Hello, LOs!
United Wholesale Mortgage announced yesterday that it will no longer require its broker partners to use appraisal management companies to complete appraisals.
As my colleague Georgia Kromrei reported, UWM instead will coordinate appraisals in-house, contracting with appraisers directly. This will allow both appraisers and brokers to bypass the "middlemen."
"It's going to be cheaper for consumers and more money for appraisers, because there's no longer going to be a middleman with UWM Appraisal Direct," UWM CEO Mat Ishbia said. "We're going to take one of the biggest negatives in the mortgage industry out of play."
Appraisers claim that AMCs pick their pockets and create bottlenecks. AMCs came into prominence following passage of Dodd-Frank and are supposed to be a firewall between the appraiser and lender, to remove the possibility of value inflation that helped contribute to the housing crash just over a decade ago.
UWM's Appraisal Direct program will oversee the entirety of the appraisal process – from scheduling to delivery. Appraisers will be selected for an appraisal based on a scorecard to assess geographic competencies and past performance. UWM will pass along the full appraisal fee paid by the borrower, which should incentivize appraisers. The lender will also pay appraisers one business day after the appraisal is completed, which should make appraisers very happy.
Fannie and Freddie cannot directly buy loans that don't comply with Appraiser Independence Requirements (AIR), so UWM needs to make sure they are fully in compliance (the GSEs, however, can buy securities backed by non-AIR-compliant loans).
Most wholesale lenders don't want the liability or the headaches of doing appraisals in-house, which is what makes what UWM Is doing so intriguing. It gives them a lot more control over the appraisal process and the costs, and it's where they have an advantage over retail. If it works, other wholesale lenders might follow suit. But they'll need to quickly develop an appraisal-ordering structure that satisfies regulators. You know the CFPB and the FHFA will be watching closely.
LOs – what do you think of this move? What has your experience been like with AMCs? Message me anonymously at jkleimann@housingwire.com. Hope you have a great weekend!
James Kleimann
Managing Editor, HousingWire
EmoticonEmoticon