For lenders who are concerned about "subpar" appraisal quality, it's important to have a technology platform in place to manage multiple AMCs and compare the work of different outsource vendors in order to determine which ones are the best to use.
Jennifer Creech, president of InHouse Inc., has a product and service line that offers lenders the choice of using InHouse Solutions as their appraisal management company, InHouse Connexions technology as a self-service appraisal management system, or implementing a combination of both.
"If I feel the AMC is strong in Massachusetts but not Florida, maybe I will only send them orders in Massachusetts. Or I think this is a great AMC or appraiser or I don't feel comfortable with the quality of this vendor's products, so I'm going to shut them down," describes Creech from a lender perspective.
In reaction to the latest data showing fraud related to appraisals and valuations increasing to 33% in 2009 from 22% in 2008, Creech says, "Do you think it's increasing or people are better able to capture better statistics to report more accurately?"
To help guard against fraud when the appraisal first comes in, her company will pull all of the property statistics. "There are great models to show this a one-bedroom condo with 1,500 square feet and it has access to a roof. It would give you property parameters," she said.
"We evaluate these. We also want to give appraisers a heads up that they understand why they are appraising so that they pull the correct comparable comparative. We also have some data for us to look at on the front end and also to review when the appraisal comes in and our quality control process."
For particular lenders, InHouse pulls an AVM and comparable to make sure that appraiser is not ignoring comps.
"You wouldn't want an appraiser avoiding comps on a short sale or foreclosure to bring in a value. Pulling an AVM and doing comp checks helps us screen those potential risks," she said.
"It really depends on the lender, how much money they want to spend and how much detail of an audit or a review that they want to do."
It's people, process and technology that make for a strong product, Creech declares.
"I think the fraud numbers could go up because we are gathering so much more data, but I believe it's going to level off. People are starting to pull more information on every appraisal. When the conditions start coming back and the questions start before the loan is funded it starts to limit their costs."
