Jon Forrester of Valuation Partners on Appraisal Industry Innovations

Jon Forrester is Vice President of Valuation Services with Valuation Partners, Sugarland, Texas, responsible for development and deployment of the company’s valuation tools, including hybrid appraisals, as well as creating new efficiencies in the appraisal process. He more than 25 years of experience in valuation technology, real estate reporting and risk assessment. Previously, he was Vice President with Mueller Services, a provider of reports, risk assessment and valuations for the insurance and lending industries. For nearly 20 years, Forrester also served as Director of Real Property Valuation Services at Southwest Financial Services.

MBA NEWSLINK: Generally speaking, how well has appraisal technology been able to keep up with changes in mortgage technology?

JON FORRESTER: I believe appraisal technology as a whole has been very impressive. We have seen some inspiring innovations over the past 10 years, particularly in the area of hybrid appraisals and creating new efficiencies in the appraisal process. That said, appraisal technologies tend to be rather disjointed. Because there have been so many new innovations in valuation and mortgage technology, it has become much harder for lenders and investors to keep up with them. This is especially the case when determining which valuation product is appropriate to use in different situations, which is something we’ve tried to address at Valuation Partners.

NEWSLINK: What are lenders currently looking for in their appraisal partners, and how has this changed compared to five or 10 years ago?

FORRESTER: Ten years ago, the mortgage world was melting down. Bubbles burst, hearings were held and regulatory oversight went into high gear. Lenders pulled back quite a bit. The lenders who survived had to struggle with changing guidelines, so there was not much room for innovation–at least not in the immediate years after the meltdown.

Recently, I have noticed that lenders are coming back and leaning on their appraisal partners to lead them into the modern appraisal world. Technically, lenders are looking for streamlined processes that support quality products within a tolerable risk profile. The other major component of a quality appraisal partner, however, is providing a best-in-class customer service experience, which has become a must. There is simply no replacement for good communication. Appraisal partners who cannot consistently manage customer expectations are simply leaving lenders in a void.

NEWSLINK: In what ways can appraisal technology improve the mortgage process?

FORRESTER: Appraisal technology can improve the mortgage process in many ways. The more well-planned solutions include streamlined workflows, which are helping to eliminate the redundant, manual tasks that have plagued our industry for years. Today’s appraisal solutions can also be integrated into current loan originations systems and similar applications, which creates greater efficiency in the ordering and delivery of appraisals.

Probably the biggest lift that appraisal technology can give lenders is by helping to determine the right valuation product for every transaction, regardless of a lender’s unique business needs, the requirements of the lender’s investors or the particular markets they serve. That’s what we have tried to create with PropertyRx, which gives lenders a more cost-effective, efficient and customizable platform for choosing valuation products and services quickly, without having to sacrifice quality and compliance.

NEWSLINK: When developing PropertyRx, what kind of research/feedback did you get from potential users about what the platform should and should not include?

FORRESTER: We consistently survey and solicit feedback from our lender partners and found that they were all hungry for more creative appraisal solutions. That said, lenders still must live within the regulatory burden of today’s lending environment. We also found that they are very cost-conscious and express an overall level of frustration with new appraisal solutions that fail to meet their needs. Some valuation products are fast, others are cheap, and some offer better quality, but no solution could satisfy all three of these demands at once.

This feedback led to the creation of PropertyRx, which we designed to be a cost-effective valuation platform that streamlines the appraisal process and is capable of delivering cost-effective valuations without sacrificing quality. The response from our clients has been tremendous. When matched with Valuation Partners’ well-recognized customer service, PropertyRx is providing our lenders with an unparalleled valuation experience that is unique in the industry.

NEWSLINK: The most recent MBA Mortgage Bankers Performance survey found total loan production costs are continuing to rise and are now $9,299 per loan, up from $8,611 in the fourth quarter. Does a lender’s choice of an appraisal partner or appraisal technology impact their production costs? If so, how?

FORRESTER: A lender’s choice in appraisal partners and appraisal technology absolutely has an impact on loan production costs. It’s a fact that problems in the appraisal process are one of the biggest causes of closing delays, and loan transaction timelines have a direct impact on production costs.

Of course, appraisal delays can still happen, but a good appraisal partner will have strong lines of communication and be able to leverage technologies to keep the appraisal process on track. Some appraisal providers have strategies in place for ensuring that appraisal appointments are set and confirmed quickly and for escalating appraisal orders when hurdles arise, but some do not. Knowing that time is money for our lender clients, we are committed to delivering every valuation as quickly as possible while maintaining the highest levels of quality and compliance.

NEWSLINK: There are a number of new appraisal platforms hitting the market, PropertyRx among them. When choosing a platform, what questions should lenders be asking to make sure they’re picking the right technology?

FORRESTER: When choosing between appraisal platforms, lenders must first ask about how the platform was developed. It’s important to know whether your partners control their own technology, or if they are beholden to another party for development resources. Lenders should also understand how the platform works and receive a demonstration of how the platform will work in their production environment.

Additionally, lenders need to ask about the actual products being offered through the platform. It is critical that the lender understands how each valuation product operates and what data is being used to support them. Finally, lenders should investigate quality controls built into both the platform and the products. A platform built with overlays of strong business rules can greatly reduce the lender’s risk of non-compliance. Conversely, a poorly designed platform can greatly increase the risk to the lender.

NEWSLINK: How do you see appraisal technology changing over the next five to ten years?

FORRESTER: Appraisal technology is evolving rapidly. As the quantity and quality of valuation data continues to improve, the end users’ access to that data will improve through smarter tools and applications. I also believe emerging technologies such as artificial intelligence and machine learning will continue to create new opportunities for greater efficiency in the appraisal process.

That being said, most appraisal providers lack the expertise and resources it will take to leverage new technologies in ways that add value to lenders in the coming years. But based on our current track record, I believe Valuation Partners is one of the few companies that will.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)