Magazine article Mortgage Banking

A New Standard for Appraisal Review

Magazine article Mortgage Banking

A New Standard for Appraisal Review

Article excerpt

Appraisals historically have been one of the more opaque--and at times, contentious--aspects of home financing. Yet establishing collateral values is an essential part of lending. [paragraph] So it's a step forward when mortgage technology not only digitizes data-heavy appraisals, but also makes it easier for lenders to thoroughly underwrite the conclusions reached by appraisers.

"Nobody's taken this to the level we have," says Phil Huff, president and chief executive officer of Platinum Data Solutions, Aliso Viejo, California. "This is appraisal review and quality control on steroids."

Huff is referring to Platinum Data's RealView[R] QB system, which allows lenders to communicate and share information with appraisal management companies (AMCs) and individual appraisers in order to deal with valuation issues early in the loan process.

Lenders can assess appraisal quality by comparing new reports with property data available in public records, recent sales and Platinum's own appraisal database. Platinum Data reports that RealView was used to evaluate more than 1 million appraisals last year.

Platinum estimates that two-thirds of the nation's home appraisers use its technology. RealView is integrated with nine of the top-10 appraisal management software systems, Huff adds.

Lenders and appraisers can access RealView directly, through its online portal, or on existing appraisal platforms. Being available on different systems makes RealView easier to use.

Industry players complain that every specialized automation platform typically deploys its own online portal. Needing to log on to a number of portals just to view or update application information then becomes unwieldy.

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Collaboration between all parties in the mortgage process will improve as data becomes more freely accessible. However, security concerns make that a challenging goal.

Custom tweaks

Lenders can define how appraisals are checked for quality control in RealView QB. Customizing appraisal review rules helps assure mortgage companies that their loans will hold up under investor and regulatory scrutiny.

After an appraisal is evaluated, a lender can electronically request clarification or additional information from the appraiser or AMC. Each step is archived on the system to establish an audit trail.

RealView QB can be configured to underwrite appraisals differently according to loan type or location, notes Huff. Or an AMC may adjust the software to adapt to the preferences of different mortgage lenders.

Although the system can be tweaked with a few mouse clicks, Huff adds that lenders receive a lot of functionality without using that option. RealView QB automatically reviews appraisals against more than 2,500 business rules as well as professional appraisal standards.

Appraisals also are evaluated in terms of how local market prices are moving, and fraud checks are in place. A rigorous analysis accomplishes more than a "check-box" approach to appraisal quality, says Huff.

Performing this work on each appraisal early in the mortgage process is more beneficial than making post-funding reviews. Lenders then can get in touch with appraisers for reasons ranging from a missing data field to a question about how comparable properties were selected.

Maintaining effective oversight on vendors is essential in today's marketplace. All financial regulators are holding lenders accountable for compliant behavior from their business partners. …

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