MReport November 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 19 of 67

18 | TH E M R EP O RT FEATURE D ata and analytics are critical to any success- ful mortgage lender's operation. Lenders an- alyze origination data closely, as well as their own performance analytics to improve operations and compete in an evolving origination market. However, there are other key indicators lenders should also consider: ap- praisal data and analytics. When it comes to appraisals, lenders in the nation's hottest markets are waiting longer for completed reports, may have lim- ited visibility into appraisal fees, and have problems committing to closing schedules. What's happen- ing in today's hot markets may be a sign of what is to come across the rest of the nation, as origina- tions make a sustained comeback. Improved valuation modeling is a key area where you can focus by using data and analytics to drive information and decision making. Mortgage lenders now have new, readily available data at their fingertips that can help mitigate common appraisal issues. Watching the Bottom Line W hile many lenders track their own appraisal costs, they are likely seeing only a sliver of the overall picture. For the more complete van- tage point, it is also important to learn what the rest of the market is paying for completed appraisal reports in all commu- nities being served. Access to appraisal fee data and analytics will help in several ways. First, analyze whether the appraisal fees being quoted on the loan estimate are competitive with those fees that the borrower will pay with other lending options. If fees are substantially higher than other lenders' fees, origination is at risk before it even gets started. Second, if appraisal fee quotes are lower than the actual fees in the area, there is a risk of absorbing expenses to cover the difference between the quote and the actual appraisal fee. According to industry surveys, lenders are quoting inaccurate fees on 11 percent of loan estimates, with an average cost of $105 per incident. Current, accurate ap - praisal fee data is one solution to avoid these unnecessary expenses. If there is an "appraiser shortage" in a particular area, see how appraisal fees stack up to what other lenders and AMCs are paying in those markets. If your fee proposals are low or just average, it may be more challenging to find high-quality professionals with acceptable turn times in that market. Measuring the Marketplace S mart lenders monitor housing market data and analytics to find communities with lending opportunities. But if you're just watching the standard data based on closed sales, you will be late to the party. If you're watching the same data every lender watches, how strong is your competitive advantage? To identify hot markets before your competitors, you should also watch appraisal orders. Home sales lag behind appraisal orders as a leading indicator of growth by at least a few months because the data is reported from public records postclosing. If you can determine where appraisal orders are increasing and where they are decreasing, you will have an indication of supply and demand, as well as a valuable clue for hyperlocal and regional lending booms. With appraisal data and analytics, you can iden - tify and leverage those upswings in real time. If you're watching appraisal orders rise in a particular market, you will have valuable insight much earlier than anyone else. When other lenders start flooding the latest hot market, you will be months ahead, already entrenched with efficient operations to more effectively leverage the opportunity. Tracking Performance I f you're on top of appraisal fees and turn times in your communities, you can use the data to benchmark your own operations against competitors. Many lenders use this insight to improve their vendor relation- ships and appraisal operations. Developing a stronger appraisal process may aid in recruiting top-producing originators. The appraisal is always a hot-button issue for loan origina- tors (LOS). If you can provide a far-better appraisal experience for your production staff and your borrowers, you can use it as a real differentiator in your market- ing efforts. To build an appraisal process for the benefit of both LOs and borrowers, track these important appraisal data points: • • Appraisal•fees:•Monitoring and paying competitive fees to your appraisers will keep them inter- ested in quickly accepting your appraisal orders. When you're Appraising the Appraisal Lenders in the nation's hottest markets are waiting longer for completed reports, may have limited visibility into appraisal fees, and have problems committing to closing schedules. See how data is addressing these issues. By Jennifer Miller

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport November 2017