Stewart In The Studio

E3: Appraisal Modernization and Diversity for Improved Quality and Turn-times

Marvin Stone: We have Terry and Rick from Stewart Valuation Intelligence with us. I guess one of the areas that maybe not all of us are as familiar with is appraisal modernization. Obviously it’s been in the headlines, but for those of us who are new to the topic, can you give some background on appraisal modernization and why that’s become a hot topic?

Rick Garrie: Appraisal modernization is taking it in a different way by allowing the bifurcation of the process where the data is collected and it’s all brought together for the appraiser to be the analyst. Gives them the opportunity to do things faster. They’re not on the road, they’re not taking photos and it gives them the ability to concentrate on what is the biggest risk that we’re looking at.

It’s the valuation portion. It gives them an opportunity to spend that needed time to really analyze and bring things to the forefront that we haven’t been able to in the past. Appraisal modernization is just really taking all of the data that we’ve collected for so long, and now putting that into a process.

It’s a modern process that, that meets today’s demands and to reduce the risk in loanmaking. Appraisal diversity.

Marvin Stone: Can you talk a little bit about that and how that comes into play at Stewart?

Teri Zarate: Yeah, absolutely. Stewart Valuation Intelligence, SVI, we are a proud sponsor of the Appraisal Diversity Initiative.

That’s a collaboration between Fannie Mae, Freddie Mac, the Appraisal Institute, and the National Urban League. It was founded back in 2018 with the goal to bring awareness of the real estate appraisal profession to the attention of entrants. SVI recognized the importance of being a part of this important initiative.

We are a partnership sponsor. And the mission is to reach, educate diverse, talented candidates, offer that peer mentorship for career development and provide trainees. Job placement assistance from sponsoring organizations. So we had a live event this year. We had over 120 attendees right in the heart of downtown Tempe, Arizona in the JPMorgan Chase building as a co sponsored this event with us SVI awarded 10 scholarships and the scholarship recipients.

They varied in background levels. Their interests, all of that will add that diversity. The sponsorship will have really a positive impact on the appraiser profession.

Marvin Stone: Let’s talk about the range of products and solutions that you offer.

Teri Zarate: Yeah, I’ll start. I’ll start on the lower end and work our way up. So we offer broker price opinions, which are BPOs.

We have a national network of real estate brokers and agents. Inception started back in the nineties. So you could call us sort of pioneers. Really, our platform is proprietary, it’s rules based engine. So we’ll address all errors or admissions right in real time, as the agent and broker, they’re entering the data resulting in faster turn times, less free words, improved one touch quality, which is extremely important, and then also providing that client satisfaction.

BPOs are typically utilized in the capital markets and service arenas. Short sales foreclosures, portfolio asset valuation and private mortgage insurance. And then on that same proprietary platform, we offered desktop appraisals. So that’s a limited scope appraisal that’s completed by state credential appraiser.

We typically will see faster turn turns when we have the broker agent, complete the field inspection, and then we provide the data to the appraiser. And the appraiser does what they do best, which is the analysis. So that product is mostly utilized in the home equity space. I also want to tell you about our platform, which is supported by integrated market data, IMD, which integrates the MLS and public record data just directly right into our platform.

So it’s providing the data at the fingertips of the appraiser. The broker, the agent with more accuracy, and then, of course, those timely submissions. We also have appraisal risk reviews, valuation, reconsideration products. We have a whole suite of products and appraisal risk review and valuation.

Reconciliation is completed by a credential appraiser that’s located in the state of the subject property. And that includes a written analysis. It’s addressing any red flags, or if the market value is considered reasonable. Thank you for your time. So these are typically utilized to confirm the appraiser’s methodologies, opinions, conclusions, understand the risk, and then also to satisfy compliance issues.

So ARRs are mostly utilized in the pre funding due diligence based on investor requirements.

Rick Garrie: There’s quite a range of products. And traditionally, most of that has been just appraisals, a full appraisal on the property or a drive by appraisal on the property. I want to bring up appraisal modernization because with that, we’re starting to add some new products into the mix.

The first thing we’ve got is the property data report or Fannie and Freddie. This is where Fannie and Freddie historically have given waivers or appraisal waivers for several different types of loans, and they’re still doing that. But to limit the risk, they want to know what the property is like today, what the condition is.

And that’s where we come in and we fill this void for the property data report. Fannie and Freddie have gotten together and they’ve gotten all these data points that they want to collect about the physical attributes of the property. And this is where we send these inspectors out to the property. They collect the information.

We’re 100 percent integrated with Fannie and Freddie. And the information flows back to them. It makes it very seamless for the lenders. That they can use in conjunction with these waivers now. So that’s one of the new things that we’ve offered. We’ve been doing it for about a year now. And with that coming, it’s going to be the hybrid appraisal, which is taking that information that our data collectors.

Have collected and now giving it to an appraiser, giving it to a human who knows the market, who understands to put a valuation together using that information. I’m super excited about this new innovation because I think it’s going to be really good for the industry. It removes a level of bias that could be there.

The appraiser is not interacting with the homeowner, the realtor, they’re not meeting anybody at the property and they’re doing what they do best. That’s value the

property

and that’s what appraisers do best.

Marvin Stone: Teri, can you talk about some of the opportunities that you see for SVI to better serve customers in some of these segments and niches in 2024?

Teri Zarate: Yeah, certainly what we do see a lot is our ADI product, which is the desktop version on our proprietary platform. That certainly gives the appraiser quicker, faster turn times because the agent broker is going out doing that inspection. And then, of course, the appraiser is doing the analysis part of it.

Certainly, it could still get the expertise and, of course, the appraised value from the appraiser, but it does reduce the whole cycle. Down a lot quicker, Teri, on the staff appraiser initiative.

Marvin Stone: Can you talk a little bit more about what that looks like here at Stewart?

Teri Zarate: Yeah, so that’s also another exciting thing.

So we just recently launched the new staff appraiser program. So we’re building a network of employee field appraisers right in key markets. This will benefit huge with the quicker turn times, improve that one touch quality, which is really big, faster contact scheduling with the borrower. This was very positive because it creates that good customer and lender experience.

The other thing too, is it does have a multi tiered value. So the performance improvement, and then also the program’s long term goal is to assist in bringing real estate appraisal roles to diverse team members is an important role. So it goes hand in hand with the appraisal diversity initiative. So it’s exciting.

It’s exciting to see that it’s going to grow this coming year.

Marvin Stone: Okay, good. Rick, any final thoughts on the appraisal side?

Rick Garrie: Yeah, absolutely. Couple of things that, that, with SVI and where we’re positioned in the market where you’d mentioned some initiatives in 2024, we’re expecting some market headwinds and some contraction in the valuation space with the appraisal modernization and the technology needed.

There’s a lot of AMCs out there that aren’t going to be positioned to be able to fill that void. We can cascade from everything from a BPO to an AVM to a complete full appraisal. We can even do narrative appraisals if necessary. And that’s a product suite that not very many other people are able to offer.

So we are truly the one stop shop for a lender that comes in that needs to be able to service many different lines.