Making The Most Of EAD

BLOG VIEW: In recent years, change has been synonymous with challenge. Although many regulatory changes have created added burdens for lenders and other mortgage industry participants, it’s important to acknowledge the changes simplifying mandatory processes.

Consider, for instance, the Federal Housing Administration’s introduction of the Electronic Appraisal Delivery (EAD) portal, through which all origination appraisals must go as of June 27. Although this change, like all others, requires lenders to adjust, it more so provides a welcomed opportunity to strengthen appraisals and improve how they conduct business.

A few months past EAD’s official deadline, lenders continue to amend their processes and, in particular, ensure they are equipped to act upon the insight EAD delivers. Using the platform doesn’t present a challenge – lenders definitely see the value in the ability to easily upload appraisals, view data and store appraisals electronically.

However, the challenges remain tied to managing the results of EAD; many lenders still need to fine-tune their procedures for hard stops and errors. Lenders shouldn’t take on this responsibility alone. Now, more than ever, they should be leaning on the partners they have already carefully vetted, especially their appraisal management companies (AMCs). Lenders should view their AMCs and EAD as working in tandem.

Although EAD provides added insight on appraisals orders, AMCs should support the actionable next steps based on that insight. A strong AMC has likely been preparing for EAD and is well versed in how to manage hard stops, errors and high-risk scores of four or five. Lenders should view their AMCs as true partners to help resolve errors or revisions on their behalf.

When it comes to appraisals in general, but especially with the launch of EAD, lenders should rely on the personal expertise with an AMC’s staff and management team. Although EAD represents yet another technology advancement to both streamline processes and improve accuracy, the value of experienced appraisers should not be overlooked.

Even in today’s era of technology, the human touch remains critical throughout the mortgage industry. An AMC committed to excellence in quality control will acknowledge the role of technology and even offer services powered by strong technology but will also ensure licensed, certified appraisers re-review every order. Although time is of the essence in lending, sacrificing this quality control measure for the sake of speed is a mistake. Accuracy and consistency – even if they require a bit more time at the onset – will undoubtedly result in faster overall time frames and better outcomes.

As lenders continue to determine the best approach for managing EAD’s findings now, in the long run, they will overwhelmingly benefit from the new review tool and the consistency it will enable them to deliver. At the same time, EAD’s introduction underscores the significance of partnerships and the importance of relying on a combination of technology and expert industry professionals.

Changes in the mortgage industry and in appraisal guidelines are inevitable. Entrusting the right partners and the right practices is critical to producing strong appraisals today and to ensuring lenders can remain agile enough to handle the changes yet to come.

George Paquette is chief appraiser for USRES, powered by RES.NET.