Brokers hope appraisers join the eRevolutionSig AndermanAdvice,Internet,RESPA
Today, mortgage originators routinely order credit reports,
flood certificates, automated underwriting, lender submission,
title reports and loan documents with a few clicks of the
processor's or loan officer's fingertips. Applications, employment,
credit and other pertinent information are keyed in only once and
instantly made available online to everyone involved in the
transaction. Saving time not only translates into increased
efficiency, but has also become a new form of customer service. So,
why are appraisers dragging their feet?
The appraisal industry has begun to join the eRevolution, albeit
a bit reluctantly. It has always been important for appraisers to
protect their independence; however, now that the Internet has
transformed the entire mortgage industry, even the small local
appraisers cannot deny the benefits.
New challenges facing brokers and today's
appraisers
The RESPA reform proposal that nearly made its way into law in
March would have required even more changes to the appraisal
business model. The Guaranteed Mortgage Package (GMP), would have
put lenders in the cat-bird seat, making it easy for them to
negotiate down the fees of service providers and the terms in which
they receive and return order requests. Many believe that if the
proposed reform had passed--and it still may in some form or
variation of its original GMP--independent appraisers may have been
required to become part of appraisal management companies to
receive orders from lenders for those loan packages. That would not
only have a significant impact on an appraiser's profit margin, but
it could also require appraisers to learn multiple systems and
processes just to receive appraisal orders from their mortgage
broker clients.
Everyone is breathing a sigh of relief because the U.S.
Department of Housing and Urban Development has retracted this
particular RESPA reform for further study. But, the threat is still
out there, in a HUD committee, circling the broker, appraisal and
settlement services community. Now is definitely the time for
mortgage brokers and appraisers to take advantage of every
opportunity to strengthen their relationships, including leveraging
every available technology to make the ordering and delivery
process as easy as possible.
Top three broker and appraiser concerns
So, how do brokers and appraisers feel about what's happening in
their industry? At my company Ellie Mae, we spent some time talking
to both parties to learn what's impacting their industry and what
they see on the horizon. The first thing our interviews confirmed
is that appraisers are a fiercely independent bunch. In fact,
unlike what the National Association of Mortgage Brokers does for
mortgage professionals, there is no single association that brings
together more than 10 percent of the appraisal community.
Our interviews also raised three main concerns that were
consistent across the board with most brokers and appraisers. The
good news is that technology is now available to address two out of
three concerns.
1. Generating more business without spending more for
it.
This concern cuts across both brokers and appraisers. The simple
answer is to drive all of your marketing and lead acquisition costs
from a fixed- to a variable-cost model. An appraiser paying monthly
fees just to be put on somebody's list is not only an ineffective
marketing technique, but also a bad business model. The days of "if
you build it, they will come" are not just over; frankly, they
never existed. Especially in today's market, you have to go to
where the transactions and the customers are. Being present in the
point of sale is terrific, but being available in the "point of
thought" is even better. That's one of the main benefits of joining
a network that is tied closely to the mortgage originator, like AppraisalPort.com for the
lender community and ePASS Appraisal Connection for the broker
community. Variable-cost models require the appraiser to only pay a
nominal fee, and only if they accept an order. Providing
responsive, wonderful service to your lender/broker is great; being
one click away on their desktop application is even better.
2. Spending less time answering phone calls and more
time on my business.
Everybody likes games, but phone-tag isn't fun for anyone. The
fact is that sophisticated technology offers the capability to make
status updates that automatically feed directly to the mortgage
originator who ordered the appraisal. This is a more efficient
process and saves a great deal of unnecessary phone calls between
those who order the appraisals and those who provide them.
Unfortunately, many appraisers still do not embrace that
technology. Brokers want to be able to check status through their
LOS system each day and save hundreds of unnecessary phone calls,
provide better customer service, create a competitive advantage for
the broker, and finally, and perhaps most importantly, create a
true customer retention tool for the appraiser and broker.
3. Feeling pressure to inflate prices.
Brokers understand the value of having an objective, independent
and professional network of trusted appraisers who can maintain
their autonomy and deliver unbiased evaluations. While there isn't
currently any known electronic solution that can solve this concern
nationally, will RESPA changes help or hurt this issue? I don't
know. But one thing is for certain, brokers and appraisers who take
advantage of the opportunities presented today will have the best
chance of maintaining their independence in what is sure to be an
uncertain tomorrow.
The bottom line is the bottom line. Now is the time for the
broker and appraiser communities to strengthen the important bond
between themselves so that, regardless of what regulatory changes
take place, what consolidation continues to occur in the industry,
and what new data or products enter the market, the third party
originators, who are responsible for approximately 65 percent of
all loans in the U.S., will still be motivated to work directly
with their favorite appraisers. Leveraging technology to strengthen
that bond is of paramount importance.
Sig Anderman is founder and CEO of Ellie Mae Inc. He may be
reached at (925) 227-7087 or e-mail
[email protected].
