Mortgage Coach and Sales Boomerang snag new investor

Mortgage Coach and Sales Boomerang snag new investor
Philadelphia-based private equity firm LLR Partners announced Tuesday its investment in Sales Boomerang and Mortgage Coach, two fintechs focused on attracting and retaining mortgage borrowers and making loan originators more efficient. Both firms will maintain their existing brands and teams.

The investment comes at a pivotal time for the mortgage industry, which has seen record refi volume give way to a market dominated by purchase loans. LLR Partners, which led a $26.5 million investment in eOriginal in 2016, said both companies offer solutions that make a difference for lenders facing stiff competition and low margins in a purchase environment.

“What stood out to us with both of these companies was their really exciting growth and the really positive feedback from across the market. Lenders across the board felt that they got truly high ROI from these solutions,” said Sam Ryder, principal at LLR Partners.  

Sales Boomerang provides automated borrower intelligence, delivering real-time customer insights to lenders, who can then offer “the right loan to borrowers at the right time,” according to CEO Alex Kutsishin. This is especially important in the current environment, Kutsishin said, where borrowers need fast, flexible solutions as rates are rising.

Mortgage Coach provides an interactive borrower education platform that lets loan officers walk borrowers through a visual presentation of their loan options so that the LO becomes a trusted advisor, Co-founder and CEO Dave Savage said.

“Mortgage professionals are really well-positioned to be the captains of a consumer’s wealth team,” Savage said. “There should be a relationship beyond the transaction. This vision is a big part of why we wanted to put gas on the fire with this investment.”

The two companies’ technology solutions are already tightly integrated and the relationship between their executives was a bonus to LLR Partners, Ryder said.

“The management teams already had a good relationship, they have similar visions for this space, and the existing product integrations — all those things taken together made this a great opportunity to invest in both businesses,” Ryder said.

The go-forward initiatives cited by LLR Partners Include “support for a wider range of financial products and lending institutions,” and the three executives HousingWire interviewed noted that their strategy reaches beyond just mortgage. Kutsishin said the expanded products could include everything from adjustable rate mortgages to reverse loans, but also products such as credit cards, auto loans and personal loans.

“We are building and already know we can deliver the best wallet share acceleration program for banks and credit unions, using the same strategies we’ve done in mortgage,” Kutsishin said.

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Will 2022 be a good year for real estate investors?

Will 2022 be a good year for real estate investors?

This article is part of our HousingWire 2022 forecast series. After the series wraps, join us on February 8 for the HW+ Virtual 2022 Forecast Event. Bringing together some of the top economists and researchers in housing, the event will provide an in-depth look at the predictions for this year, along with a roundtable discussion on how these insights apply to your business. The event is exclusively for HW+ members, and you can go here to register.

Experienced real estate investors often say that there are opportunities in every market — whether prices are rising or falling, whether the trends lean towards a buyers’ market or a seller’s market. It’s simply a matter of adjusting your investment strategy to optimize current market conditions. 

But what if the market conditions include historically low levels of available inventory for sale, and competing for that limited inventory with institutional investors as well as millions of millennial homebuyers? And what if those market conditions drive home prices up to new price peaks at the same time that mortgage rates are rising and inflation is at levels not seen in 40 years? 

That’s the state of the real estate market as we move into the new year, so the answers to those questions will determine the fate of real estate investors in 2022.

2022 Forecast series

What are the drivers of housing demand in 2022?

5 predictions for the 2022 housing market

Here are 7 trends to watch in the 2022 appraisal market

The “Big Four” take on the upstarts in title insurance

The good news: demand isn’t going away

Whether a real estate investor is a developer, a fix-and-flip expert or someone who buys properties to rent, the good news is that demand isn’t going away anytime soon. As HousingWire’s Lead Analyst Logan Mohtashami has pointed out frequently, demographics drive demand, and those demographics definitely suggest that there will be no shortage of homebuyers in 2022.

The largest cohort of millennials — the largest generation in U.S. history — are between the ages of 29-32, and the average age of a first-time homebuyer today is 33. The COVID-19 pandemic has accelerated a trend among millennials to migrate from urban renters to suburban homeowners, in part to move away from the perceived health risks of high-density city environments, and in part to take advantage of having the opportunity to work from home.

Also driving demand are historically low interest rates, which have kept monthly payments relatively affordable despite home prices that have jumped by 18-20% in the past year, and, according to a recent report from RealtyTrac’s parent company ATTOM,  have made it less expensive to own a home than to rent in 60% of the markets across the country. Despite that, and despite asking rent prices that soared 14% year-over-year, apartment vacancy rates are also at historically low levels, about 2% according to RealPage. 

So opportunities should continue to abound for developers building owner-occupied properties or new rental homes; for fix-and-flippers bringing formerly distressed inventory back to market; and for single-family rental investors offering properties to families who’ve outgrown apartments. All these investors need are properties to sell or rent. And there, of course, lies the rub.

The Bad News: Limited Supply isn’t Going Away Either

According to the Winter 2022 RealtyTrac Investor Sentiment Survey, which tracks the state of the market in the minds of individual investors, 63% of the investors surveyed cited limited inventory as the biggest challenge they face today.

This marks the third consecutive time that “limited inventory” was cited as the biggest challenge, and 57% of the respondents believe that it will still be the biggest issue they face six months from now. Housing industry experts agree: Mike Simonson, CEO of Altos Research, reported on January 17 that the inventory of homes for sale had hit an all-time low of 284,000 properties.

December housing starts and permits increased to annualized rates of 1.7 million and 1.87 million respectively, suggesting that some relief may be on the way, but after a decade of under-building, it will take time before we reach a balanced level of supply and demand.

This unhealthy supply/demand imbalance has had a predictable impact on home prices, which was the second most frequently cited problem by investors (60%) in the RealtyTrac survey. Rising prices affect different types of real estate investors in different ways, of course.

Rental property investors probably have a slightly higher tolerance for rising prices since they can offset costs to a certain extent by charging more for rent; and rental property owners are often more concerned with cash flow than short-term price appreciation. Fix-and-flip investors, on the other hand, have to be more price sensitive, since their business model relies on buying low, managing repair budgets carefully, and making a profit at current market prices.

This has proved to be challenging over the past two quarters — ATTOM reported that while the total number of homes flipped had increased in both the second and third quarter of 2021, gross margins had decreased by over ten percentage points, from 43.8% in 2020 to 33.2% in 2021, the lowest level of gross margin since the first quarter of 2011, during the Great Recession.

Investors are also worried that inflation may make matters worse in 2022. About 88% of survey respondents expressed concerns that inflation would have an impact on their business due to higher material and labor costs, higher interest rates making financing more expensive, or because rising consumer prices might weaken demand from potential home buyers and renters.

Competition remains fierce, and iBuyers are here to stay

Individual investors find themselves competing not just with larger, institutional investors, but with traditional consumer homebuyers as well. Both were cited about 25% of the time as a major impediment by survey respondents in the current market and a likely problem six months from now.

Competition is especially fierce at the low end of the market, which has the lowest level of for sale inventory of any price tier, and where first-time homebuyers (about 31% of the market) are looking for affordable properties, and institutional investors are looking for affordable rental units.

iBuyers were expected to remain in the game, despite the exit of Zillow’s Instant Offers business from the category. Only 16% of the investors surveyed believed that the iBuyer model was intrinsically flawed, and that other major players would exit. More than twice as many believed that Zillow’s Zestimate, used as an integral part of the company’s buying strategy, simply wasn’t accurate enough, and resulted in improperly priced purchase decisions — a fatal flaw in a fix-and-flip model.

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New home sales rebound, but builders are still wary

New home sales rebound, but builders are still wary

Today the Census Bureau‘s new home sales report came in as a beat of estimates at 811,000. The headline beat surprised many people, but the report’s internals show negative revisions for the previous months. The bearish take on housing for the second half of 2021 didn’t really pan out, especially in the new home sales sector.

What I believe occurred is that some housing investors took the decline in builders confidence and the increase in monthly supply to push that something bad was going to occur quickly. In reality, as we talked about many times on HousingWire, housing data was going to moderate, find a base and work from that COVID-19 surge in the data.

Now that 2021 is wrapped up, we can see this is what happened and I believe that was misread by some people. However, with that said, it’s still just an OK housing market for me based on how I view the new home sales market. Not everything in housing has to be smoking hot or an epic crash — a slow and steady dance can make the evening just right.

From Census: The seasonally adjusted estimate of new houses for sale at the end of December was 403,000.  This represents a supply of 6.0 months at the current sales rate.My rule of thumb for anticipating builder behavior is based on the three-month average of supply:

When supply is 4.3 months and below, this is an excellent market for the builders.When supply is 4.4 to 6.4 months, this is an OK market for the builders. They will build as long as new home sales are growing.When supply is 6.5 months and above, the builders will pull back on construction.

The headline supply number is six months with a three-month average number of 6.6 months. While we have seen a monthly decline in supply, we always want to keep mindful of the three-month average because the month-to-month numbers can be wild, both positive and negative.Of course, we all know what is going on in the U.S.: it’s taking forever to build and complete a home. The saddest housing chart we have in America is the total completion chart for housing starts. It is an embarrassment, but construction productivity — which has been terrible for decades — is now also dealing with shortages that delay finishing homes. Also, since robots and immigrants didn’t take all the jobs in America, we have a higher-than-normal level of job openings for construction workers. The new home sales market is doing its slow and steady dance upward, which is typically the case as long as mortgage rates stay low. This isn’t a booming home sales market and the existing home sales have clearly been outperforming recently versus the new home sales.From Census: New Home Sales Sales of new single‐family houses in December 2021 were at a seasonally adjusted annual rate of 811,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.  This is 11.9 percent (±20.3 percent)* above the revised November rate of 725,000, but is 14.0 percent (±16.6 percent)* below the December 2020 estimate of 943,000Slow and steady wins the race and the market that we had from 2002-2005 doesn’t exist today. The credit boom that facilitated new home sales then no longer exists, so while sales levels are nowhere near the peak of the housing bubble years, this should be viewed as a positive because we never want to see a credit boom as we did back then.

Now for some good news, growth of the median sales price has slowed down!

My biggest concern for housing in the years 2020-2024 was about home prices having the capacity to overheat in the existing home sales market. Here on the new home sales side of the equation, it’s all about pricing power and profit margins. The builders had the ability to push higher prices on the consumers as the demand was there. So for all the complaints about labor and lumber costs, the builders sold their homes at higher prices and made good money off them. This is also a factor why I don’t believe in the housing construction boom premise, because when builders and sellers have pricing power they push it to the limits.

From Census: The median sales price of new houses sold in December 2021 was $377,700.  The average sales price was $457,300.Even though the recent builder survey saw a slight drop, it picked up over the last few months of 2021, so the builders were feeling a bit perkier and sales rose, as well as permits. I believe some of the marketing that housing was going to crash in the second half of 2021 didn’t end well because simply rates are too low and demographic demand is too big.

Now the pressing question is: What will the 10-year yield do? I believe, as I have since the summer of 2020, if you want housing to cool down you need the 10-year yield to break above 1.94% and head much higher with duration. Of course, this is something that hasn’t happened since the second half of 2019 after the inverted yield curve. That cooling process is to allow days on market to grow and create a balance for the existing home sales market.

Unlike last year, where I didn’t even address the possibility of that happening, for 2022 I have talked about how bond yields could rise above 1.94%, but we would need global yields to rise with it. From my article last week: “For this scenario, Japan and Germany yields need to rise, which would push our 10-year yield toward 2.42% and get mortgage rates over 4%. Current conditions don’t support this.”Germany and Japan’s 10-year yields have been rising lately, but still not enough yet to get our 10-year yield to even really test the 1.94% level just yet.

Higher bond yields and higher mortgage rates really impact the new home sales market more than the existing home sales market. So, if the 10-year yield closes above 1.94% and heads toward 2.42%, creating 4% plus mortgage rates, the first sector you want to keep an eye on is the new home sales sector.

Today’s headline number beat surprised a lot of people, but the revisions to previous sales have been negative (see here for that déjà vu). On top of negative revisions, it is still taking too long to complete a new home in America. The builder has passed on a lot of costs onto the consumer, so they will be mindful of that 10-year yield as well.

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FOMC indicates taper end in March, rate hike soon

FOMC indicates taper end in March, rate hike soon
High inflation and a strong labor market has convinced Federal Reserve officials of the need to raise interest rates “soon,” though an exact timetable has not yet been disclosed.

“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Federal Open Markets Committee said in a statement on Wednesday.  

The FOMC decided on Wednesday to keep the target range for the federal funds rate at 0 to 0.25%, but will likely take action on rates in early March.

Policymakers at the central bank said that beginning in mid-February, it will purchase $20 billion in Treasury securities and $10 billion in mortgage backed securities. The previous plan, from January, indicated purchases of $40 billion in Treasury and $20 billion for MBS. The asset tapering program is scheduled to end in early March.

For the mortgage industry, the announcements of a rate hike and the end of the pandemic-era asset purchasing policy signals heightened pressure on mortgage-backed securities and higher rates on loans in 2022.  Mortgage rates are already above 3.5% for a typical 30-year mortgage, and trade group the Mortgage Bankers Association has forecast mortgage rates to climb to 4% by the end of the year.

After raising interest rates, the FOMC agreed that it will reduce the size of the central bank’s balance sheet over time in a predictable manner, primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account (SOMA).

Lenders, are you prepared for 2022’s challenges?

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“In the longer run, the Committee intends to hold primarily Treasury securities in the SOMA, thereby minimizing the effect of Federal Reserve holdings on the allocation of credit across sectors of the economy,” the FOMC said. 

Regarding the pandemic and the omicron variant, the FOMC said the “path of the economy continues to depend on the course of the virus,” though it expressed optimism that economic conditions were improving.

In a note on Wednesday, Mortgage Bankers Association’s senior vice president and chief economist Mike Fratantoni said that it’s worth watching how the Fed will reduce its $9 trillion balance sheet, which is expected to be quick and at a faster pace once it starts.  

“The principle that they would like to return to a balance sheet that is primarily Treasuries at some point hints at some additional pressure on MBS yields over the medium term,” Fratantoni said in a statement. 
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UWM to credit borrowers up to $600 for their appraisal costs

UWM to credit borrowers up to 0 for their appraisal costs
For the next two months, United Wholesale Mortgage (UWM) will credit borrowers up to $600 for their appraisal costs, the lender said in a statement Wednesday.

According to the Pontiac, Michigan-based lender, the credit will be available on all primary purchases, including jumbo mortgages. The offer will run from now until March 31.

Mat Ishbia, CEO of UWM, said in a statement that the move is meant to “jump-start purchase season” and that this offering will give independent mortgage brokers a significant edge with real estate agents and borrowers in a rising rate, purchase-focused environment.

“Partnering with an independent mortgage broker continues to be the best choice for real estate agents and consumers, and we’re adding one more reason why with the no-cost appraisal,” said Ishbia. “This tool will save homebuyers a lot of money and make the homebuying experience better for consumers and real estate agents alike.”

In September 2021, the top-ranked wholesale lender announced that it would no longer require its brokers to use appraisal management companies to complete appraisals.

Instead, UWM said that it would offer appraisals in-house, contracting with appraisers directly, which would allow appraisers and brokers to bypass appraisal management companies.

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UWM’s Appraisal Direct program, which officially launched in October, oversees the entire appraisal process including scheduling, execution and delivery of the appraisal.  Appraisers are selected based on a scorecard to asses’ geographic competencies and past performance, the wholesale lender said.

When the programs launched last year, UWM’s chief strategy officer, Alex Elezaj, noted that the company decided to offer an alternative to AMCs as a result of complaints about bad service, slow turn times and overcharging appraisers.

Elezaj, who was once the CEO of Class Appraisal, said that in a pilot of the AMC-free option, the lender noticed a notable improvement in the time to complete appraisals, without compromising on the compliance that AMCs provide.

“If a broker has an opportunity to sell the loan to us or another lender, they choose us because of speed, technology and service, and they’ll look at appraisals the same way,” said Elezaj.
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Rate pressure pushes down mortgage applications

Rate pressure pushes down mortgage applications
Mortgage applications fell 7.1% from the previous week, following an increase in rates to the highest level since the pandemic onset, according to the Mortgage Bankers Association (MBA) survey for the week ending Jan. 21.

The seasonally adjusted Refinance Index decreased 12.6% in the same period, with applications falling for the fourth straight week. Meanwhile, the Purchase Index declined 1.8%.

Compared to the same week one year ago, mortgage apps overall dropped 34.6%, with a sharp decline in refinance (-46.6%) compared to purchase (-8.5%).

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, all mortgage rates continue to climb, but the 30-year fixed rate rose for the fifth consecutive week to its highest level since March 2020.

The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased from 3.64% to 3.72%. For jumbo mortgage loans (greater than $647,200), rates went to 3.56% from 3.54% the week prior.

“After almost two years of lower rates, there are not many borrowers left who have an incentive to refinance. Of those who are still in the market for a refinance, these higher rates are proving much less attractive to them,” Kan said in a statement.

Regarding purchases, he said that the decline was led by a 5% drop in government applications, compared to less than 1% drop in conventional loans applications.

“The relative weakness in government purchase activity continues to contribute to higher loan sizes. The average purchase loan size was $433,500, eclipsing the previous record of $418,500 set two weeks ago.”

The refinance share of mortgage activity decreased to 55.5% of total applications last week, from 60.3% the previous week. The VA apps went from 10% to 9.9% in the same period.

The FHA share of total applications decreased from 9.3% to 8.6%. Meanwhile, the adjustable-rate mortgage share of activity increased from 3.8% of total applications to 4.4%. The USDA share of total applications went from 0.4% to 0.5%.
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Opinion: Don’t shrink the GSEs’ market footprint 

Opinion: Don’t shrink the GSEs’ market footprint 
The Community Home Lenders Association (CHLA), which represents small and mid-sized IMBs, just sent a letter to the Federal Housing Finance Authority (FHFA), asking for tweaks to FHFA’s recently announced fee hikes on second home and high balance Fannie Mae and Freddie Mac loans. CHLA asked FHFA for targeted adjustments to the fee hikes to protect middle income borrowers.

But a major part of the letter dealt with a broader issue that CHLA believes merits much more public and Congressional discussion than it is getting: What is the proper role of Fannie and Freddie and what authority should FHFA have or exercise to shrink the GSEs’ market footprint?

With the implosion of the Private Label Securities (PLS) market after the subprime fiasco in 2008, Fannie Mae and Freddie Mac (along with FHA) have assumed an increasing market share of the origination of 30-year fixed rate mortgages. In response, both competitors of the GSEs and individuals who want to shrink the government’s role in mortgage markets have argued that FHFA should take actions specifically designed to shrink the GSEs’ footprint. The argument is that “private markets” should have more mortgage market share.

The PSPA caps from a year ago January on loans to underserved borrowers, on investor and second home loans, and on small lender access to the cash window appear to have been designed for precisely that purpose. Fortunately, Acting Director Sandra Thompson suspended those artificial caps last September.

CHLA strongly opposed the PSPA caps. And, in our recent FHFA fee hike letter, CHLA argues that it is never appropriate for the FHFA to take actions whose main objective or impact is to arbitrarily shrink the GSEs’ footprint. The GSEs’ statutory charter directs them to serve the entire mortgage market, including low and moderate income borrowers and underserved communities. 

The statute also identifies what loans the GSEs cannot make, such as loans over certain dollar amount and commercial loans. It does not envision FHFA making these sorts of decisions.

In our letter, CHLA noted that we are never happy with GSE fee hikes, but are open to them if they are part of a larger strategy to keep fees down on core GSE loans and loans to underserved borrowers. But we also laid out a strong case against arbitrarily shrinking the GSEs’ footprint.

Let’s unpack the argument that the GSEs’ footprint should shrink in order to facilitate more “private market” loans. Are these proponents referring to banks? This seems ludicrous. Banks should not assume the significant interest rate risk inherent in 30-year fixed rate loans because of the possible interest rate mismatch with deposits, a phenomenon that sunk countless banks and S&Ls in the 1980s.

Fortunately, banks protect against that interest rate risk through Federal Home Loan Bank (FHLB) advances and access to the Fed discount window. Great – but proponents should not argue that this is the “private market” or that taxpayers aren’t on the hook. The FHLB is just as much a GSE as Fannie and Freddie. And the Federal Reserve may not technically be the federal government – but their assistance is hardly the free market.

The other main option for 30-year mortgages is the PLS market. Thirteen years after the subprime crisis, this market is still struggling to find its footing. The simple truth is that the PLS market serves certain areas reasonably well — like low LTV loans and high-income borrowers. But it is not clear if it can ever adequately serve the key mortgage functions of providing affordable higher LTV loans to first-time homebuyers and underserved borrowers.

So, beware when people starting using terms like “private market” and “shrinking the government footprint.” In practice, the main impact of actions to accomplish those objectives is to diminish access to mortgage credit for minorities, underserved borrowers, and first-time homebuyers. At a time of rising prices and a generation of younger families at risk of being shut out of homeownership, this would be precisely the wrong approach.

CHLA thinks Acting FHFA Director Thompson is getting this just about right — suspension of the PSPA caps and pricing policies which focus on core, underserved, and minority borrowers.

Unfortunately, we expect the push to arbitrarily shrink Fannie and Freddie under the guise of “private market” rhetoric to continue, if not accelerate. 

So, CHLA is calling on Congress, FHFA and policy holders to thoroughly debate this issue. And we urge policy makers to come down in the end on the side of reaffirming the statutory responsibility of Fannie Mae and Freddie Mac to serve all of the nation’s mortgage markets. At a time of rising home prices and a generation of younger Americans at risk of being locked out of homeownership, this imperative is more critical than ever.

Scott Olson is the Executive Director of the Community Home Lenders Association (CHLA).

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:Scott Olson at scottolson@communitylender.org

To contact the editor responsible for this story:Sarah Wheeler at swheeler@housingwire.com
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Old Republic joins in on the title acquisition fun

Old Republic joins in on the title acquisition fun
Another week, another sign of consolidation in the housing title industry.

Old Republic Title announced Monday that its subsidiary, Old Republic National Title Insurance Company, acquired the operating assets of Mountain View Title & Escrow, Inc. on Friday. The financial terms of the deal were not disclosed.

This acquisition adds nine office locations and 86 employees to Old Republic’s existing network that includes more than 270 branch and subsidiary office locations nationwide.

Since 1979, the Utah-based Mountain View has been run by firm president Michael Hendry, who will now hold the title of vice president, senior escrow officer and manager at Old Republic Title.

“We are delighted to welcome Mountain View to the Old Republic family where they will benefit through their alignment with our Title Group’s national network of operations, underwriting expertise and financial strength,” Carolyn Monroe, the president of Old Republic Title, said in a statement. “This significant acquisition also accelerates Old Republic Title’s growth plans in Utah.”

Old Republic is not the only member of the “Big Four” title insurers starting the year off with acquisitions. Earlier this month, Stewart Title, the smallest of the “Big Four” by market share, acquired Nashville-based Homeland Title and a majority interest in Houston-based Great American Title Company. Meanwhile First American Financial Corporation, the second largest of the “Big Four,” announced plans to acquire Mother Lode Holding Company and its subsidiaries, expanding its footprint in 11 states.

During the third quarter of 2021, Old Republic’s market share was 14.8%, making it the third largest underwriter by market share, according to the American Land Title Association. In Q3 2021, Old Republic reported a net income of $88.7 million compared to $246.0 million during the same time period a year prior. Additionally, the company reported $1.142 billion in direct title revenue, up 33% from Q3 2020.
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How will appraisal technology evolve in 2022?

How will appraisal technology evolve in 2022?
With the recent news about desktop appraisals, appraisal technology is top of mind for many. HousingWire recently spoke with Reggora co-founder and CTO Will Denslow about the role of technology in appraisal innovation.

HousingWire: The FHFA announced late last year that desktop appraisals will become permanent, and Fannie Mae also just released guidelines regarding the change. How will this affect appraisal technology moving forward?

Will Denslow: With desktop appraisals becoming a permanent fixture in the appraisal landscape, and the continued prevalence of appraisal waivers and alternative products, we can expect to see a lot of change in the coming year or two. This will range from the technology used to conduct home appraisals and valuations, as well as the technology that lenders and appraisal vendors use to manage their operational workflows.

Digging into the workflow technology a bit further, it’s going to become increasingly important for appraisal management systems to have built-in flexibility for managing new types of workflows. The appraisal process, which isn’t simple to begin with, is becoming even more dynamic.

We’ll see multiple vendors, different data sources and different formats of data to deliver to GSEs; while these new programs will ultimately speed up the appraisal process, there is going to be a higher level of coordination required for each appraisal order.

To keep up, appraisal management systems need to offer advanced automation and configurable workflows that can react to changes quickly. If lenders cannot meet the new level of coordination required, they risk falling behind.

HW: Last year, we began talking about a growing shortage of appraisers. How can technology help mitigate this issue?

WD: With fewer appraisers entering the workforce and the demand for appraisals continuing to grow, longer turn times are having a major impact on lenders. The good news is that there are a number of ways that technology can help.

Many have discussed the role of automated valuation models (AVMs) to further reduce the role of appraisers, but AMVs are still incredibly limited by publicly available data and can only play a role in the simplest of properties. As a result, we’re always going to need appraisers playing a part in the process.

For the majority of appraisals, especially with more complex properties, it is still crucial to ensure that a licensed appraiser plays a role in the valuation process.

With an appraiser shortage that’s causing delays across the country, it’s time to apply more intelligence to the way we get the right appraiser to the right property at the right time – very similar to what Uber has done for the transportation and freight industries. With the right alignment of data, advanced algorithms and automation can be used to optimize where and how appraisers are utilized.

It’s also worth noting the role of new technologies such as LiDAR and 3D scanning that could help the industry. We could soon be in a position where the majority of home inspections (including measurements, photos, etc.) are completed by someone like a Realtor or gig-economy worker, and the information is then sent to the licensed appraiser to complete at their desk. This approach would eliminate the need for appraisers to spend time on the road and increase the numbers of appraisals they can complete each week.

HW: What innovations should the industry be looking out for in 2022?

WD: There are a few major innovations lenders will be focused on for 2022. The first is hybrid and desktop appraisals which I touched upon earlier. This is the beginning of a fundamental change for the industry which will require a level of cohesion between vendors and lenders that the industry has never seen before. As a result, I think this will be a big catalyst for lenders to move over to newer technologies.

The second are streamlined integrations. For lenders who currently utilize a modern appraisal platform, they are looking to enhance the amount of communication between their LOS/POS and their AMS.

As we move into 2022 and lenders strive to optimize their operations and deliver frictionless and fast customer service, you can expect most lenders to continue upgrading their tech stacks.

A big indicator is that we are seeing many of our lender clients start to utilize our APIs in addition to our out-of-the-box integrations. Because Reggora has fully open APIs for our lender clients, lenders can completely customize their experience and access data like never before. When your systems are sharing data bi-directionally and all of your stakeholders can access the right information at the right time, you’ll be in a better position for success.

In terms of other innovations, be on the lookout for new advances in AI and automation, new approaches to algorithmic order processing, and new gadgets to make appraisers more productive in the field.

HW: How does Reggora plan to contribute to appraisal innovation?

WD: Reggora was founded with the goal of modernizing the appraisal industry to improve appraisal logistics and reduce turn times. We are a technology company first. That means more than 50% of our company is either an engineer or someone owning a portion of our product, fully dedicated to ongoing research and development.

Since our platform was built on a flexible modern framework and designed with the future in mind, we are already in a position to support lenders who are embracing appraisal modernization and new options such as desktop appraisals. On an ongoing basis, we are developing more advanced automations and algorithms that leverage real-time data to increase speed and efficiency for both lenders and appraisers.

We are excited about the changes beginning to take shape in the industry, and excited to continue bringing new innovation to the market. 
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