From the appraiserâ€™s perspective: FNC Inc. and Bill Rayburn, connecting appraisers and lenders--Part twoCharlie Elliott Jr., MAI, SRABill Rayburn, interview, AppraisalPort, FNC, appraisal products In an attempt to address some of the technological issues that connect appraisers and lenders, who better to contact than a leader in the field? This month's column is part two of an interview with one of our industry's true technological pioneers, Bill Rayburn, CEO of FNC Inc. In addition to being CEO of the company he founded, Bill holds a Ph.D. in finance and CFA (Certified Financial Analysis) and MAI (Member, Appraisal Institute) designations, three of the most sought-after credentials in the finance and appraisal industries. Charlie Elliot: Bill, could you talk to us a bit about any of your products or systems that connect mortgage lenders to appraisers? I know from first-hand knowledge that you offer a system called AppraisalPort. Could you tell me more about it and some of the success that you have had with it? Bill Rayburn: FNC pioneered collateral information management with our flagship product, the Collateral Management System (CMS). By applying a data-centric model to the traditional collateral-related services involved in mortgage origination, and using the Internet to connect lenders and service providers, CMS changed how the industry does business. CMS automates settlement service ordering, delivery, tracking, quality control and risk analysis. And, CMS has been designed to make the most and best use of data. So, all the information that comes in during loan originationrelating to the borrower and the property securing the loancan be collected, reported on and analyzed. AppraisalPort serves as a secure interface between 13,000-plus appraisers and approximately 30 large lenders and vendor management companies using FNC's CMS. AppraisalPort facilitates automated ordering, tracking and messaging, and delivery of completed reports from the appraisers straight into our clients' management systems. We've had tremendous success with AppraisalPort. We've had clients who've saved hundreds of thousands of dollars in shipping fees through the automated ordering. We've had clients who've been able to consolidate, say, 40 appraisal centers down to four. We've saved appraisers the pain and inefficiency of phone and fax tag, and allowed them to do their work at all hours from any place with Internet connectivity. If an appraiser delivers his or her report through AppraisalPort in our Appraisal Institute-ready format, then the data that comes in to the lender or management company from the appraiser automatically populates the correct form, so that saves even more time because the recipient doesn't have to do any data entry. The data is all there. CE: A lot has been said about the importance of connectivity between mortgage companies and their vendors, particularly appraisers. Do you have any thoughts on the direction this connectivity will take in the future and the relative importance of it to both parties? BR: I think connectivity between mortgage originators and their service providers is simply going to be a given as we move forward. The lender is focused on speed, efficiency and access to data to mitigate risk and aid in relationship management. The vendors who can, and are willing to, deliver services and expertise in a way that integrates with the lender's management system are going to be the vendors of choice. CE: A lot has also been said about automated valuation products. Some are of the opinion that such products may even replace appraisers in the future. What information and opinion could you provide on this subject? BR: Automated Valuation Models (AVMs) are more accurate and more popular in the market today. They are a valuable tool, but I don't foresee AVMs replacing appraisers. A statistical model is never going to outdo a good, honest and professional appraiser. AVMs are always going to beat out the appraiser on speed, and where we see lenders using them is where they can get a fast turnaround and there isn't a whole lot of risk involved, or where the AVMs can be used to pre-qualify the loan. Right now, as the market is taking a downturn, lenders are going to be less apt to trust AVMs to provide accurate data. There's a big move in the industry now to work to standardize principles and requirements for AVMs. For AVMs to improve, there needs to be greater consistency in their management and usage. Right now is an excellent time for appraisers to be involved in the formulation of those standard principles and requirements different industry participants are working to develop. Appraisers can choose to ignore AVMs, complain about them or embrace them as an additional product they can offer, but no matter what appraisers do, AVMs aren't going away. There are some fantastic opportunities out there for appraisers to influence the future in regards to AVMs, as well as to use them in appraiser-enabled, or appraiser-assisted, AVMs for desktop valuation. CE: Does FNC have any new products coming out in the near future that you are at liberty to disclose? If so, tell us about them. BR: FNC is working on a product called Digital Loan File (DLF) that addresses mortgage lenders' shift to a paperless loan file. Brokers and correspondents using DLF will be able to easily create files for new applications and submit them electronically to their lender clients, which will save them money and time. The lender can configure a document matrix that defines what documents that product or loan type requires, and then multiple parties can access that file at one time to work on the loan. DLF will allow any kind of electrically originated document to become part of the filefax, e-mail or otherwiseand will allow the lender to dictate who can access the file, and who can perform specific actions. Anyone with access to do so can add comments to the file or a document in the file. So, DLF is an audit trail, a disaster recovery mechanism and a means to more efficient paperless processing. CE: As the CEO of a major corporation, I realize that you walk a fine line between providing an honest and positive outlook for your company. Would you care to offer a candid opinion of where FNC will be in five years and whether the type business you are in will change very much during that time? BR: At FNC, our goal is to reward risk-taking and entrepreneurship. As a result, over the next several years, we will enter new markets that allow us to leverage our existing solutions. These markets include international expansion in financial services, as well as entering the insurance and healthcare fields. CE: Well, that takes care of all of the specific questions I have. Are there other issues, comments or opinions you would like to address or offer concerning how FNC connects appraisers and lenders? BR: FNC's goal in collateral information management is to provide tools that make collateral valuation and underwriting efficient for all parties, lenders, appraisers and other settlement service providers alike. FNC's AppraisalPort and the use of the AI-ready format in conjunction with AppraisalPort help level the playing field. They bring the same efficiencies to one-man shops as they do large companies. AppraisalPort and the AI-ready format drive huge productivity gains for lenders, who are able to use AppraisalPort with FNC's CMS collateral information management system to automate appraisal ordering, receipt and review. We appreciate the support of the thousands of appraisers and other settlement services providers and lender clients who use FNC's systems and ports. We will continue to work hard to earn their business in the future. Charlie Elliott Jr., MAI, SRA is president of ELLIOTT & Company Appraisers, a national real estate appraisal company. He can be reached by phone at (800) 854-5889, via e-mail at [email protected] or through the companys Web site at www.appraisalsanywhere.com.