President and CEO of United Wholesale Mortgage, Mat Ishbia, has made another shocking announcement via Facebook live that will rock the entire mortgage industry.
The last time Ishbia went live on Facebook in 2020, he announced the highly controversial ultimatum between UWM, Fairway Independent Mortgage, and Rocket Mortgage, forcing brokers to choose which lenders to do business with. This time, Mat Ishbia has targeted appraisal management companies (AMCs) by announcing the launch of Appraisal Direct, providing clients another option when ordering an appraisal on UWM loans.
The UWM Appraisal Direct team will manage the entire process from start to finish, including scheduling, execution and delivery of the appraisal. The company boasts that this service also provides more transparency for all parties with a tracking system and communication alerts. Ishbia promises that the new streamlined process will deliver accurate appraisals faster, and at a reduced cost for borrowers. It also allows UWM to gain an industry advantage with faster closing times.
The achilles heel for most lenders across the nation are appraisals. The shortage of appraisers paired with a white-hot housing market spells a recipe for disaster; even with the current advancement of automated appraisals, most appraisers cannot keep up with the current volume of purchase and refinance mortgages. The typical appraisal can get done in about three days, but due to the market’s high volume of home sales, appraisals can get backed up for weeks at a time, severely impacting lenders’ closing times.
“We understand how important it is for independent mortgage brokers to get a fast and efficient appraisal on their borrowers’ home,” said Ishbia. “This new team will be using state of the art technology, making it faster and easier, so brokers and borrowers can get the elite client service they deserve and expect from UWM.”
Appraisers who work with UWM Appraisal Direct will receive the full appraisal fee paid by the borrower. This means UWM will not pocket any management fees and 100% of the fee will go to the appraiser. Appraisers will also be paid the next business day following a successful appraisal completion. The service launches October 1, 2021, and will be open to all brokers doing business with UWM.
“We know the appraisal process has been a challenge in our industry for quite some time,” said Ishbia. “We’re closing 60,000 loans per month at UWM, so it was critical for us to build a solution to improve this part of the process. We already have the best underwriting, technology and people in the country, and now we’re going to have the best appraisal process too.”
Update: UWM chief strategy officer Alex Elezaj, said the company will continue working with AMCs once Appraisal Direct launches. "This is not meant to destroy AMCs, but it will challenge them," he said. "I'm sure some of them are thinking they're in trouble after today's announcement, but others will be thinking about how to get a leg up. All of this fuels more competition in the market so we can get cheaper appraisals with faster turn times."
Instead of going through an AMC company to schedule an appraiser, UWM will select the right person for the job via an appraiser panel, and handle all the processing internally. This way, UWM can get paid the for processing and let the appraiser keep 100% of the appraisal fee. Elezaj firmly states that the process is completely compliant, without infringing on appraiser independence requirements.
Although this initiative is ambitious and innovative, it's also costly. Elezaj emphasized this as a multi-million dollar commitment, with currently no projections on profit. "This is a value-add," Elezaj said. "This is all about helping brokers, making our company more attractive to them, and showing them that we are there. Today, appraisals are the biggest pain when trying to get a loan closed and we hit the nail by addressing that problem. We're actually doing something about it."
