When was the last time your organization took a close look at its appraisal process? Over the past several years, mortgage lenders have invested countless hours into digitizing their loan process in an effort to remain competitive and save money. Despite this, the appraisal component has gone overlooked, and many lenders remain stuck in the same appraisal workflow that they were in a decade ago.
This means that there is an opportunity. An opportunity for you to reanalyze your organization’s appraisal process, identify gaps, and speed up this largely manual process. Doing this will save invaluable time and money over the course of your loan cycle.
Where to start? Typically, there are five overarching inefficiencies—or roadblocks—in mortgage lenders’ appraisal processes.
Roadblock #1: Integrations
In order to fully realize the one-click digital mortgage, all of your different systems and software need to be fully integrated. As a result, your loan origination system needs to be linked to your point of sale system, which should then be linked to whatever your appraisal system is. Too many lenders today still order their appraisals through a stand alone third-party software, which involves manual entry and an additional platform to keep track of. Modern solutions available will allow your appraisal software to “speak” to your LOS and POS and automatically order the appraisal while transferring all of the relevant information.
Roadblock #2: Payment Processing
Especially if you conduct thousands of appraisals per month, the payment process can be a big burden on your accounting team. For each appraisal, appraisers need to be paid out and borrowers need to be collected from, which adds up over time. Once again, manually completing this process can often lead to confusion, missed payments, and more. Instead, consider using an appraisal platform that automates payment processing. This allows borrowers to easily pay for their appraisal through an online portal the moment it is requested. Similarly, once the appraisal is completed, an automated payment goes out to the appraiser. This type of technology takes the stress off your accounting team and helps keep your process compliant and auditable.
Roadblock #3: Underwriting
The appraisal reforms after 2008 require a variety of “checks” to be completed on each appraisal. Unfortunately, many lenders manually review appraisals with a literal checklist in an effort to catch errors. Once any errors are caught, lenders then need to contact the appraiser and have them revise the issue. This process can extend the appraisal by days, even over a small issue. Automated underwriting tools today can manually review each appraisal for errors and flags. These errors are often flagged on submission, so the appraiser has a chance to revise the appraisal on the spot, and once they submit the appraisal, it’s almost entirely quality checked.
Roadblock #4: Scheduling
While it may seem out of sight and out of mind to lenders, the scheduling process between appraisers and brokers can often drag on and create logistical problems. With the right tech, however, you can help. Many appraisal tools today have appraisal scheduling features that allow brokers or sellers to input predetermined availability into an app. Once an appraiser gets assigned to order from you, they can then use the app or software to see the availability and select the one that works the best for them. This process cuts down the phone tag and immediately schedules the appraisal from the get-go.
Roadblock #5: E-Delivery and Disclosures
Compliance requirements mandate that you disclose certain terms of the appraisal to the borrower and also provide the borrower with a copy of the appraisal within 72 hours of closing. This is a prime example of a small compliance issue that can cause major headaches to keep up with. Current appraisal software has a solution to fill this gap. The best appraisal platforms will automatically notify borrowers of any changes in the disclosure terms so that they are immediately aware of, for example, a change in the cost of the appraisal. Similarly, once the appraisal is completed, borrowers can receive an e-delivery of the appraisal (which they have to confirm receipt of to adhere to compliance requirements).
Eliminating these roadblocks so that you can speed up your appraisal process is easier than you might think. With the right modern appraisal technology, you can integrate your systems and automate tasks that are currently manual and labor-intensive. It’s amazing how quickly and clearly you can see a return on your investment, giving you an even bigger competitive edge in the market.
Brian Zitin is the co-founder and Chief Executive Officer of Reggora, a venture-backed startup that provides software to speed up the appraisal process for mortgage lenders and real estate appraisers. Prior to Reggora, Brian co-founded a real estate brokerage called Sonder Partners, which was based on a proprietary algorithm that helped to efficiently target and sell investment properties in the Greater Boston area. His time with Sonder Partners exposed Brian to the inefficiencies in the modern appraisal process, which led to the start of Reggora. Brian has also spent time at both a boutique private equity company and a large commercial real estate investment firm.