[ad_1] Luke Tomaszewski, an appraiser doing home inspections in the aftermath of the housing bust, was traveling as much as an hour across Chicago just to snap exterior photos of bank-owned properties. Sitting in traffic, Tomaszewski wished he could pay an Uber driver to take the photos instead. “When we started, the idea was to obtain exterior photos as fast as possible, at a time when Uber, Lyft and marketing technology was advancing, and anyone with a smartphone could get exterior photos,” said Tomaszewski, who worked to turn his idea into ProxyPics. The company, which employs about 17 people, was founded in 2015, and is one of those approved to provide the Freddie Mac data report for its new remote inspection program. At a cost to ProxyPics of $50 to $100 per inspection, it’s certainly cheaper than sending an appraiser. It’s also simplified and scaled back. For example, in a call-out to prospective data collectors posted on its website, ProxyPics adopts gig-worker language. “ProxyPics will notify you when photo assignments are available near your current location,” according to the website. “Work whenever it’s convenient for you, wherever you are.” It’s a model in stark contrast to that of inspections for traditional appraisals. It may also be viewed as revolutionary for an industry in which the most significant change to the appraisal process in the past few decades was the advent of appraisal management companies as an intermediary between lenders and appraisers. Others may view ProxyPics as the kind of disruptor responsible for creating the same gig economy it now occupies: Uber, Lyft, DoorDash, GrubHub, InstaCart. After all, it wasn’t so long ago appraisers received assignments via fax machine. Companies such as ProxyPics stand to benefit from a major Freddie Mac policy change, which goes into effect this month. Starting in July, the government-sponsored enterprise will allow remote inspections on some refinance loans it buys. But while desktop appraisals may save a few gas miles, and certainly will provide opportunities for a coterie of private sector companies, it’s not yet clear whether they are superior to traditional appraisals, and if they ultimately will reduce racial bias, a key GSE policy goal. A Freddie Mac representative declined to comment for this story. Made to order Beginning July 17, Freddie Mac will accept some mortgages with hybrid appraisals — but the list of caveats is lengthy. First, the option only applies to refinances. For cash-out refinances, the loan-to-value amount may not exceed 70% for a primary residence, or 60% for a second home. For other refinance transactions, the loan can be for as much as 90% of the home’s value. Mortgages for manufactured homes, investment properties, duplexes and fourplexes are not eligible. The property data reports Freddie Mac will ingest include some 200 distinct data points. On Freddie Mac’s property data report form, the inspector must provide data for whether there is dampness, settlement and infestation evident in the property; the condition and age of the roof; and whether the property has a washer-dryer hookup, among other required fields. The form also requires the data collector to certify he or she has “unbiased professional conclusions,” no interest in the property and no interest or bias toward the parties involved in the transaction. A certification lightens the legal liability of bias. But an attestation, however comprehensively phrased, can’t dissolve deep racial prejudices or make the appraiser workforce more diverse. Fannie Mae also plans to use hybrid appraisals more often in 2022, as part of its equity plan, which is intended to “reduce costs to the borrower and reduce potential risk of bias by creating greater separation between the appraiser and borrower.” Fannie Mae representatives said the GSE has evidence alternative appraisal approaches result in fewer instances of confirmation bias. Its appraisal modernization pilot, which used hybrid appraisals, showed an 18% point reduction in confirmation bias compared with traditional appraisals, which rely on human observations and, as such, potentially could be riddled with overt or subconscious bias. Alternative appraisals, however, rely more on objective data and an “arm’s-length” process between the appraiser and the homeowner or buyer, sometimes assisted by technology, a spokesperson for the GSE said. Both desktop and hybrid appraisals, according to Fannie Mae, “have the benefit of reducing contact between borrowers and appraisers, thus lowering the likelihood of valuations being affected by personal or unconscious biases.” The State of Appraisals in 2022 This white paper will explore lenders’ key challenges presented by the legacy appraisal process, the hidden gaps affecting turn times, and how appraisal technology solves these gaps to improve efficiency and profitability. Presented by: Reggora Another benefit for the GSEs is access to the vast dataset hybrid appraisals may generate. But it’s unclear who else will have access to the data. Given how reluctant the GSEs have been to share the appraisal data they already have, John Brenan, chief appraiser at appraisal management giant Clear Capital, sees little hope for a public repository of floor plans, for example. The GSEs have so far rebuffed demands from academics, fair housing groups, lawmakers and federal agencies to make appraisal data public. The GSEs “collect all of this [appraisal] data, but they’ve kept it close to the vest,” Brenan said. “Something has to give. If they say, ‘Sure, we’ll make it available,’ but only 5% of companies can access it, that’s not mission accomplished.” Think of the savings Clear Capital’s Brenan describes his vision of a hybrid appraisal as one which can drastically reduce wait times. “An agent does a floorplan scan when they make a listing. An offer comes in at 5 p.m. that afternoon. The seller accepts it; they go into contract. The borrower says, ‘I need a loan,’ and the bank says, ‘We want to do a desktop appraisal.’ Then they submit an order to us and the appraiser gets it the next day. The appraiser can do it all within 24 to 48 hours.” Quicker turnaround essentially means less work per appraisal — as Brenan put it, “The amount
