Appraiser News, May 18, 2015
Experts from across the mortgage industry got together at the Realtors Legislative Meetings & Trade Expo held May 10-16 in Washington D.C. to discuss the state of the appraisal industry and technology’s role in the future of the profession.
The forum touched on a number of issues, including AVMs and smart technology, but clarification on Fannie Mae’s Collateral Underwriter (CU) unsurprisingly was front and center, Realtor Magazine reported.
Fannie Mae’s risk assessment tool has generated a substantial amount of controversy from those who feel it leads to more scope creep from lenders and additional work for the appraiser, but Bob Murphy, Fannie Mae’s director of property valuation and eligibility, contends that CU is merely a guide for lenders, not something that offers the final verdict.
“Collateral Underwriter is not a decision engine,” Murphy said, noting that CU’s risk scores ranging on a scale of 1 to 5 (5 being the reports that appear most at-risk) aren’t the ultimate determiner of an appraisal’s soundness. “Just because a property gets a 5 doesn’t necessarily mean there’s something wrong with it.”
Quicken Loans Vice President of Operations Mike Lyon agreed, stating that CU hasn’t been the wrench in the gears of the mortgage process that many feared it would be.
“Collateral Underwriter has not slowed our process down at all,” Lyons said. He acknowledged that although higher scores sometimes necessitate added oversight, CU has the propensity to help lenders streamline their appraisal processes. “It’s going to allow us to do our reviews in a more efficient manner.”
The panel also addressed the changing nature of AVMs. Tom Hosack, broker of Pennsylvania-based Northwood Realty Services, predicted that AVMs will continue to become more advanced as Big Data gets more comprehensive.
“You will see them get more accurate. They are constantly working toward that,” Hosack said. “The challenge with Zillow is that they can’t monetize accuracy. … Their profit center is not based on accuracy.”
The caveat with AVMs, the panel noted, is that they never will be able to replace the insight offered by appraisers working in the field, which provides an opportunity for appraisers to showcase their worth.
“I haven’t seen an AVM that doesn’t have qualifiers on it,” MLSListings Inc. President and CEO James Harrison said. “Your clients are coming to you and they’ve already done the research. … It’s a good opportunity to sit down and explain to them your value.”
“In almost every market there’re outliers,” Hosack said. “A computer can’t look at a house and tell if 35 cats lived in it.”
The panel articulated the enduring importance of appraisers amid continuing technological advancements, but also advised valuation professionals to embrace technology themselves.
“[Appraisers] absolutely have to have a tablet and a smartphone or you’re at a huge disadvantage,” Harrison said. “As you’re interacting in real time with your clients, you need to have the apps lined up to bring them the information you need.”