With interest rates still high and loan volume growth stunted, agency and non-agency investors are able to spend more time scrutinizing loans and appraisals to identify deficiencies. As this focus on quality has grown, so has the risk of loan repurchase requests from these investors back to the mortgage lender. Because lenders are responsible for providing quality appraisals, it’s important to use an automated appraisal review solution that will help flag risk, reduce errors, and arm underwriting teams with the appropriate data and tools necessary to ensure quality while improving loan production efficiency. Read on to learn more about automated appraisal review solutions.
What is an automated appraisal review solution and how does it improve collateral underwriting??
Automated appraisal review software can provide your collateral underwriting team with the tools needed to quickly and efficiently flag and eliminate risks through the use of data such as automated rules, automated valuation models, comparable sales and listings, and more. With the market’s continued emphasis on quality, it is important for all lenders to have a solution that not only helps their team reduce errors and increase review speed, but also helps prevent loan buybacks. As the market changes and volume fluctuates, lenders need a solution in place that can scale alongside their needs to ensure peak appraisal quality — no matter the situation.
To help hone in on the right solution for you, consider these three things when vetting an automated appraisal review solution.
- How centralized data and AI improve automated appraisal review
- Automated appraisal workflow tools to save time
- Choosing between appraisal review platform vs. PDF report
How centralized data and AI improve automated appraisal review
In order for a collateral underwriting team to do its job, it not only needs access to appraisal data, but also to data solutions that can validate the information within the appraisal. At a base level, collateral underwriters need to ensure the appraisal contains accurate information by leveraging data from ASC.gov, public records, local market insights, and more. But it is incredibly time-consuming for a review team to constantly leave the appraisal document to search for information that can validate all the fields within a 30+ page appraisal.
When examining automated appraisal review software, aim to find a solution that centralizes all the data needed to review an appraisal in one place. This removes the need for reviewers to perform manual searches across many websites and tools. When the data is all in one place, it makes it that much easier to run rules and automate quality checks on the appraisal itself, further freeing up the time and focus of collateral underwriters.
While the majority of automated appraisal review software contains rules that automatically leverage data to check for completeness and consistency issues within the appraisal, keep an eye out for additional tools to identify valuation risk, such as an automated valuation model (AVM). A review solution that has a world-class AVM and other comparable sales and listing data will be more helpful in identifying valuation accuracy risk, which can help eliminate risk of repurchase.
One additional thing to keep in mind when screening automated review solutions is artificial intelligence (AI) capabilities. What additional data can the solution provide using AI that can help eliminate even more review time and errors? Can the solution use AI to determine inaccuracies on a sketch from an appraisal or even validate the appraiser’s condition score through scanning all property photos? These unique features can immediately and automatically flag risk to a collateral underwriting team while reducing effort and cost.
Automated appraisal workflow tools to save time
The key to efficiency, scalability, and speed is automated workflow. When vetting review solutions, pay attention to how the system can help a team stay organized and automate the manual and time-consuming tasks that are a part of any collateral underwriter’s day-to-day life, often saving one or more days in processing time.
Retrieval of appraisals from a Loan Origination System (LOS) or Order Management Service (OMS) can be automated, which makes the appraisal ready to review as soon as it arrives in the system of record. Workflow tools can also automate the submission of completed review documents back into those systems. For appraisals that need revisions, an ideal review solution can also automatically communicate the revision request so the system notifies the appraiser of the request immediately. Finally, the system should be able to upload the revised appraisal back into the system for review.
Beyond the automated flow of appraisals and documents between systems, features like auto-assignment and auto-approval can quicken review times by 50% or more. Pay extra attention to tools that can automatically and intelligently assign appraisals to a review team. Additionally, solutions that have a robust set of data, rules, and valuation accuracy checks will enable a team to auto-approve low-risk appraisals, close loans faster, and allow a review team to focus on the appraisals that require heightened review.
Finally, when analyzing workflow tools, configurability is essential. An effective solution will work out of the box while allowing lenders to tailor the review process to specific underwriting guidelines, ensuring compliance and accuracy. This adaptability ensures the system evolves with ever-changing market conditions and business needs!
Choosing between an appraisal review platform vs. PDF report
Not all automated appraisal review solutions are built the same. Commonly, review solutions can be found in two different variations: platform versus PDF report output.
A platform-based appraisal review solution will provide a home for a review team and includes the robust tools and data mentioned above — including the automated workflow tools. This solution is great for larger teams that handle enough daily volume where automating the flow of appraisals, documents, and revision requests back and forth between the review solution and the LOS/OMS would save time and make teams more efficient.
However, if a team is smaller or has a very specific set of appraisals that require additional review, a review solution that provides a PDF report output may be a better fit. This type of solution allows users to input an appraisal and receive a PDF report of the automated review data that can be used to underwrite a loan. However, these solutions often don’t include workflow tools. If additional workflow tools are implemented, or if these tools are not needed at all, this may be a better option. Not to mention, this option could be more affordable.
While the PDF-only solution doesn’t contain workflow tools, it is easily ingestible in nearly any existing system(s). A PDF report solution could add valuable data to an existing appraisal review process to increase quality and boost consistency and efficiency all around.