Creating a digital mortgage space isn't something you need to be thinking about; it's something you should already be putting into play. The pandemic exposed a lot of pain points of digitizing the mortgage process and some deficiencies with traditional appraisal operations. Now that consumers have had a taste, it has only accelerated demand for a modern experience.
What's more, the digital transformation that borrowers demand brings cost savings and efficiency gains for lenders. In a recent webinar, Reggora CEO Brian Zitin spoke with Katherine Campbell, Assurance Financial's Chief Digital Officer, and its Director of Operations, Scott Alexander, on why they prioritized the digital experience, their approach to implementation, and how they've achieved success. The trio discusses how the digitization of the space is happening at lightning speed and how the consumer market has gone from surprise and delight to absolute expectation.
Sign it's time to prioritize the improvement of your appraisal operations
According to Campbell, the most significant hurdles that needed overcoming in Assurance Financial's operations were communication, timing, and payments. These are issues lenders are constantly trying to overcome in a busy market. In fact, a recent study Reggora commissioned by the STRATMOR Group found that issues with the appraisal are the culprit nearly 6% of the time when borrowers walk away from loans. That same study found that 12.3% of closings are delayed because of the appraisal, and part of the delay is actually within a lender’s control. There are plenty of opportunities for lenders to accelerate the time it takes to complete an appraisal and ultimately reduce their operating costs.
In a rising interest rate environment, every day counts when lenders are trying to secure the lowest interest rate possible for the consumer. It is actually the perfect time for cost-conscious lenders to delve into how implementing technology into their process could improve operations. "Assurance thinks appraisal is critical to the seamless borrower experience," Campbell said. "This year is a great opportunity because many people will be hurt and will need to stop and reevaluate and make some big decisions like this."
In the aftermath of some significant volume years, we've learned that big digital players are the clear winners today in terms of volume. "That doesn't mean they're the least expensive," Campbell said. "It does not mean that they have a great experience. And it certainly doesn't mean that they have the best rates. It just means that they had a digital platform that many people flock to, proving that the market is ready for a digital experience."
How can lenders build on their experience? Campbell believes that the solution is to deliver a fantastic brand and experience. That means providing a very seamless experience to the end-user. "They may be logging in or being tracked from 11 technologies from us at any given time. They don't need to log into 11 tools. They don't even know they've been through 11 tools. They need to know that they've had this experience with Assurance Financial, and it was so easy."
A tech-driven, transparent process reduces operational frustrations
Alexander said that technology allows you to see what is happening on a very granular level. "Now we can see the orders have been ordered and how long it takes for an appraiser to pick that order up," Alexander said. "It's no longer just measuring metrics from ordered to receipt but order to acceptance. Now, we can go to one location to check that the appraiser does their job and uses that tool to communicate back with us. We can break those down by counties or parishes, where we can look at the appraisal in certain areas and determine where we are getting the best service level or the appropriate service level in that area. We can hold our partners somewhat accountable for their customer service as it relates to the end user."
This one-stop-shopping has effectively streamlined communication and has eliminated the need for back-and-forth emails.
Beyond improving communication, Alexander said that having this level of information has also helped Assurance Financial better build a more effective appraisal panel. "Now we can measure the appraisers on our panel, and we can decide to remove some of the data tells us too. Before, we didn't have data available at that level and so easily accessible."
This granular level data also helps improve the relationship between the lender and appraiser. Campbell said that a critical part of the process is to be able to give the appraisers you work with feedback to strengthen the partnership. This level of information provides metrics that appraisers hadn’t had access to before. “To be able to give them feedback and let them know their average turn time, versus the average turn time in your area is; this gives them some sort of scope of reality. That is the sort of data that they haven’t really had before that we now deliver to them,” Campbell said.
According to Campbell, payment is probably one of the most contentious parts of the overall appraisal process. In a manual workflow, lenders rely on one of two options to deal with the cost of appraisals. The lender either cuts the check and pays the appraiser or leans on ACH transfers. Both options cost time and money, and it's one more line item for the accounting department. Instead, Assurance hands payment processing off to Reggora as the platform sends payment links directly to borrowers and enables seamless payment interactions through its Stripe integration. Lender-labeled payment links are sent to borrowers by Reggora upon order creation, then the platform processes funds and pays appraisal vendors upon acceptance or submission. According to Campbell, making this third party responsible for payments has removed a lot of anxiety over payment.
How lenders can prepare to implement and ensure success
Campbell said that the key to Assurance Financial's implementation strategy was picking a well-funded vendor. Even a good idea will fall short of expectations. When you're vetting that vendor, you want to make sure that they look long-term and not just short-term. Lenders also need to be sure that the tech is funded through development and that it will still be there next year.
Lenders should also focus on the quality of the developers and particularly their development capabilities, as far as an open Application Programming Interface (API). Campbell said that Assurance Financial was looking to pull as much data out of the platform as possible. In some instances, vendors have not built an API yet, or they are still hiding the ability to access their information. "I can see all of this data on a screen, but if I can't access it and enrich the customer experience by passing it along in different ways, it is not as advantageous," Campbell said.
Finally, the most significant attribute that lenders should look for is if the vendor can play with other partners you are using. This point was crucial for Assurance Financial's selection of Reggora. Campbell said that had Reggora not been as deeply invested in integration with Encompass it “would have been a different ball game” for Assurance Financial. Lenders should be looking for vendors willing to play with additional partners and allow the lender customer to take their API and put it into some backend capabilities. “Reggora hit all of those things and batted a thousand on those things,” Campbell said. “And so the seamless integration with Encompass was a big win.”
That should be standard for all lenders currently making the digital transformation because the industry is constantly changing. Zitin points out that those changes are beginning to take hold of the appraisal process on the regulatory front. The GSEs have announced many changes coming this year, mostly in terms of desktop appraisals, but other new approaches to valuation are on the horizon. For example, Freddie Mac updated its automated collateral evaluation (ACE) eligibility for appraisal waivers and introduced ACE+ PDR (property data report), beginning July 17, 2022; Fannie Mae posted some guidance on appraisal waivers, although not an exact timeline for a similar offering.
Alexander said that Assurance Financial plans to adopt all of them. "The key is that the technology is there for us to use these new items other than a full appraisal in the future to instill, meet the requirements of the GSEs," he said. "We must adopt those products to provide that customer satisfaction, and we can maybe reap a return customer when they go to get that next loan.
"You want to be able to make sure that you're evolving as technology's evolving, but also as products are opening up that you can offer the customer more than just the mortgage. Can you offer them a home equity line of credit or offer another mortgage service that they may need in the future?"
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