Each month, we look at various valuation issues, best practices, technology developments and so forth, to provide clearer insight into our world. For Veros, and the vantage point of this column, that world is very specifically residential real estate valuations. We discuss the application of analytic tools and valuation workflow technology. We opine on the interrelationship between appraisals, AVMs and BPOs and the regulations that respectively govern them; and we consider how all these strategies and industry developments work together to make mortgage lending and investing safer and more profitable. We do this so, in turn, we can create a safer lending environment for the consumer and ultimately, foster a more stable mortgage economy.
This month’s column comes alongside MBA Annual’s centennial year and the launch of a new campaign for Veros, which focuses on the issue of “perspective.” As these two points converge, it seemed appropriate to broaden the ValueNation point of view momentarily to consider the broad stroke of perspective changes that have swept over our industry through this period of market recovery.
Sir John Lubbock wrote: “What we see depends mainly on what we look for,” which poses an intriguing point of view in regard to valuations and measures taken toward the return of a healthy mortgage market. In the immediate wake of the market crash, we collectively saw how an over-emphasis on consumer credit (at the expense of collateral understanding) placed lenders and investors in far more precarious positions than had been anticipated. We saw appraisers, lenders, technology providers and investors pointing fingers at each other without true loan-level data to audit against. And most certainly, we saw issue after issue that warranted better regulation, reform or at minimum “guidance.”
The heroes within our industry though are the ones looking for and implementing solutions to address these and the many other underlying causes of the collapse. Who, instead of looking for cause and effect, saw opportunities to improve the system. This group realized that common among many issues contributing to the collapse was a lack of perspective. As a result of the work of this group, in a few short years, we have seen some amazing industry transformation occur. We’ve seen true open-source data adoption through MISMO. We have also seen appraisal forms vendors, appraisers, lenders and technology providers adopt the Uniform Appraisal Dataset (UAD) which has gained ground not just with its sponsors, Fannie Mae and Freddie Mac, but also with FHA, VA and Ginnie Mae. Undeniably, our perspective has also been changed by the industry-wide collaboration that occurred under the Uniform Collateral Data Portal (UCDP) which has added such transparency to the industry that policies, like the Representation & Warrants model, could be amended based on better availability and quality of electronic appraisal data. These programs have pushed our level of understanding forward in a profound way because for the first time—from origination to securitization—we have a shared perspective on the loan file and a common format through which to gain understanding.
Adrienne Ainbinder is vice president of marketing at Veros Real Estate Solutions. For more information, call (714) 415-6310 or visit Veros.com.