Article By: Ben Giumarra, Spillane Consulting Associates, Inc.
A common grip from borrowers – could compliance concerns be getting in the way unnecessarily?
Sick of borrowers complaining “Where is my appraisal? The appraiser was here a month ago!”
Well, you’re not alone. Especially for refinances in markets where housing prices are fluctuating, this can be one of the most anxious parts of the mortgage process for a borrower. What’s my house worth? Is it going to be enough?
Often, there’s not much you can do about it. Appraisal turn-times have been a painful point for much of the industry as a whole. The arrival of Dodd-Frank’s requirements in 2010, the rise of AMCs, shortage of appraisers, and other factors all contribute to general displeasure (from both lender and borrower) with how quickly appraisals are completed.
In many cases, appraisers can be blamed for communicating overly optimistic estimates to the borrower. But of course, because only the lender can deliver the appraisal to the borrower, the lender takes the blame for any delays.
Maybe it goes something like this….
Appraiser to Borrower: “Yeah, I should have this to the lender next Wednesday.”
(Wednesday comes and appraiser misses Wednesday deadline.)
Borrower to Lender: “Is my appraisal in yet?”
Lender to Borrower: “No. Not yet.”
(Thursday comes and appraiser still hasn’t submitted appraisal to lender.)
Borrower to Lender: “Is my appraisal in now?”
Lender to Borrower: “Still no, we’ll update you as soon as it does.”
(Friday, still no appraisal.)
Borrower to Lender: “Hey what the heck! Where is the appraisal?”
Lender to Borrower: “Still not arrived, I’m sorry.”
(Appraiser delivers Friday afternoon at 4:00)
Borrower to Lender: (On Monday) “Is my appraisal in yet?”
Lender to Borrower: “Yes, but we still need to review it before we can share it with you. It might be a couple of days.”
Borrower to Lender: “Unacceptable! I’ve been waiting forever for this. Can you at least say what the value came in at???”
Lender to Borrower: ……
So the language highlighted above makes me CRINGE! That’s just about the last thing an anxious and impatient borrower wants to hear. But that’s what many institutions do actually say – because many institutions adopt the policy of delivering appraisals only after formal appraisal review. There is logic behind this policy decision: it avoids the uncomfortable conversation of explaining to the borrower that the original appraisal cannot be relied upon- that it had an error (and not in the borrower’s favor).
And if that policy decision makes sense to you – Fine. But the reason for this newsletter is to express that this should not be made for fear of non-compliance. There is no compliance requirement that requires appraisal review prior to delivery of a copy to the borrower. With this in mind, there are institutions that might be able to Monday’s cringe-worthy conversation and instead put the borrower at ease explaining “We received it on Friday at 4:00 pm and immediately forwarded to you.” Just thought that, for some lenders, that might be a better option – and didn’t want that door to be closed for some make-believe compliance concern.
In Other News
Not planning to attend SCA’s free technology lunch & learn (2nd annual) this Thursday on October 5th in Canton, MA? Are you crazy!! Click here or call Bill Dolan @ 781-356-2772 for more information.
Impressive borrower satisfaction statistics for mobile applications, as reported by the ABA in this survey.
On My Mind …
Where and when do you get your best work done? The hunt for productivity and inspiration never ends. Admitting this to yourself is a critical experience. Admitting that 4 hours of productive time is worth 10 hours sitting behind a desk going through the motions. If you want to really do your best work, maybe we have to have the courage to shake things up – even if coworkers don’t necessarily understand.
Maybe sometimes we have to go to our proverbial cabin in the woods. Dustin Moskovitz, Facebook co-founder, established “No Meetings” Wednesday for himself. Bryan Guido Hassin, a professor, uses “Airplane Days” to get work done — days where he unplugs and doesn’t take calls or meetings. He started this after discovering that he was getting more work done at airports than the office. And if you want to follow this to its extreme – follow Bill Gates’ lead: He goes on an annual “ThinkWeek”, which is a cabin in the woods unplugged from electronics, where he reports getting a years’ worth of reading and thinking done in a single week.
“A lack of trust is your biggest expense.” – David Horsager
Thanks so much for reading our weekly newsletters. We’re not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we’re always going to be trustworthy. Your calls and e-mails are very helpful – please keep contributing.
**These are our opinions. We’re not authorized, or willing, to express those of others.**
Thank you to Ben Giumarra, Spillane Consulting Associates, Inc., a member of our Education Committee, who with the support of other experts at SCA have put together this newsletter.