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Technology and The Human Touch Solves HVCC Woes

By Anthony Garritano, Editor, Mortgage Technology Magazine

I know I’m the poster child for technology, but technology isn’t the answer in and of itself. In total, 65% of respondents don’t think technology is enough to comply with HVCC. If technology is used the wrong way or inappropriately you can’t expect a good result. But technology used the right way can make a big difference.

“Technology is an effective solution for HVCC compliance if implemented appropriately,” said Jeremy McCarty, CEO and chief strategy officer of Valligent. “Appraiser qualification due diligence, impartial appraiser selection, order request documentation, secure communication, and process management can all be conducted with an electronic audit trail to prove HVCC compliance.

“However, due to the complexities of different markets and properties, technology alone does not ensure valuation accuracy, which is the intent of the HVCC 10% audit requirement. For this, the blending of innovative technologies and the intelligence and expertise of a seasoned appraiser analyst achieves the purpose of HVCC — restoring confidence in lending through independent and accurate collateral valuation.”

But addressing HVCC without any technology at all is a big mistake. “The intent of HVCC is to improve the assessment of collateral risk during the loan underwriting process by improving the reliability and accuracy of appraisals,” said Rich Kuegler, vice president at MDA Lending Solutions. “Not only is technology a key to complying with the specific provisions of HVCC, it is also one of the key drivers of appraisal reliability and accuracy. The technology embedded in appraisal order management and appraiser performance management systems is critical to implementing the process controls necessary to comply with the specific provisions of the code.

”Technology, such as AVMs (Automated Valuation Models), HPIs (Housing Price Index), and related analytics, can be used to better understand local market risk and the subject property’s position in the market. When deployed by a team of experienced and knowledgeable associates, these tools and robust business controls can make the goal of HVCC a reality.

But in the end it’s about striking a balance between technology and the human element. “Technology is a very large part of the answer in HVCC compliance, more as the enabler for HVCC compliance rather than being the solution itself,” added Griff Straw, president, Solidifi U.S. “From our perspective as a technology-powered AMC company, technology is the way we have replaced the expensive and repetitive tasks associated with managing the appraisal effort, leaving our skilled people to perform the knowledge-based review and QC work. Without technology, AMCs require high margins to operate profitably, and those costs are factored in to the overall appraisal costs, often resulting in splitting fees with appraisers. With technology, margins are kept low and appraisers can be paid their full fees, which means faster and more accurate appraisals.

“With the FHA rules set to take effect on January 1st, technology plays an even greater role in staying compliant. Fees are expected to rise because FHA roster appraisers are not allowed to accept below-market fees, so low-tech AMCs will have to start charging more and cutting corners to remain profitable. Technology-based ‘next generation’ AMCs are already prepared for this and are assured of compliant services. Technology also allows them to provide advanced appraiser performance metrics that permit lenders to examine their results by appraiser, by report and within specific geographies. Technology makes this level of sophistication and compliance possible.”

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