Be prepared for additional lockdown restrictions by identifying pain points and embracing lending technology

Strategies for automating loan originations and property appraisals

By David Chiappe

First appeared on

Unprecedented is the word of the year. It popped up in nearly every news article in March and April, and you can still hear it now as a new series of lockdowns rattles the country. From impacts on schools and holiday gatherings to restaurants, bars, travel – and so much more – unprecedented has almost become a negative cliché for many this year.

However: in finance, unprecedented has a different connotation this year. It refers to the record number of loan transactions that clogged lending department pipelines. Low rates and significant home equity saw a surge in refinances and equity loans. Unprecedented was almost a welcome word that brought smiles to faces among loan officers and lending department managers. These record low rates saw lending up 65% over 2019 levels in some areas.

But record loan volumes brought their own set of challenges too.

Lockdown impacts on originations and property appraisals

With the loan origination influx that started around April, technological efficiency became a requirement for lending departments to keep up with originations. But it seemed that no one was prepared for the impact on property appraisals as face to face interaction became limited.

Even though lending departments were completely busy, getting a timely appraisal seemed impossible. Many lenders saw increasing appraisal prices and worsening turnaround times as this year progressed: it became difficult for appraisers to safely enter homes and perform interior inspections. Appraisers raised their rates, and longer turn times became the norm.

Subsequently, rate lock extensions are continuing to be frequent, at the cost of the lender.

What can lending departments do to make sure their appraisal process is healthy?

For many lending departments, appraisal costs skyrocketed to $800-$1200, and sometimes took eight or more weeks to complete. And this was earlier in the year. With new lockdowns being implemented as virus cases surge, lenders should be prepared with automated solutions to bring appraisal turn times back to normal and appraisal costs down. Your borrowers will thank you.

So what can you do?

Three things to consider for your overall strategy

First off, consider what your lending department does when ordering an appraisal.

Some lenders utilize a manual process that involves an Excel spreadsheet to handle their property appraisal needs. While this has worked well in the past, the manual aspect of reading through a spreadsheet to identify the most qualified appraiser for the order takes too much precious time for a lending department trying to handle a surge in loan volume. Lenders should consider how to automate this process.

Secondly, if a lender decides to utilize an Appraisal Management Company (AMC), they must investigate what the AMC can guarantee as far as appraisal product prices and turn times. AMCs can be a great addition to a lending departments’ overall origination strategy, but having a middleman between you and your appraisers can have its own unique set of challenges.

Finally, the easiest and most cost-effective solution is to implement an Appraisal Management Software (AMS) solution: one where all appraisers, prices and products are preloaded into a single web-based secure system. Lenders using an AMS solution can manage their own appraisal process, positioning their lending department for continued loan volume growth even amidst additional lockdown restrictions.

Web-based appraisal management software: What to expect

Lending departments can place orders to their appraiser panel, and these systems will automate the appraisal assignment based on vicinity to subject property, appraiser qualifications, appraiser that specialized in certain property types, billing options, and more.  

AMS solutions offer much more than just refinance and purchase solutions: they also offer AVMs, Property Condition Reports, Mobile Appraisal Solutions, automated appraisal review, consistency of process, reliability, connections to multiple AMCs and more. The Mobile Appraisal Inspection Solutions offered by AMS’s accommodate limited face to face interaction by allowing the member to assist the appraiser with the interior property inspection. Any new limitations on face to face interactions can be handled with an AMS.

AMS’s also act as a central hub for all the valuation products a lender might need across their spectrum of loan products: new purchase, refinance, and the various equity lending products. Lenders that are utilizing these solutions will keep costs down, have reasonable turn times, handle lockdown restrictions easier, and ultimately have happier borrowers.

Lenders can embrace the unprecedented year and make the most of lending in 2021 by adding technology solutions to their lending department.

PS. We know that implementing new digital technology solutions can be difficult. Read our How-To article on embracing new technology solutions.

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