TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/442484
26 | Th e M Rep o RT Feature lenders and AMCs that do the same thing as CU. So a revision to the appraiser inquiring about alternative comps is nothing new. But, the concern with CU is that the amount and depth of requests will increase substan- tially by the end of the month. Another common refrain from the field of appraisers is how to walk the fine line of value pres- sure. This is a much-contested argument among appraisers as the definition of pressure seems to be very broad within the profession. There's a large segment of appraisers who already feel pres- sured in the current environment and there is another equally large segment that cite zero pressure at all. The lending process is time-sensitive (e.g. loan locks, closings). So will the requests to consider more properties be placed in a rushed manner, creating more pressure for the appraiser? After CU takes effect, some of these requests will come in later than they are now. In the process of underwrit- ing an appraisal, it is the lender's responsibility to ensure apprais- ers are meeting Fannie Mae's requirements. The manner and, in my opinion, the intentions of Fannie Mae with the release of CU is a great step toward better appraisal quality and transpar- ency. If the tool is used as it was designed—for underwriters, or anyone reviewing an appraisal report, to gain deeper clarity into the appraiser's thoughts and se- lection process—then this will be another impactful advancement in the valuation profession. Though it was never even on the table, Fannie Mae seems to have some genuine concerns with sharing the CU with appraisers. CU was not built to run upfront; it needs the appraisal report to be complete to run its analysis. This seems like an obstacle that could be overcome by technol- ogy. Another possible reason why Fannie Mae is not granting access to the appraiser upfront is to avoid steering of comp selection or making suggestions to value at the time of engagement. Would it be considered value pressure (high or low) delivering this data at the time of engagement? There are also many other aspects of CU that go beyond just comparable selection. The tool can confirm the accuracy of data in the report (sales dates, sales prices, bedroom/bath count, gross living area, as well as many other data points). Because the database is intuitive, it becomes more robust with every appraisal report submitted. This way indi- vidual properties' overall quality and condition ratings determined by appraisers can be aggregated and inconsistencies can be easily identified. When they are identi- fied, the user of CU can ask the appraiser for clarification. This is a great check and bal- ance for the industry and some- thing that should be asked after submission so appraisers are not steered to simply conform with the general consensus of their peers if they legitimately have a different opinion. Appraisers should also already have access to much of the market data used by CU and in the appraisal review. It's understandable that some appraisers feel the way they do. Their hard work laid CU's foun- dation and continues to contribute to its database. By most accounts, there's too much back-and-forth among all parties around an appraisal's development and conclusions. The lack of appraiser inclusion with the tool does seem to point to future increases in revision requests. Only after the adoption of the CU industrywide will we see if this commonly held belief is true. There is no question that all parties (GSE, lender, AMC, ap- praiser, and consumer) would benefit from fewer revisions. Appraisers and underwriters do have the power to keep this at bay. It goes back to the basics. Appraisers need to anticipate that questions will arise and they'll have to proactively ad- dress them thoroughly and concisely within their reports. If the appraisers perform competently, supply data to sup- port their conclusions, and can defend their comp selections, adjustments and ultimate value conclusions, they should expect minimum feedback from CU or any appraisal review tool. The solution to reduce revi- sions also lies with the under- writers and appraisal reviewers. Proper upfront training and a commitment to fair diligence to make prudent decisions around collateral risk will reduce frivolous requests that only serve to delay the process and waste time. More education and tools for underwriters is unequivocally a good thing for everybody. The best way to keep improving the quality of appraisals is to make sure all parties are on the same page and share the same approach. Everyone's intentions seem good and their differences seem reason- able. Hopefully a solution can be found to maintain the spirit and improvement the industry has pursued over the past six years. Who knows? Maybe CU will help everyone in the process better understand the appraisers' reports, reduce revisions, and raise the bar on appraisal quality standards. "The best way to keep improving the quality of appraisals is to make sure all parties on the same page and share the same approach." Brandon Boudreau is COO of Detroit-based Metro-West Appraisal Co. LLC, where his responsibilities include overseeing daily operations for the company and its more than 250 employees in 75 metropolitan markets across the nation. Boudreau is a state-certified ap- praiser with more than 14 years of industry experience with companies in Arizona and Michigan. He is a delegate member of The Appraisal Foundation Advisory Council and a member of the Collateral Risk Network.