InsightsCombining Innovation and Experience to Modernize and Simplify

The current buzz phrase in the valuation industry is “appraisal modernization.” Lenders, appraisers, AMCs, and borrowers are regarding the interpretation of this phrase differently, making it important that all stakeholders are aligned --- so the industry can continue to adapt to this new landscape.

Appraisal modernization represents the Federal Housing Finance Agency’s (FHFA) independent research, assessment, and planning to move the current appraisal process into the future while continuing to ensure the integrity of the appraisal process.

Modernization efforts are focused on examining potential changes to many aspects of the appraisal process. Considerations of overhauling current appraisal forms, UAD reporting format and implementation/acceptance of hybrid appraisals are the primary elements of the exploration. Hybrid appraisals refers to the bifurcation of the appraisal process, whereby a third-party data collector gathers information regarding the subject property from an on-site visit and the appraiser performs the analysis from their desk, using the data collection for reference purposes. “The need for more efficient approach to the appraisal process has been a key industry focus for the past few years,” says Matthew Woodhouse, managing director, valuations for ServiceLink. “This evolution will empower appraisers to work in the manner they wish -- in the field or from their home office.”

FNMA’s Value Verify pilot program, and the COVID related impacts of 2020, opened up appraisal flexibilities, which permitted the bifurcation of the appraisal process to some extent. This paved the way for new allowable procedures, permitting appraisals to be completed using information about the subject property supplied by homeowners and other parties that may or may not have a financial interest in the transaction. This combined with an appraisal volume increase of 50% in 2020, and a 50% increase in appraisal waivers by Fannie Mae and Freddie Mac, created another opportunity for innovation – and the initial temporary flexibility, is now permanent. Those flexibilities come in the form of a desktop appraisal, which is now permitted by both FNMA & FHLMC. In addition, the Freddie Mac PDR offering became available in July 2022, with the full hybrid appraisal solution planned to be accepted by both GSEs in 2024.

ServiceLink is prepared to help lenders adapt to the new normal, as it’s been focused on finding better ways to complete the appraisal process in a timely, cost-effective way since long before some of these new offerings became available. ServiceLink, a pioneer in hybrid appraisals, has been providing these types of appraisal product(s) for its clients for more than fifteen years. Continuing to evolve hybrid appraisal products further positions ServiceLink to be ahead of appraisal modernization opportunities well into the future.

ServiceLink’s continued investment into technology and partnerships with other elite organizations will keep ServiceLink poised to be ahead of the competition as these products become more mainstream.

But what does appraisal modernization mean for the future of more than 40,000 appraisers across the country? “We know that there will always be a need for full appraisal products and we stand ready to support that, but we also know the needs of our appraisers differ, and we’re excited to provide new options that might cater better to our appraiser’s needs,” says Erin Reed-Esser, vice president, originations valuations for ServiceLink. “Whether it be on full appraisal or these new product offerings, we will always need local appraisers to provide their opinions.”

ServiceLink also focuses heavily on helping to cultivate opportunities for new appraisers to continue building their appraiser network. Monty Marcus, vice president of desktop operations at ServiceLink, has seen the benefits of this training program firsthand. “My two sons and my nephew entered our training program, obtained the appraisal licenses and are each working as full-time appraisers. Additionally, I’m supporting new programs focused on expanding our use of trainee appraisers.”

ServiceLink consistently brings solutions to keep the industry flowing through this unique time in the mortgage industry.

ServiceLink is listed on the FHLMC site for PDR fulfillment.