0
0
0

The Improving Appraisal Landscape: Why Your Business Depends On It

by Jason Porterfield

Bygone Days of Direct Contact

While the old pre-HVCC days saw many abuses of the appraisal process, there were benefits to letting lenders and appraisers have direct contact. Loan officers could send work to appraisers they knew and trusted – people they had worked with in the past and who had knowledge of an area where the appraisal was taking place. The appraisers knew what the lenders were looking for and what their fees were. To Susan Seeberg, a senior loan officer at WinTrust Mortgage, the post-boom reforms have rendered the process  complicated, bureaucratic and time consuming. Instead of dealing directly with the appraisers that she knew and had worked with before, she now has to go through an appraisal management company and accept whichever appraiser comes out of the AMC pool.

“Our biggest frustration is making sure that the appraisers coming out of that pool know what they’re doing in that area,” Seeberg says. “In the greater Chicago area, it can make a huge difference. Depending on the ZIP code, there can be a real difference in understanding what the value of a home truly is. It’s best to make sure the comps are really the best comps for that particular property. It was more of an issue in the onset of the new rules. I’d see appraisers coming in from way out of the area, unfamiliar with the specific area nuances and missing the mark in their reports.”

Seeberg sees that there are frustrations on the side of appraisers, as well. Their business dried up during the downturn, and many left the industry. With the appraisal management companies now taking a piece of their fee, they wind up making less per property, while having to do more work to meet the paperwork requirements in place.

To Hobbs, some of the delays caused by paperwork are a result of the sloppiness that plagued appraisals before the crash, resulting in an extremely stringent review process.

The Process Problem

A number of the current problems in the appraisal process can be traced back to the way appraisers are assigned to properties. When an appraisal is requested, AMCs send out an e-blast to their network of appraisers. The first appraiser to respond gets the work, regardless of their knowledge of an area and its comps, Hobbs explains. The clock starts ticking when the request is accepted, and an appraiser typically has three to five days to complete the work. Hobbs says that before the HVCC regulations went into effect, he could complete three appraisal reports in a day, if everything went smoothly. If he worked late, he might get through four.

Now, though, things are different. Adding to the burden of having to spend more time doing paperwork, appraisers also have to share a portion of their fees with the AMCs. Those fees have remained stagnant for years, even as the demands placed on the appraisers have increased. To make up for the fee loss, many appraisers take on more work than they can handle.

The AMCs have gotten better about sending appraisers to unfamiliar areas, but it still happens, and the time it takes for them to travel out of their area adds to the pressure to finish the appraisal quickly. In a rush to get the appraisal report done, they may make errors that result in the report bouncing between the loan officer and the AMC until corrections have been made, causing delays to the purchasing process and potentially souring the deal for everyone.

Read More Related to This Post

Join the conversation

New Subscribe

  • This field is for validation purposes and should be left unchanged.