Posts

Commercial Evaluations Could Be The Answer

The appraisal industry is rapidly changing, and these changes usher in challenges as well as solutions. A declining appraiser pool can sometimes lead to appraisal delays and contribute to industry frustration. A more lengthy appraisal process can also create a disconnect between the borrower and the lender. This concern is significant in the commercial lending space as well as the residential.

To counter this dynamic, viable substitutes to traditional appraisals continue to emerge within the marketplace for qualifying situations. These substitutes are most often referred to as Evaluations. Evaluations are typically administered by real estate brokers and agents and follow practices set forth by the FDIC’s Interagency Guideline (IAG). They are most suitable for small loan balances as well as due diligence, portfolio monitoring, loan modifications, default services and extensions of credit. Lenders may also use evaluations for origination purposes when valuing a commercial property under a $250,000 loan threshold.

Featured Sponsors:

 

 
So, what are the key differences?

The evaluation process is governed by the Interagency Guidelines and offers an abbreviated set of standards to accommodate qualifying transactions, while the traditional appraisal process is governed by USPAP which outlines a comprehensive set of standards by which to operate. Prices for evaluations are often less than the price of appraisals. Commercial evaluations generally cost under $1,000, while commercial appraisals can cost anywhere from $2,000 to $4,000 for similar properties. The time required to complete an evaluation is also reduced. Evaluations are generally completed in ten business days or less, while commercial appraisals generally require three to four weeks.

Featured Sponsors:

 
The commercial evaluation form contains several approaches to value which includes land values, a comparable analysis (three comparable listings; three comparable rentals; three comparable sales); line item adjustments; local market trends, including vacancy rates and the subject’s neighborhood; income approach; subject property transaction history; capitalization rate; operating expenses; current subject photos; and commentary. Field agents perform interior site inspections as requested. The reports address current zoning, site utility, construction quality, assessment information and highest and best use.

Because the standards are not as extensive for evaluations, it is critical for lenders to understand the processes their vendors use including the use of technology, data resources and manual review.

Featured Sponsors:

 
Lenders that understand the differences in the products offered by the market and the appropriate application of each can, in many cases, lower costs and expedite the production of credible values.

About The Author

Audrey Clearwater
Audrey Clearwater is vice president of operations at LRES, a national residential and commercial mortgage services company providing valuations, REO asset management and HOA solutions for the mortgage and real estate industry. With more than 15 years of continued growth, LRES offers managed business processes for the origination and default markets. For more information about LRES, visit its website at www.lres.com.

LRES Names New Chief Strategy Officer

LRES, a national residential and commercial mortgage services company providing valuations, REO asset management, HOA and technology solutions for the mortgage and real estate industry, announced Mark R. Johnson as its chief strategy officer to create and implement new strategic priorities and ensure core company initiatives, services and partnerships that reflect the company’s plans for growth.

Featured Sponsors:

 

In this role, Johnson serves as a resource across the organization to increase broad cohesion of strategic plans while monitoring the competitive landscape and market conditions to identify opportunities, issues and risks in order to recommend actionable strategies.

Featured Sponsors:

Johnson has more than 20 years of executive experience working for various Fortune 500 companies within the mortgage industry where he was charged with establishing annual strategic goals and managing budgets, forecasts and corporate reporting. Prior to LRES, he served as division president of Nationstar Mortgage Holdings. Previously he served as division president and chief operating officer of Lender Processing Services (now known as Black Knight Financial Services).

Featured Sponsors:

“Mark’s proven experience of managing strategic execution and business unit performance metrics at distinguishable companies within our industry makes him the perfect candidate to help lead our strategic efforts. I look forward to working with Mark and the LRES executives to further collaborate with clients, address emerging opportunities and create change within the industry that allows for better accuracy and faster, more efficient delivery of information. LRES seeks to have an intimate understanding of client expectations and is focused on making it easy to do business,” said Roger Beane, CEO of LRES.

Johnson added “For a confluence of reasons, the valuation industry is not as efficient as it should, or could, be. By continuing to integrate data sciences, advanced workflows and mobile technology, we can change and improve this ecosystem and bring additional lift to clients as well as to the appraiser community and other vendors.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Vendor Launches New Tool To Enhance Customer Retention And Risk Mitigation

LRES, a national residential and commercial real estate services company providing valuations, REO asset management, HOA and technology solutions for the mortgage and real estate industry, has launched a complete lien alert solution to enable servicers to continuously stay informed with the latest updates on their loan inventory.

Featured Sponsors:

 

 
LRES’ lien solution offers the choice between 10 lien activity alerts that flag servicers with any changes to their loan portfolio which may impact loan or borrower status. The 10 alerts available include information on ARM resets, tax delinquency, bankruptcy notifications, ownership changes, lien status changes, value changes, foreclosure/default activity, involuntary liens and judgments, new recorded loans and MLS listings.

Featured Sponsors:

 
LRES collaborates with multiple data providers to aggregate and mine data down to the county level to extract the latest property- and consumer-related information across the servicer’s portfolio. This information can be used by servicers as a customer retention tool to trigger any opportunities to re-engage with their borrowers depending on industry changes that would positively influence their specific situation, such as refinancing for better rates or representing them again when they are ready to finance a new property. It can also be used as a risk mitigation tool to arm servicers with the information needed to follow proper protocols during complex situations such as bankruptcies, foreclosures, etc.

Featured Sponsors:

 
“Our lien alert solution provides servicers with instant access to relevant lien activity on their loan portfolios so they can keep a closer eye on their inventory and react to any changes or updates accordingly,” said Roger Beane, CEO of LRES.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

An AMC’s Perspective On Declining Numbers Of Appraisers

There is a common misconception that AMCs are unconcerned with the problems affecting appraisers. AMCs should be viewed as business partners for appraisers, offering appraisal assignments and ready to assist the independent appraiser to better understand the regulations and rules that are constraining the business and provide guidance on how to better navigate those challenges. AMCs are a part of the industry as a whole and we believe they share in the responsibility to reverse the declining number of appraisers. AMCs can, and are, taking action to both change restrictive policies and increase the number of licensed appraisers. There will be dramatic consequences for all in the mortgage appraisal industry if the number of appraisers continues to decline at the same rate. Through lobbying, education and policy change, AMCs believe they should help reverse the trend of appraisers leaving the business.

Strain on Appraisers

The decline in appraisers over the last few years has been steep. The average annual rate of decrease is approximately three percent – a cumulative decline of 22 percent since 2007 (Appraisal Institute Research Department). As large of a decline as this is, there is the potential for these numbers to become even more dramatic in the future. More than 62 percent of appraisers are over the age of 51, and only 13 percent are younger than 35. The lack of youth in the profession and the decline in appraisers can both be tied to increased barriers of entry into the profession.

Featured Sponsors:

 

 
Currently, certified level appraisers are expected to have a four-year college degree, two additional years of apprenticeship and pass certification requirements. The four-year college degree does not need to be in a field of study relevant to appraising and some suggest a school for appraisers would impart more relevant and valuable skills than an unrelated four-year degree. What’s making the apprenticeship period more difficult is that many lenders refuse to accept appraisals that include the signature of a trainee on the left side, though the supervisory appraiser does take full responsibility by signing on the right side. It’s incredibly difficult to find people to train as potential new appraisers because they’re being asked to work and train for some 2,500 hours without being able to establish their own reputations by signing their own work.

Appraisers are backlogged in work and some try to complete 2-3 appraisals a day, on top of making corrections to any existing appraisals and submitting their work through multiple systems to multiple companies. The workload and demand on their time has risen sharply. Appraisers are under immense pressure to be organized, efficient, adaptable, and accurate despite the increasing workloads. With only 24 hours in each day, those appraisers who fall behind suffer from stress, long hours driving and exhaustion. While many would benefit from an apprentice or trainee appraiser, many appraisers are not sure how to manage that situation to the ultimate benefit of both parties. Many appraisers strive to minimize risk and asking an individual to risk his hard-won reputation and business by using unseasoned appraisers is a risk many are not willing to accept.

Featured Sponsors:

 
What can AMCs do to provide assistance to bridge this chasm? It’s an issue which needs an immediate solution. Time is not on our side. Given that it takes two to three years to move from trainee status to fully licensed appraiser, the industry requirements have guaranteed there will be no quick relief for several years. While some argue technology is the future, AMCs believe there will always be a need for human appraisers in the real estate business. Technology can change the way appraisers offer services, but can never replace the need for an unbiased, talented and experienced appraiser.

Strain on AMCs

The same strain impacting appraisers is occurring at AMCs. With the decline in overall numbers, there are less qualified appraisers able to take on the burdening expectations. AMCs are forced to search harder for qualified appraisers. The means more time and resources are allocated to dig deeper into databases to find the most qualified appraisers. This forces AMCs to search for appraisers who are further away from the property to be appraised. In some circumstances AMCs may have to search for appraisers outside the county, and even, very rarely, across state lines. While these problems may be less visible in more urban areas where there are still many appraisers to choose from, the shortage is impacting the more rural or isolated areas the hardest.

Featured Sponsors:

 
Effects on Appraisals

AMCs worry that if the decline in appraisers continues, it will have a negative effect on the quality of appraisals. AMCs strive to find the most qualified and informed appraisers to make decisions on properties. The further away from the subject property an appraiser is, the larger the possibility for potential error based on lack of geographic competency. Although many AMCs currently have large vendor networks and are currently able to find the most qualified leads, in time, with fewer appraisers offering services, it will potentially affect the accuracy, turn time and quality of the appraisal market as a whole.

Another substantial goal AMCs have is to protect the value of appraisals over cheaper alternative valuation products such as AVMs. The time needed to complete an appraisal would increase with the continued decline in the number appraisers. This increasing wait could come with mounting pressure for appraisals to be substituted by other valuations products which do not have the insight, accuracy or accountability of an appraisal. In this area, AMCs can help ensure the value of the appraisal product while fighting for more appraiser friendly regulations and policies. Ultimately AMCs need to work with appraisers to change the overly restrictive regulations surrounding the sector.

Potential Solutions

The current environment needs to change to better protect the appraisers at the center of the industry. In order to reach solutions it is up to the mortgage industry to increase its voice to influence policies. AMCs are taking action to change the current environment. Many AMCs are joining the Real Estate Valuation Advocacy Association (REVAA) who lobby for positive change for the industry. REVAA and other non-profit trade associations monitor public policy and serve as an important resource to federal and state regulators and policymakers. They work on creating solutions with policy makers about the attrition of appraisers and ensure the movement to halt the decline is a top agenda item.

There are many innovative ideas on how AMCs can help combat the decline in the number of appraisers if policies were changed. This includes AMCs starting their own training programs, but these ideas are often limited by existing rules and regulations. As long as AMCs’ ability to affect change is limited by government regulations and existing lender policies it is harder to address the root causes of the lack of appraisers. Outside the policy sphere, more information needs to be published for potential recruits on the benefits of working as an appraiser. The ability of appraisers to work their own schedule, own their own shops and the flexibility of working for themselves are major draws for younger people interested in the profession. More potential recruits need to know that an appraisal career can offer security, stability and has the potential to be lucrative if well-established.

The final way AMCs can help reverse the decline of appraisers is to take responsibility over their operations and relationships. AMCs need to do more to directly help the profession become stronger and better. AMCs need to treat their appraisers right; with respect, reasonable turn times, and fair and adequate compensation. AMCs must be held accountable for their part of the relationship. The healthier a relationship that can be formed between AMCs and appraisers, the more attractive it will be for future appraisers to join the field. Simply by acknowledging and guaranteeing that AMC s value the work of appraisers, AMCs can help attract more people to the field.

From Discussion to Action

AMCs are very aware of the decline in the number of appraisers, and have been feeling the same strain that appraisers are all too familiar with. AMCs are having the hard discussions of what can be done to support the appraisal profession and are working towards finding solutions to reverse the decline in the number of appraisers. While the lack of appraisers is fundamentally affecting the length of time to acquire and fund financing in several states, if the current rate of decline continues, there will potentially be very big problems soon. While there are still many discussions to be had on how to fix the problem, AMCs and appraisers must work together to correct current trends before it’s too late.

About The Author

Wynetta Byers
Wynetta Byers is Chief Appraiser at LRES, a national residential and commercial real estate services company providing valuations, REO asset management, HOA and technology solutions for the mortgage and real estate industry. For more information about LRES, visit its website at www.lres.com.

LRES Gives Back

LRES, a national residential and commercial real estate services company providing valuations, REO asset management, HOA and technology solutions for the mortgage and real estate industry, announced its second annual 5K Cares Walk raised more than $11,500 for five charities.

Featured Sponsors:

 

 
The LRES Cares Walk benefitted the Project Walk Paralysis Recovery Centers, the Nevada Humane Society, Wounded Warrior Project, Colette’s Children’s Home and Central Arizona Shelter Services (CASS).

Featured Sponsors:

 
LRES’ Orange County, Arizona and Reno offices held 5K walk/runs for its associates last month, and more than 150 LRES associates, friends and family participated. Associates chose their favorite charity from the five foundations, and LRES matched every dollar made.

Featured Sponsors:

 
“At LRES, we strive to take advantage of our own successes by giving back to our community,” said Roger Beane, CEO of LRES.

Progress In Lending
The Place For Thought Leaders And Visionaries

Acquisition Enables LRES To Offer Commercial Evaluations

LRES, a national residential and commercial real estate services company providing valuations, REO asset management, HOA and technology solutions for the mortgage and real estate industry, now offers commercial evaluations through its recent acquisition of InsideValuation.

Performed and reviewed by its strong network of more than 25,000 field agents, these evaluation products contain thorough data and analysis to procure accurate and timely valuations for commercial properties. These evaluations incorporate several approaches to determine value, including comparable sales analysis and an optional income approach.

Featured Sponsors:

 

 

Evaluations are more cost effective than traditional commercial appraisals, reducing valuation costs by up to 75 percent. They also reduce turn time by as much as 50 percent or more, with standard 10 business day turn time or optional 5 business day rush option. These valuation products can often be used in situations that do not call for a full appraisal, and there are a number of cases covered in the interagency guidelines that allow the lender to forgo a full appraisal.

Commercial evaluation reports address construction quality, site utility, current zoning, assessment information, highest and best use, projected use and external obsolescence. The reports also analyze local market trends, including vacancy rates and the subject’s neighborhood. Land-only evaluations are also available. All evaluation reports include a site inspection performed by an experienced field agent along with current subject photos obtained at the time of inspection.

Featured Sponsors:

 

All evaluations are fully compliant with the Interagency Appraisal and Evaluation Guidelines (IAG) and the Office of Comptroller of the Currency (OCC) requirements. LRES’ InsideValuation team reduces compliance risk through its thorough evaluation quality control process, as evidenced by its less than 2 percent kick-back rate.

LRES’ commercial evaluations are offered through a different portal developed by its technology team in Reno, Nevada.

“Our commercial evaluations live up to the high standards we place on our residential valuations, and our diversified offering provides even more options for our valued customers,” said Roger Beane, founder and CEO of LRES.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

LRES Releases White Paper Offering Advice For Mortgage Servicers

LRES, a national REO and appraisal management company offering property valuations, asset management, HOA and technology solutions for the mortgage and real estate industry, announced that it now offers a free white paper, “What Mortgage Servicers Need to Know to Prevent Liens from Destroying Investor Profits.”

Click here to download “What Mortgage Servicers Need to Know to Prevent Liens from Destroying Investor Profits”: http://info.lres.com/what-mortgage-servicers-need-to-know-to-prevent-hoa-liens-from-destroying-investor-profits

This new white paper eliminates some of the confusion over the lien position of HOA properties in relation to investors and mortgage holders, as well as provides guidance for loan servicers on how to protect the lien rights of their investors where conflicts arise between the various lienholders of a property residing in one of these communities.

Featured Sponsors:

[huge_it_gallery id=”2″]

One recurring challenge occurs when an HOA forecloses on a property for unpaid association fees, and the servicer then faces significant risk of increased loss and even of losing its investor’s stake in the property. Since no investor would consider this acceptable, servicers are left in need of a better method of managing the HOA lien process. This whitepaper offers an effective strategy for dealing with HOA fees and liens over the life of the loan.

Featured Sponsors:

[huge_it_gallery id=”3″]

“Our new white paper delivers sound advice for servicers on how to effectively manage the intricacies behind the HOA lien process,” said Roger Beane, LRES founder and CEO. “Homeowner associations are very important to the housing industry as a whole, which is why it is extremely important for servicers to have a good understanding of the risks to be mitigated and the requirements for doing so.”

About The Author

[author_bio]

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Success Stories Do Exist These Days

It may be hard to believe, but success stories do exist these days. For example, LRES, a national provider of commercial and residential valuations and asset management for the mortgage, banking, credit union and real estate industries, has experienced 58 percent revenue growth throughout 2015 and is projected to achieve a 19 percent growth rate in 2016 due to its diverse end-to-end service offerings and expanded client base.

Featured Sponsors:

[huge_it_gallery id=”2″]

The increased performance was partially attributed to its additional service offerings with the launch of its homeowners’ association (HOA) services to aid originators, servicers and investors in dealing with potential risks associated with HOA defaults and liens. And through its strategic partnership with OSC, a lender-placed insurance, tracking and compliance services provider, LRES now helps manage the collateral insurance requirements of its customers’ portfolios.

Another factor that greatly contributed to LRES’ strong year was its recent acquisition and smooth integration with formerly Tulsa, Okla.-based Lenders Choice, a residential real estate appraisal management company that specializes in residential appraisals. LRES continues seeking additional strategic acquisition targets to strengthen and diversify its offerings.

In addition to expanding through acquisition, LRES expanded its management team by adding several key associates to its executive team, including a new CTO, three vice presidents of sales, a vice president of finance/controller and a client relations manager.

Featured Sponsors:

[huge_it_gallery id=”3″]

On the technology front, LRES is now fully integrated with Platinum Data Solutions RealView and Mercury Network using LRES DirectConnect™, an integration framework that enables third-party systems to integrate seamlessly into the LRES LINK™ order management platform to optimize and accelerate the appraisal order processing. It also upgraded its client-vendor portals for correspondent lenders and associated financial institutions to improve user experience and serve a broader base of loan officers.

“Through LRES’ additional diverse service offerings, experienced executive team, increased technology enhancements, improved internal processes and a successful acquisition, we experienced a year of dramatic growth in 2015 and project continued growth through 2016,” said Roger Beane, CEO of LRES.

About The Author

[author_bio]

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

Partnership Enables Faster Appraisal Data Exchange

LRES, a national REO and appraisal management company offering property valuations, asset management, HOA and technology solutions for the mortgage industry, announced that its LRES DirectConnect integration hub now fully integrates with Mercury Network, a software platform used by more than 700 lenders and AMCs to manage their collateral valuation workflow.

Through this partnership, LRES and Mercury Network offer seamless communication of appraisal orders for customers by  delivering collateral valuation reports and supporting data in the MISMO industry-standard format. The integration provides end-to-end automated connectivity while delivering reports and data for auditing and compliance purposes via a single management platform for faster appraisal data exchange.

Featured Sponsors:

[huge_it_gallery id=”2″]

LRES has the ability to receive appraisal order requests and order modifications from clients directly through the Mercury Network and electronically delivers those orders into its proprietary LRES LINK order management platform.

“Our partnership with LRES allows for a faster valuation ordering process for lenders in a single, easily configurable interface,” said Adam Campbell, integration specialist at Mercury Network.

Featured Sponsors:

[huge_it_gallery id=”3″]

“LRES’ integration with Mercury Network focuses on appraisal quality management and enhanced operational efficiency throughout the entire valuation lifecycle,” said Roger Beane, CEO of LRES.

Progress In Lending
The Place For Thought Leaders And Visionaries

LRES Hires A CTO

LRES, a nation REO and appraisal management company offering property valuations, asset management, HOA and technology solutions for the mortgage industry, has hired Mike Rasooli as its chief technology officer (CTO).

In this role, Rasooli manages LRES’ technical priorities and operational vision; drives growth by delivering applications, tools and services; and leads all aspects of the company’s strategic and tactical technological development.

Featured Sponsors:

[huge_it_gallery id=”2″]

Rasooli has more than 27 years of experience in management, software development and IT experience with an extensive background in enterprise and database management systems, B2C and B2B E-commerce, customer relationship management, document management and mortgage technologies. Prior to joining LRES, Rasooli has served as the chief technology officer for Edge Mortgage Advisory Company and PowerSoft 360. He has also served as CEO/CTO at LogixInfo. Prior to that he has also served as a director of Project Management at Pathways, a senior software engineer at Corbis Images and Timeline and senior project manager at Microsoft.

Featured Sponsors:

[huge_it_gallery id=”3″]

“Mike is no stranger to technological innovation, and we welcome his specialized expertise to add further enhancements and value to our proprietary appraisal order management technology platform, LRES DirectConnect™, and our vendor portal, as well as provide guidance and strategic direction toward future technological developments,” said Roger Beane, CEO of LRES.

Rasooli also holds a bachelor’s degree in science from the University of Darmstadt in Germany.

Progress In Lending
The Place For Thought Leaders And Visionaries