Faith Schwartz of Housing Finance Strategies: Three Keys to the Future of Appraisal

Faith Schwartz founded Housing Finance Strategies in 2016 to leverage her decades of industry leadership and mortgage experience to modernize the housing finance system. Her work and passion for building out the future of mortgage finance includes advisory services, board memberships and strategy roles in growing organizations. Housing Finance Strategies is an MBA member in good standing with clients ranging from publicly traded financial services firms, trade associations, fintechs and non-profits. Recently appointed to the Consumer Advisory Board of the CFPB, she also sits on the following Boards: Redwood Trust, Gateway First Bank, RiskSpan Inc., Class Valuation and FundingShield LLC.

Faith Schwartz

On November 9, HUD held its second PAVE taskforce meeting since announcing the formation of the Property Appraisal Valuation Equity interagency workgroup last summer. I have made a point of engaging on this important work because there can be no debate that bias must be eradicated from the collateral valuation process. While some may question the cause or amount of bias, the fact is we need to eliminate any bias from the system. 

From my perspective, the housing industry should immediately engage in appraisal reform based on three guiding principles: embrace 3D property imaging, diversify and train the appraiser workforce and deploy policy levers such as ‘second look’ opportunities to enhance quality control.

As a proponent of mortgage modernization and tech forward solutions in housing finance, count me as a strong supporter of leveraging digital technology to improve the process of collateral valuation.  Clearly, the mortgage industry has made tremendous progress in measuring a borrower’s capacity to repay obligations through the ‘tokening’ of bank statements. We have made progress in assessing credit worthiness by including positive rental payment history. Yet the industry remains stuck on the third ‘C,’ the collateral valuation even though solutions exist that offer precision and insight into a property’s condition.

Some proffer AVMs as an off-the-shelf solution. And while I am quick to endorse efficiency opportunities, an on-site 3D scan can be bundled with other metrics and create fresh data points. Combining source data from the property which collects digital footprints, views from all rooms, appliances and construction material, as well as condition of the property, assists the appraiser in assessing current value.  Simple, seamless and authentic source data will drive certainty, minimize downstream quality assurance costs and reflect an accurate view of any property.  These records will also capture home improvements or any deterioration that exists.

Therefore, I see tremendous value in harnessing technology to capture the current state and condition of a subject property.  Apps available on an iPhone can capture thousands of images per property should be used to test, pilot and learn.  The unbiased lens of an iPhone app provides immutable source data that benefits borrower, lender, insurer and investor.

With 3D scanning comes the opportunity to train new entrants to the appraisal workforce. Today’s appraiser workforce is not representative of the demographics of those refinancing or purchasing new homes. We have a window of opportunity to instill confidence in the valuation process by encouraging diversity in the appraisal industry through a purposeful hiring wave and technology can foster this change. At the same time, the aging appraiser workforce can benefit from unconscious bias training and remote work reviewing the digital images captured by the onsite iPhone apps.

It goes without saying that many industry stakeholders will resist automation and technology enhancements to the appraisal process. That same reticence existed for underwriters when automated scoring systems were deployed. Yet over time, as we know the industry coalesced. Leaders in appraisal I speak to see benefits for an aging appraiser workforce to extend their careers by leveraging independent source data that ingests a property’s digital footprint, captures precise measurements and allows for an independent homogenous data feed of the facts on the ground without visiting the subject property. This direction represents a responsible way to leverage advanced technology to foster change and higher quality outcomes.

Finally, policy levers can be adjusted with an eye on enhanced quality control. I support the review of policies and procedures to ensure the collateral assessment and appraisal report presents an unbiased valuation. One policy override that should be front and center is a ‘second look’ approach in undervalued minority and low-income census tracts. When successfully deployed, a second look program can create confidence in the assignment of value through data and analytics in a uniform manner.  Management reporting and dashboards of a second look program will shine a spotlight on quality and should be collected as key performance indicators for executive management review. 

As the PAVE taskforce continues its important work, the industry should align on substantive changes we can make to the appraisal process. My suggestion of a three-pronged approach focused on technology, diversification in hiring, and policy change begins to right the ship in a manner consistent with the challenge.  There is much more work to do.

It is important to note, we begin the discussion with the premise that all the work performed should be with good intentions; and the appraiser is often placed in a challenging role.  Our goal is to support and empower the profession by driving better tools, tech and data to be used throughout the process.  It is also noteworthy that the aging profession needs to diversify and undergo unconscious bias training as does the entire mortgage lending ecosystem.  Our industry must lean in on this and work together with all the important stakeholders to continue to drive toward excellence.

I encourage all to register and attend an upcoming NAAMBA webinar on these topics.  I will be moderating this webinar on December 2 and we will hear from key experts on this issue.  Join us as we tackle these challenging issues by registering for the complimentary Modernization of Valuation – Public-Private Partnering webinar featuring PAVE’s HUD leader, Melody Taylor, retired First American Chief Appraiser Alan Hummel, National Fair Housing Alliance’s Senior Vice President Nikitra Bailey and Class Valuation’s Chief Innovation Officer Scot Rose.

(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; or Michael Tucker, editorial manager, at