They say, ‘Necessity is the mother of invention.’ Truer words have never been spoken when it comes to how the mortgage industry has been flipped to respond to the COVID-19 pandemic. Talk about a perfect storm, lowest mortgage rates in recorded history driving highest home refinancing volumes ever, with one MAJOR problem – national level stay-at-home orders.
That plays out incredibly difficult when it comes to closing loans, especially when appraising homes and ultimately going to the closing table to sign all the documents. Much has been written about the variations of eClosings, to help with social distancing, yet little has been said about appraiser and homeowner interaction during the pandemic.
Within just a few weeks of the pandemic, innovators got busy and quite creative. In an instant, home appraisers were able to enlist help from a very unusual source – the homeowners themselves! Neither party really wanted to risk the appraiser coming in the house and infecting others, or becoming infected. A few states have even banned appraisers from entering homes during the pandemic.
Vendors like Corporate Settlement Solutions (CSS), either built or subscribed to mobile apps to allow homeowners to easily step through the room-by-room process to take pictures and provide pertaining interior information. That’s right, the homeowners are physically completing the appraisal inspection.
These virtual inspection apps capture high-quality images and information of the interior and exterior of the homes, ultimately sent to lenders, appraisers and appraisal management companies (AMCs) through a secure interface. The apps are of great help, in general, although they are even more useful in homes where renovations and major updates have been made. Without the use of these new mobile apps, it is not likely these home improvements would be adequately reflected in the appraised value. These apps typically include the following basic components and capabilities:
- Used by camera-enabled mobile devices
- Authenticated photos that are geocoded and time stamped to help prevent fraud
Key differentiators of the CSS process:
- There is no app to download
- The homeowner gets a text/email with a link for direct access to the secure portal; (Most apps have to be downloaded form an app store)
- The entire process can be completed within 15 to 30 minutes
- Immediately upon submission, the homeowner gets a copy of their report
Virtual inspection apps have temporary approval from the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac’s for appraisal alternatives, which include desktop or drive-by appraisals. The goal is to provide accurate, timely and affordable appraisals while also allowing compliance with social distancing guidelines.
By just about every account, the appraiser profession has long been in decline, with fewer and fewer new entrants. Many predict these ‘homeowner-assisted’ appraisals, using the virtual inspection apps, do not have an expiration date. Plus, this new process is directly in line with the ‘hybrid appraisal’ model whereby someone other than the appraiser – a data gatherer – makes a site visit to the subject property.
“Borrower conducted virtual inspections can be a standalone product, utilized with an AVM or incorporated into a traditional appraisal. They provide flexibility in meeting the borrower needs and lender requirements in providing pertinent exterior and interior information for the collateral. As a consumer, I have utilized our link and found it to be very user friendly. The program walks you through each question and required photo step by step. It only took about 20 minutes to produce a comprehensive and compact report containing all my property characteristics entered and the photos I took.” -Sherri Zahtilla, SVP of Operations
In days past, it was a very good bet that any article referencing both appraisers and homeowners, it often cited their adversarial relationship whereby homeowners were not happy with the valuation product. Today, at least for a while, the two parties are collaborating – in an official capacity.
Another homeowner benefit – no waiting around for the appraiser appointment. Homeowners can immediately click the link and instantly initiate the home inspection process. And, you know the prideful homeowners will only submit the very best quality photos, right!
We began the blog with a familiar quote, so let’s end with an appropriate one. It is said that, ‘People tend to support what they help create.’ In this case, appraisers and homeowners may never be more cozy together.