Technology Spotlight: A New Take On Reverse Lending

*A New Take On Reverse Lending*
**Plaza Home Mortgage Profiled**

***Reverse mortgage lenders have traditionally relied on automated valuation models (AVMs) and desk appraisal reviews in order to obtain a value on the property securing the transaction. Today that is changing. San Diego-based Plaza Home Mortgage Inc., a full-service wholesale mortgage lender, has implemented Platinum Data Solutions’ RealView appraisal review technology in its Reverse Mortgage Division, which transacts reverse mortgages nationwide. Here’s why:

****Reverse mortgages, which are available to individuals aged 62 or older, allow homeowners to draw against a portion of their home equity. Repayment of the loan is deferred until the owner dies, sells the home, ceases to live in the property, or breaches the mortgage provisions. Because of the way reverse mortgages are structured, they differ from traditional mortgage loans in that property value, not the borrower’s credit or income, is the single most important factor in determining loan worthiness.

****“Adding desk reviews or AVMs to substantiate an appraisal, although helpful, doesn’t always yield consistent information,” said Mark Reeve, Reverse Mortgage Division Manager for Plaza Home Mortgage, Inc. “More often than not, they create more ambiguity.” That ambiguity is generally centered around whether the most appropriate comparables were used to determine the property’s value. Reeve added, “This can lead to difficulties between our underwriting staff and the appraisers we use. Without substantiated proof, questions about the validity of comparables tend to result in extended, strained communications between underwriters and appraisers.”

****In January 2012, Plaza Home Mortgage, Inc. implemented Platinum Data Solutions’ RealView automated appraisal review technology in its Reverse Mortgage Division to ensure consistent quality among the appraisals used to underwrite its reverse mortgages. The company now uses RealView as part of its underwriting process on all of its transactions.

****“RealView’s consistent, objective evaluation allows our underwriters to make accurate decisions, knowing that the appraiser used the best comps available – and if not, they now have data to rebut appraisers directly, in a methodical, scientific manner,” said Reeve. “RealView helps us make our underwriting decisions with confidence. That’s the bottom line.”

****In just a few minutes, RealView conducts an evaluation that covers over 2,000 best practices rules and appraisal review guidelines, which include appraisal data points, as well as customized user-defined rules throughout all sections of the appraisal report. An internal manual appraisal review that covers the number of points covered by RealView could consume 30 minutes or longer.

****“An accurate appraisal should be the number one component of any collateralized loan because it’s sufficient value that positions you at square one to make a decision,” said Phil Huff, CEO of Platinum Data Solutions. “Platinum Data Solutions’ mission is to provide companies with a rock-solid foundation of valuation-based information. From there they can proceed with confidence, to make the decisions that best suit their goals.”