Last month, the U.S. Department of the Treasury released a comprehensive report titled: “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation.” The report touches on many sectors within the financial system – including the Mortgage Lending and Servicing sector.
In its findings on Mortgage Lending and Servicing, a prominent theme is the need to accelerate technology innovation and adoption in order to address the rising costs and cycle times associated with mortgage loans. In this blog post, we’ll share our thoughts on two of the recommendations made in the report – innovation in appraisals and innovation in the back-end of the mortgage process.
Innovating Appraisal Management & Property Valuations
The report encourages lenders to consider new technologies and solutions to improve how they handle property appraisals and appraisal management. The U.S. Treasury cites the opportunity to shave up to 10 days off appraisal turnaround times through the use of alternative appraisal methods including waivers, AVMs and hybrid/desktop appraisals.
Of particular interest is the growing adoption of hybrid or desktop appraisals. The report states:
Another form of property appraisal exists between these two approaches to combine aspects of traditional appraisals with the automation and database capabilities of AVMs. So-called hybrid or desktop appraisals leverage property history data, comparable sales data, photographs or video of the interior and exterior of a property, and a licensed or certified appraiser. As the name would imply, desktop appraisals are able to be executed from a single remote location, and offer the potential to save appraisers considerable time that would otherwise be spent in transit to and from properties.
At Accurate Group, we’ve been at the heart of innovation in hybrid and desktop appraisal solutions. As a result, desktop appraisal software is making its move into the mainstream. Our market-leading desktop appraisal technology platform – ValueNet – incorporates an interior inspection option that is certified to be compliant for all loan sizes and could replace a traditional appraisal for home equity and portfolio mortgage loans. ValueNet has made desktop appraisals viable for a wide range of loan types, and, as the GSEs and VA continue to explore and endorse alternative appraisal methods, desktop appraisal technology is likely to emerge as the wave of the future.
The business benefits of moving to technology-enabled appraisals are significant:
A better borrower experience. Appraisal management technology and alternative valuation solutions such as desktop appraisals enable both lenders and appraisers to provide faster, better service to borrowers, while also ensuring an accurate, compliant appraisal. Borrowers will appreciate the increased transparency and smooth, efficient process.
Efficiency and transparency. Investing in modern technology to streamline appraisals and improve transparency is one of the best ways to improve operational efficiency and lower operating costs.
Productivity and cost savings. Likewise, desktop appraisal technology applications require minimal upfront investment but offer a big payoff in productivity, enabling appraisers to handle more volume at a lower cost with less administrative effort.
Innovating the Back-End of the Mortgage Process
Another area covered by the report is the current lack of focus on optimizing the “back end” of the mortgage process – citing a missed opportunity for lenders. While much attention has been placed on the use of technology for loan originations, the U.S. Treasury notes the need for more innovation in the back office and the latter half of the mortgage process. The report states:
The capabilities to support a digital back-end mortgage process are even less developed. This stage comprises the more time- and labor-intensive portion of the production timeline and encompasses originator-driven activities from processing through loan closing, vendor services such as property appraisal and title insurance, and, ultimately, funding and sale into the secondary market. Further development of, and integration with, digital capabilities across the back-end of the process is integral to the ability for lenders to offer an end-to-end digital mortgage product.
At Accurate Group, we’ve invested a great deal in R&D to develop leading edge technologies to automate and improve the “behind the scenes” processes that are integral to mortgage cycle times – including appraisal management, title data and e-closing. Read our whitepaper, “Beyond Origination: Innovative Ways to Digitize Your Mortgage Process,” for specific tips and insights on how you can improve efficiency, reduce cycle times and deliver a better borrower experience with process improvements and technology solutions that are available today.
The mortgage loan process is ripe for innovation and technology adoption is likely to be a key component of this change. Technology has the power to deliver process automation, compliance enforcement, improved collaboration and on-demand transparency – all of which will improve the real estate lending experience for lenders, appraisers and borrowers. By adopting technology to streamline the back-end of the mortgage process, lenders will gain significant efficiencies that will both lower costs and reduce loan cycle times. In addition, adopting hybrid or desktop technology for appraisals has the potential to shave 10% off the total loan cost.
Market forces are already underway, and the technology-enabled appraisal will soon be the new normal. It’s time to get on board – the earliest adopters will gain the biggest benefits and become the new market leaders.
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