as a third-party appraisal management company, a self-service appraisal management system, or a combination of both options.
Creech agrees that property valuations are a hot mortgage industry topic, yet she dismisses the validity of the old dispute over which methodology is best: appraisals or broker priced opinions.
In valuations as in every other aspect of the business world it all boils down to overall process efficiency and strategies.
“Think differently. Rethink what you think you know and implement new ideas.” The best fit varies from company to company, she said, since an appraiser is more efficient and makes more sense for some banks, while an REO manager may favor BPOs as a way to more frequently monitor large portfolios of such distressed assets.
Many banks favor the use of more sophisticated technology in the valuation space and combine appraisals with BPOs, she said, and that is fueling a trend of closer collaboration between appraisers and brokers or BPO providers. “I know of BPOs who are calling appraisers to see who is interested.”
Whether that type of collaboration expands or not and regardless of preferences, all parties in the valuation process share the requirement to comply with appraisal and evaluation guidelines.
Originally written and published in 1994 and then revised in 2010, the “Interagency Appraisal & Evaluation Guidelines” were updated to help maintain the integrity of safety standards and due diligence in real transactions. Santa Ana-based collateral valuation technology provider Veros Real
Estate Solutions recently published a white paper with insights into understanding and integrating the new guidance in an effort “to bring clarity to the expanded language” about appraisal requirements and the appropriate use of evaluations including automated valuation model and other research tools.
“It is critical,” says Veros’ director of valuation initiatives William E. King, that property valuation professionals have an accurate understanding of the new regulations.
“The real estate and mortgage industries have experienced a constant evolution of technology development and legislative change that directly impact how appraisers do business, as well as how the value of residential properties are assessed.”
For example, the five basic requirements established in the original 1994 guidelines remain unchanged, he said. The 2010 revisions aim to broaden the knowledge base for industry professionals.
