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Stewart in the Studio

Stewart In The Studio: Appraisal Modernization and Diversity for Improved Quality and Turn-times

In this week’s Stewart In The Studio episode, Teri Zarate and Richard Garrie share the latest on industry trends and how Stewart Valuation Intelligence is helping mortgage lenders become more efficient in this ever-changing landscape.

Marvin: Today, we have Teri 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: 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. 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 that’s a modern process that meets today’s demands and to reduce the risk in loan making.

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

Teri: Yeah, absolutely. So Stewart Valuation Intelligence, SVI, we are a proud sponsor of the Appraisal Diversity Initiative. So now 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 potential new entrants. SVI recognized the importance of being a part of this important initiative and are a workshop sponsor. 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.

We had a live event this year, with over 120 attendees right in the heart of downtown Tempe, Arizona, in the JPMorgan Chase building as they 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: Let’s talk about the range of products and solutions that you offer.

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

We have a national network of real estate brokers and agents. We started back in the 90s, 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 omissions right in real time, right as the agent and broker they’re entering the data, resulting in faster turn times, less rework, 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, PMI. And then on that same proprietary platform, we offer desktop appraisals. So that’s a limited scope appraisal that’s completed by a state credentialed appraiser.

We typically will see faster turn times 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 opinion market value is considered reasonable. 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 prefunding due diligence based on investor requirements. 

Marvin: That’s quite a range of products.

Rick: 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 for Fannie and Freddie. This is where Fannie and Freddie, historically have given waivers, for 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’s 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. 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 is 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 evaluation 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: 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: Yeah, certainly what we do see a lot is our ADI product which is the desktop appraial version on our proprietary platform.

So, that certainly gives the appraiser a 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. So certainly, you could still get the expertise and of course the appraised value from an appraiser but it does reduce the whole cycle down a lot quicker..

Marvin: Teri on the staff appraiser initiative.

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

Teri: Yeah. So that’s also another exciting thing. 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 quicker turn times, improve that one touch quality, which is really faster contact scheduling with the borrower.

This is 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, it’s 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: Okay, good. Rick, any final thoughts on the appraisal side?

Rick: Yes, absolutely. A couple of things that, you know, with SVI and where we’re positioned in the market. You 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 the lender that comes in, that needs to be able to service many different lines.

Marvin: Outstanding. Thank you so much. It’s been a great time to get to know both of you and the full span of products and services offered with SVI