United Wholesale Mortgage will work directly with appraisers, which is not common in the brokerage sector which typically employs valuation management companies as middlemen.
UWM will roll out the Appraisal Direct program it is piloting nationwide on October 1st. It adds 100+ people to work with the program, and it continues to offer the ability to order reviews through AMCs.
"AMCs are great, you can still work with them," said Mat Ishbia, President and CEO of UWM. "You have great value in our industry, but we have a new option."
While Ishbia touted the effectiveness of the program, Kimber White, president of the National Association of Mortgage Brokers, asked if the wholesale lender offered "an emotional response to a more complex problem in our industry." Even before COVID, the lack of experts impaired the efficient functioning of the lending process.
"I just don't see this as a solution to the valuation problem from the NAMB's point of view," said White. "I think it can be instant for them, but isn't it better for all of us to work together collectively and find a solution for our entire industry."
White said the move was reminiscent of past missteps. "Are we really going to do this to get every wholesale lender into the valuation business?" We know how that worked for us before, "he said, citing the myriad of problems with valuations during the real estate boom and crash that led to the creation of the Code of Conduct for Real Estate Valuation, which in turn led to an increase in lenders using AMCs as intermediaries for appraisers and mortgage brokers.
The Appraisal Institute, the nation's largest professional association of real estate appraisers, has always been suspicious of the use of AMCs. More recently, the debate has centered on whether new technologies will support or replace human evaluators.
"Our organization supports innovation in the credit industry, and any advancement that advances customer relationships to include highly skilled professionals is beneficial to consumers and the industry at large," said Rodman Schley, president of AI. "We hear of more situations like this and other innovations, including in-house employee models and the use of technology platforms or 'portals' to help lenders manage the valuation function with the highest quality."
AMC usage in particular has been a focal point for reviewers, especially when it comes to fees for both the amount and timeliness of payment.
As part of UWM's Appraisal Direct, 100% of the fee the company collects goes to the appraiser and it's paid the next day instead of waiting for the 15th of the month or two weeks later, or even as much as 45 Days later said Ishbia
"And if the appraiser gets paid more, what are they going to do?" he said. "They're going to want more of these jobs because they're getting great dollars, and hopefully they will do it faster, with better quality.
White agreed that a standalone wholesaler with its own panel was not the common practice, but added that some banks and retail lenders have their own panels. He doesn't think they'll get better turnaround times on the reports than if they'd gone through an AMC.
"I wish you all the best, I just think there is a better way to talk about it and come to the table together," said White.