Sponsored Content from SWBC: 2022 Property Appraisal Challenges; an Interview with Chuck Mureddu

Tony Streeter

Tony Streeter

Tony Streeter is Senior Vice President of Marketing, The Financial Institution Group, SWBC, San Antonio, Texas. He is responsible for product marketing across all lines of business (predominantly auto and mortgage risk management) geared toward the financial institution market. Over his 30+ year career, hehas led new product development, Ecommerce platforms, digital marketing, patented various business processes, and has written extensively for the industry.

Mortgage lenders are having a hard time sourcing affordable, prompt property appraisals. We discuss this challenge with SWBC’s Chief Valuation Officer, Chuck Mureddu.

The mortgage lending industry is currently coming off heady times of low interest rates and booming housing demand and the coming months are looking rockier. One major challenge mortgage lenders are facing is their ability to source affordable, prompt property appraisals.

According to the American Bankers Association, “Banks report that appraisal options are dwindling in many jurisdictions, leading to difficulties in home closing transactions…Appraisers report that they face very increased demands and are charging more in an attempt to reduce the number of orders. In light of this shortage, the price for appraisals is increasing very sharply. According to market experts, appraisers are retiring in a hurry and are not being replaced at rates that will sustain increased demands.”

I recently sat down with Chuck Mureddu, Chief Valuation Officer for SWBC Lending Solutions to get his insight on property appraisal issues mortgage lenders are currently facing.

Chuck Mureddu has more than 30 years of combined mortgage lending experience, including appraisal management, institutional risk, loss mitigation, and whole loan exit and securitization strategies. As the Chief Valuation Officer for SWBC Lending Solutions, he is responsible for all valuation policy and process, quality assurance and regulatory compliance.

What’s the latest on the appraiser shortage?

Chuck Mureddu

According to statistics provided by the Appraisal Institute, 10,000 appraisers have left the industry since 2013. This represents 13% of the total population for this role. Of the appraisers still working, half are near retirement age and 20% are over 66 years old. 

There is currently an all-hands-on-deck, industry-wide initiative to get more appraisers in the business and build out a younger, tech savvy, and more diversified appraiser workforce for the future. Technology and innovation will also be a key driver to reduce the stress. That said, the lending industry will continue to face challenges tied to the appraiser shortage for the foreseeable future.

What do turnaround times for property appraisals look like in Q2-3 2022?

We are starting to see turnaround times drop as some appraisers appear to be catching up. However, we are still seeing many who continue to be very busy. For the first time in years, we are starting to see appraisers reach out to us to be added to our panel. This was a normal occurrence prior to 2017. 

The industry has always been cyclical and we are already seeing some markets cooling down, but what does that mean? We are seeing bidding wars starting to slow down in California and Florida, for instance. The market is still heated, to be sure, but interest rate hikes are causing some Americans to pull back from the housing market and some economists say interest rates will continue to rise possibly around 6%. We usually see an increase in turnaround times during summer months but, we anticipate turn times to stabilize.

What’s going right in the appraisal industry?

One thing is certain, the appraisal industry is not going to go away. There will always be the need for appraisals and the industry is working hard to get new blood into the industry. More importantly, industry leaders are leveraging innovation and technology well by making data more accessible to appraisers and taking a lot of the subjectivity out of the process. It’s all about consistency.   

In 2022, I think appraisers are more open to embrace the technology available to them and using it to provide a better-quality product. This will be more important as markets start to shift. Data analysis will be key to understanding when time adjustments need to be made based on market fluctuations. Younger appraisers who are entering the industry tend to be more analytical and very tech savvy. I expect this trend will continue over the next few years.

How are alternative valuation products helping address appraisal issues in 2022?

Alternative valuation products have been around for quite some time and are becoming more attractive to lenders who have been somewhat cautious about using them, in the past. Larger lending institutions have been using many gap products including hybrid and desktop appraisals and evaluations. 

The regulatory landscape has been changed to allow more flexibility on using these products and smaller banks and credit unions are starting to see the benefit. The key is knowing when to use them and how to ensure they are being used in the right way. A good loan policy is key to ensuring sound lending decisions and should include policy around alternatives. 

At SWBC, we provide innovative and compliant products for originators, loan servicers, hedge funds, and portfolio managers. Built as a result of our vast experience in valuations, we have assembled a suite of effective, cost-efficient products designed and process-engineered to meet the turnaround time and compliance needs of the financial industry.

Our main objective is getting appraisals assigned as quickly as possible. That means working closely with our lender clients to ensure we understand their footprint and we price correctly out of the gate. For more information, visit our website.

(Sponsored content includes material submitted independently of the Mortgage Bankers Association and MBA NewsLink and does not connote an MBA endorsement of a specific company, product or service. For more information about sponsored content opportunities, contact Bill Farmakis at bill@jlfarmakis.com or 203/834-8832.)