The Role of Remote/Desktop Appraisals in Making Access to Homeownership Equal

Homeownership is a particularly powerful tool for building wealth and financial stability –but in the past, many diverse consumers have faced extra obstacles to buying or selling the home of their dreams.

For example, as HUD Secretary Marcia L. Fudge has noted, “For generations, millions of Black and Brown Americans have had their homes valued for less than their white counterparts simply because of the color of their skin or the racial makeup of the neighborhood.”

Affected by this legacy, underrepresented borrowers, whether of different minority groups or lower socioeconomic status, appreciate working with institutions that demonstrate a strong commitment to servicing every individual – going above and beyond to answer their questions, meet their individual needs and make the loan process easier from origination to closing.

Credit unions are uniquely poised to win their trust because of the special relationship-building skills that they bring to their overall membership model.

In fact, credit unions originated $292.35 billion in mortgages last year, an increase of 5.9% from 2020. This year, as higher interest rates push some potential buyers out of the market, credit unions can build on this distinctive member service orientation for a competitive advantage.

Appraisal Modernization Makes an Impact

Modernization and digitization of different components of the mortgage process, such as appraisals, are helping credit unions to advance this differentiator. They come at a time when the industry is joining together to remove any obstacles affecting people of color and other underrepresented groups, such as buyers/sellers in rural neighborhoods.

An example is the development of technologies for remote/desktop appraisals, which provide a meaningful way for professional appraisers to conduct appraisal inspections without leaving their desks. These actually rose to the forefront when COVID-19 began, and mortgage lenders needed valuation reports despite the hesitancy of homeowners to let appraisers into their houses.

While these solutions started out as temporary emergency measures, they have now transitioned into more permanent business tools – aligning with the industry’s migration toward a digital mortgage. This past March, Fannie Mae and Freddie Mac approved remote desktop appraisals for many government-backed mortgages, opening the gates even wider.

How do these appraisals work? They enable appraisers to complete compliant inspections from the convenience of their personal workspaces, rather than driving to and from properties, which can take up to 50% of their workday and thereby slow down valuation turnaround times.

Sitting at their desks, they look through a property contact’s (homeowner’s/realtor’s) smartphone camera, and snap geographically verified, time-stamped images and closeups while directing the individual from room to room. Using the technology, they can create a floorplan with walls and illustrate a home’s functional layout, meeting key GSE requirements. This information can be used to complete a final valuation report in a streamlined way, with a high level of accuracy, so that the mortgage lending process can move forward more speedily and seamlessly for all parties involved. It can also be applied seamlessly to HELOC, disaster inspections and other inspection types.

Helping Underrepresented Buyers

Serendipitously, lenders are also realizing the benefits that remote solutions can have on mitigating biases during the appraisal inspection process. With these technologies, appraisers never need to see the face of the homeowner. This level of objectivity helps level the playing field, since the appraisal only factors in the property data for the evaluation. Negative personal interactions do not come into play.

Moreover, the number of appraisers who routinely service rural, minority or socioeconomically challenged neighborhoods is often limited. Because of this issue, lenders in the past have had to pay higher fees to appraisers to get them to go out to these areas on a timely basis. In many cases, they have then had to pass the costs on to the borrower – exacerbating the issues these borrowers already faced.

Remote/desktop appraisals are also particularly useful in a challenging economy as diverse borrowers look to their credit unions for help with loan modifications. Responding to members with speed and flexibility in a difficult time can go a long way toward building years of loyalty. Modifications are particularly helpful in serving minority borrowers as data from the CFPB has shown that forbearances or delinquent mortgages are disproportionately higher in underserved areas.

Reinforcing a Larger Commitment

A commitment to supporting underserved communities remains at the forefront for many credit unions across the U.S. The NCUA, for example, is working harder at scrutinizing the diversity, equity and inclusion practices of credit unions within the next year or two, including evaluating how the industry is reducing appraisal bias.

While remote technologies are still in the early stages of adoption, credit unions that build these capabilities into their business models have a unique opportunity to be seen as marketplace leaders. After all, remote/desktop appraisals go a long way in optimizing one of the most time-consuming parts of the lending process, while ensuring that the property is evaluated rather than the person, and ultimately helping underrepresented borrowers build wealth through homeownership.

Mark Walser is President of Incenter Appraisal Management, a Horsham, Penn.-based appraisal service and mobile appraisal technology provider.