Mortgage

Digital assessments are rising in significance, however is probably not a "blanket resolution".

The coronavirus forced reviewers to rely more than ever on technology to get their jobs done safely, and its successful application demonstrated that automating reviews can do more than previously thought.

But remote homeowner-backed valuations may not be the best choice in all circumstances, said Lyle Radke, director of collateral policy at Fannie Mae, during a panel on the matter at Arizent's Digital Mortgage Conference Thursday.

"I don't think it's a blanket solution for everything," he said.

This is in line with the view of government sponsored companies about pre-pandemic assessment alternatives. While agencies have long shown interest in expanding the use of automation in property valuations, they have been selective in this regard.

Compared to conventional methods, remote assessments have some weaknesses, said Radke using the example of a scenario in which an assessor marks property values ​​as requiring repair.

Usually 10% of reviews fall into this category, he said. In contrast, it was only 2% of remote property reviews that Fannie examined.

That sounds like a big difference, but there are both qualitative and quantitative considerations that need to be taken into account when solving the problem, Radke said.

Appraisers who use remote methods give much more indications in their reports about the need for repairs than they normally do. While appraisers using remote methods were less likely to flag reviews as in need of repair, the frequency with which they do so may be warranted more often than traditional appraisals, Radke said.

"There is probably some space on either side," he said.

Unexpected headache with remote assessment

The move to desktop appraisals helped mortgage lenders close loans, but it also presented them with some challenges, said Rachel Robinson, senior team leader, collateral policy and product development at Quicken Loans.

"We had to set up additional communication so our customers would understand," Hey, you are not going to have this traditional experience. As it turns out, the reviewer will complete the report from their home desktop and use information and they could contact You contact to get some photos or answer some questions. So it's not traditional. It's not what you're used to, ”she said.

Usually there is a certificate of valuation prohibiting the inclusion of information from an interested party, such as a borrower or a real estate agent, in the transaction if the temporary flexibilities currently offered by the GSEs are not in place. As such, the GSEs may not want to allow consumers to continue posting photos when other means of verifying a review are possible, said Scott Reuter, Freddie Mac's chief reviewer.

How long this temporary flexibility is granted ultimately depends on the Federal Housing Agency, which extends the contingency monthly, he said.

"They are really the ones making the announcement," said Reuter.

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