For lenders to successfully manage their portfolios, they need to provide borrowers with a seamless mortgage process from start to finish. It’s for this reason more lenders are starting to integrate automation, like eClosing solutions and automated underwriting, to provide borrowers with more transparency and streamline the overall process.
While having core systems in place is important, no matter how good a lender’s process is, if there’s an issue with the appraisal, everything could be compromised.
According to Reggora co-founder and CEO Brian Zitin, “Lenders need to start paying attention to the appraisal process now, more than ever.”
As everything continues to accelerate and the FHFA considers making widespread changes to the appraisal process, lenders need to make sure they’re working with technology vendors who are ready to respond to changing market conditions and are prepared for new approaches to valuation.
Appraisal challenges impact everyone
This year’s hot housing market has created several obstacles within the appraisal process that impact both the lender and the borrower. According to Zitin, “There are two main challenges plaguing the appraisal industry today.”
The first is legacy technology. The appraisal process hasn’t changed much in the last decade, with there still being an emphasis on manual workflow. The second challenge is the actual logistics.
For an appraisal process to be completed, the appraiser has to physically go to the property in most cases, which can take a great deal of time and coordination. Appraisers are also understaffed right now, and the number of appraisers continues to decrease every year.
“As the number of appraisers declines, there’s still a lot of market demand,” Zitin said. “All of this has created a situation where some borrowers experience two to three weeks turn times within the appraisal process, causing a huge bottleneck for lenders.”
In this day and age where borrowers put speed and efficiency over anything, a slow process could reflect negatively on the lender and cause strain with the borrower.
“I’ve worked in the industry for about 20 years, and the appraisal process being too slow has always been the complaint,” said former Ellie Mae CEO Jonathan Corr. “We’ve gone through cycles that showed all parties the need to have a better flow of technology and communication and so forth between all the players.”
Corr believes so much in this sentiment that he joined Reggora’s board of directors earlier this year. He commented, “Reggora is taking a unique approach to solving a historic challenge in the mortgage loan process, and I am proud to join in the mission to deliver consistent two-day appraisal turn times.”
Why appraisal is the next big opportunity in mortgage fulfillment
“Appraisals are one thing that is outside of anyone’s control, because it’s a third-party contractor in the form of an appraiser,” Zitin explained. “It’s a very anxiety-ridden part of the process.”
Due to high listing prices, more appraisals have been coming in lower than the asking price, potentially throwing off the entire loan. In the event of an appraisal gap, a lender typically orders another appraisal for confirmation, which only adds time and costs to the process.
This disruption can negatively impact mortgage fulfillment and the borrower’s experience with that lender. Now, more than ever before, it’s important lenders start paying attention to the appraisal process to ensure repeat customers.
“My advice would be for lenders to prioritize working with technology vendors who can be agile enough to keep up with the market changes,” Zitin said.
How lenders can simplify the appraisal process
Reggora provides a modern platform that streamlines and automates the manual tasks associated with the appraisal process. With Reggora, lenders are provided with real-time reporting, automation, and intelligence to help fulfill appraisals efficiently.
Appraisers are provided a platform that lets them receive orders from lenders and manage their businesses all in one place.
Reggora currently has tens of thousands of individual appraisers on the platform and partners with over 100 AMCs. The platform gives lenders access to a larger network of appraisal vendors in a simplified platform with various automated workflows.
“By using Reggora, our lenders have reduced turn times by about 30%, cutting days off the process,” Zitin said. “That is mostly due to better reporting around appraisal vendors to make sure lenders are sending the right appraisers to the right places.”
With so much automation being introduced into the mortgage industry, it’s crucial the appraisal process adopts technology so it doesn’t fall behind; especially as certain changes become requirements.
For instance, in 2020, the Federal Housing Finance Agency (FHFA), put out a Request for Input (RFI) in an attempt to modernize the appraisal process. The policies included automated valuation models and appraisal modernization to help improve loan quality and the valuation process.
In October of this year, FHFA Acting Director Sandra Thompson announced desktop appraisals will become a permanent part of the appraisal process.
“Changes are coming and you want to be on top of those changes,” Zitin said. “Reggora’s primary goal is to help simplify the appraisal process for lenders, appraisers and borrowers. With this type of automation built into workflows, our lender customers have reported saving up to 20 minutes of manual work per loan file, among other substantial benefits.”
