Appraisal automation amid a pandemic: Implications for lenders today and tomorrow

apprisal automation EVO

NEXT Article, March 23, 2021 – The mortgage industry has typically lagged, compared to others, in leveraging technology to provide a better customer experience. In contrast, the auto insurance industry has leveraged mobile apps for many years to allow their customers to photograph, inspect and submit a claim for vehicles that have been involved in an accident. 

Clearly the technology has been available for some time, but a global pandemic was required to initiate the first borrower-conducted appraisal inspection to adhere to social distancing guidelines. For the first time appraisers and lenders were able to expedite the process by relying on photos, videos and data indicating physical property characteristics provided by the borrower.

Such considerable industry disparity begs the question: Why is the mortgage industry behind the curve in their use of technology? Some might speculate it is a mature segment with considerable legacy systems, if it isn’t broken mentality or even an affinity for paper. In the past 20 years, we have studied this phenomenon and have come up with three primary factors. Lenders find changing technology platforms disruptive to their business, expensive on their pocketbooks and extremely resources-intensive.

In the appraisal valuation technology space, it typically takes over three months to implement a solution and in the loan origination space, significantly longer. These types of software projects require a great deal of time for process analysis, planning, custom software development, testing and training. The longer the implementation, the higher the potential disruption to day-to-day operations, cost and risk.

Lenders want the process to be fast, cheap, and efficient which is rarely the case. These projects also tend to drag on forever, depriving almost every department from sales to IT of their already limited time.

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