Back to the future in real estate

Calyx Point® users can now order appraisals directly from the LOS, through a la mode’s Mercury Network, eliminating costly errors and delays

Scott Kinnaird (a la mode) — Fri, 14 Jan 2011 16:00:50 -0800

Oklahoma City, OK — a la mode today announced a huge step forward for appraisal compliance and efficiency with Mercury Network’s full integration for appraisal ordering inside the popular loan origination software, Calyx Point.

Point users can now click a button inside their software to log in to Mercury Network, the nation's premiere online Vendor Management Platform, or VMP, allowing originators to manage their entire appraisal workflow while being compliant with all appraisal independence standards and banking security regulations. Their appraisal order form will be pre-filled with the data from their Point file, eliminating the errors and delays resulting from human data entry. Point users can import appraisal status messages directly into the loan file, and download the completed appraisal into the LOS in both PDF and MISMO formats.

The new integration means originators using Point with Mercury Network will have a continuous, automated chain of appraisal data for compliance with FHFA’s newly mandated Uniform Mortgage Data Program (UMDP), setting them apart from lenders or AMCs using less sophisticated appraisal management arrangements. Point users will also have superior appraisal quality control measures because of Mercury’s automated and customizable regimen of over 1,000 quality rules. The QC rules are run on the appraisal before it’s delivered to the lender or AMC, dramatically reducing time in underwriting and manual coordination processes.

This optimal automation of appraisal data delivery and quality control is possible because of a la mode’s unique position as the provider of both Mercury Network, and WinTOTAL, the appraisal formfilling software used by over half the nation’s appraisers (although thousands of appraisers using formfillers other than WinTOTAL daily receive and deliver orders through Mercury as well). Since a la mode’s Mercury Network has direct access to the appraisal data on the appraisers’ desktops, the QC rules can be run against every report before delivery, and the lender or AMC ordering appraisals also receives MISMO XML directly from the appraiser, rather than relying on error-prone OCR or PDF extraction methods. Those using Mercury will submit appraisal reports to the UMDP’s “front end”, the Uniform Collateral Data Portal (UCDP), without fear of rejection due to OCR or human data entry errors.

“We’re excited about this integration because it means the appraisal order and the appraisal data will be secure and unmolested from the originator’s desktop all the way to submission to UMDP – with no need for the manual interventions that so often result in errors”, said Jennifer Miller, EVP of Products for a la mode’s Mortgage Solutions Division.

Mercury Network is used by a lengthy roster of the nation's largest lenders and AMCs, as well as by numerous community banks, credit unions, wholesale and correspondent lenders, and mortgage brokers. It handles over 10,000 appraisal transactions a day, and has been used by more than 200,000 mortgage professionals since 2002 to completely automate the full “round trip” of tens of millions of appraisals. Integration with Mercury Network offers an even more seamless approach to Point’s thousands of users.

For more information visit MercuryVMP.com.

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About a la mode
Celebrating 25 years as a technology leader, a la mode develops desktop, mobile, and Web tools for the real estate and mortgage industries. a la mode’s mission-critical products are used by hundreds of thousands of appraisers, agents, inspectors, and lending professionals to complete the nation’s real estate transactions. a la mode’s state-of-the-art offices are located in Salt Lake City, Oklahoma City, and Washington, DC. For more information, visit www.alamode.com.

Press inquiries, contact:
Molly Dowdy
EVP, Marketing
Mortgage Solutions Division
a la mode, inc.
(405) 359-6587 x 339

Sales inquiries, contact:
Chris Sullivan
VP, Sales
Mortgage Solutions Division
a la mode, inc.
(405) 359-6587 x 708

a la mode growth spawns separate Mortgage and Real Estate Solutions divisions

Scott Kinnaird (a la mode) — Fri, 12 Nov 2010 11:00:07 -0800

October 19, 2010

Oklahoma City, OK -- a la mode formally announced today that it has created two separate divisions inside the company to better serve the distinct needs of its varied customer base. Its Real Estate Solutions Division will serve the company's tens of thousands of clients working as real estate agents and brokers, appraisers, and inspectors, and the new Mortgage Solutions Division will focus on serving mortgage lenders, loan officers, compliance officers, mortgage brokers, servicers, AMCs, and REO/asset managers.

Serving as president of the real estate group will be Dustin Moore, promoted from his role as the senior executive in charge of the company's real estate agent products, and who previously held positions at Stewart Title. His counterpart leading the mortgage group will be Adam Calvery, formerly the executive in charge of product management for the appraisal product family and under whose direction the company's Mercury Network was relaunched as a post-HVCC vendor management platform.

a la mode has been known to date primarily for its domination of the appraisal software and services market, with more than half of all real estate appraisers in the nation using its TOTAL family of desktop appraisal software to develop form reports.

However, the company's Mortgage XSites and XSellerate product families are also the nation's most popular line of origination websites and marketing tools for mortgage brokers and loan officers, and its Mercury Network valuation vendor management platform is likewise the mortgage lending market leader with over 10,000 transactions a day utilizing Mercury. Those solutions and more, such as the company's SureDocs e-signing system, have been rolled into the company's mortgage division.

a la mode’s CEO, Scott Kinnaird, explained the move to the two structures. “After the HVCC came along and independent firewalls were required, we had to serve our appraisers by being their conduit to lenders instead of just their software provider. That necessitated a separate sales force and product team directed at lenders and AMCs, because unless Mercury Network solved the lender's problem first and foremost, it wasn't going to solve the appraiser's problems either. Coupled with our existing market leading products for mortgage origination, a new division was obviously in order. This is the net result, and it's worked beautifully."

a la mode's Mercury Network has since become the nation's premiere online Vendor Management Platform, or VMP, allowing lenders and AMCs to manage their entire appraisal workflow while being compliant with all appraisal independence standards and banking security regulations. Mercury combines a cloud-based SaaS core with a robust appraiser desktop plugin architecture that automates the appraiser's data flow to and from clients.

The company's real estate group meanwhile has taken the market by storm with its iPad, iPhone, and upcoming Android versions of its DaVinci field data gathering software for appraisers as well as TourNarrator for agents. All three applications have been prominently featured by Apple in marketing venues, and they've shown strong demand around the globe, with approximately 20% of all installations coming from international markets. DaVinci for iPad is the leading product of its kind, with more than 48,000 installs in the last six months.

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About a la mode
Celebrating 25 years as a dominant leader in the real estate and mortgage industries, a la mode develops mission-critical desktop, mobile, and Web tools used by hundreds of thousands of appraisers, agents, inspectors, and lending professionals to power tens of millions of transactions each year. a la mode’s state-of-the-art offices are located in Salt Lake City, Oklahoma City, and Washington, DC. For more information, visit www.alamode.com.

All product and company names herein may be trademarks of their registered owners.

Press inquiries, contact:
Molly Dowdy
EVP, Marketing
Mortgage Solutions Division
a la mode, inc.
(405) 359-6587 x 339

Sales inquiries, contact:
Chris Sullivan
VP, Sales
Mortgage Solutions Division
a la mode, inc.
(405) 359-6587 x 708

Mercury Network Connects with Fannie's UCDP via Veros

Scott Kinnaird (a la mode) — Fri, 24 Sep 2010 13:33:06 -0700

Veros now integrated with a la mode’s Mercury Network for appraisal ordering and compliance with GSE’s Uniform Collateral Data Portal

September 14, 2010

September 14th, 2010 — Oklahoma City, OK — a la mode announced today that Veros Real Estate Solutions has integrated their VeroSELECT and Valuation Risk Management (VRM) products with Mercury Network’s vendor management platform.

The integration connects Veros’ platform clients with the largest network of real estate appraisers and appraisal management companies. The services will support real-time appraisal order placement, appraisal order payment processing, status updates through the order cycle, and delivery of the completed appraisal report in MISMO 2.6 format, and electronic appraisal submission in full compliance with the Federal Housing Finance Agency’s (FHFA) mandated Uniform Collateral Data Portal (UCDP). UCDP is being implemented by Fannie Mae and Freddie Mac as part of a greater loan quality initiative, the Uniform Mortgage Data Program, in order to provide seller/servicers with common requirements for appraisal and data delivery, ultimately improving loan quality and transparency across the board.

The plug-in between Mercury Network and Veros provides platform users with the ability to connect to the appraiser’s desktop software as well as place orders directly to AMCs using Mercury Network as their vendor management platform. Additionally, the plug-in enables appraisal reports to be delivered to the Veros systems using fully compliant MISMO XML, which in turn, will allow the report data to flow directly to the UCDP.

As a result, this connection will provide users with the ability to streamline compliance and enhance quality assurance. Business and workflow rules (which are executed on the appraiser’s desktop from within the Mercury Network plug-in) preprocess the appraisal report before it is delivered to the Veros system.

Adam Calvery, a la mode’s President of Mortgage Solutions said, “This integration with Veros perfectly positions our two companies to achieve several of our shared priorities, such as forward-thinking compliance, and high-quality finished appraisal reports. We’re excited about the implications this development has for our respective customers.”

Mercury Network is the premiere online Vendor Management Platform, or VMP, allowing lenders and AMCs to manage their entire appraisal workflow. It’s been used by more than 200,000 mortgage professionals since 2002 to completely automate the full “round trip” of tens of millions of appraisals. a la mode and Mercury Network are in a unique position to offer the pre-delivery, customizable quality assurance checks and statusing because a la mode’s WinTOTAL is the leading appraisal desktop formfilling software, used by over half of the nation’s appraisers.

“We’re delighted to be working with Mercury Network,” said David Rasmussen, senior vice president of sales and operations for Veros. “The ability to seamlessly connect with Mercury’s diverse network of appraisers and AMCs all the way through the valuation chain to the secondary market creates an industry efficiency where everyone wins.”

For more information on Mercury Network vendor management platform, visit www.MercuryVMP.com.

Veros’ platforms are designed to intelligently order, receive, review and route appraisals, broker price opinions (BPOs) and automated valuation models (AVMs) as well as other forms of collateral valuations and analytics. For additional information, visitwww.veros.com.

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About Veros Real Estate Solutions
Veros Real Estate Solutions uniquely combines the power of predictive technology, data analytics and industry expertise to deliver advanced automated decisioning solutions. Veros products and services are optimizing millions of profitable decisions throughout the mortgage industry, from loan origination through servicing and securitization. Veros provides solutions to control risk and increase profits including automated valuations, fraud and risk detection, portfolio analysis, forecasting, and next-generation collateral risk management platforms. For additional information, visit www.veros.com.

All product and company names herein may be trademarks of their registered owners.

May

Scott Kinnaird (a la mode) — Tue, 02 Jun 2009 11:56:00 -0700

Active Rain threw up on my AMEX card renewal so my blog was down the whole month of May. But, they got it back up and going. I think Active Rain is great and is only limited by how well they scale their customer service while they continue to grow. Few non-technical consumers have any idea how difficult it is to do cutomer service the right way.

On that subject, I'm very proud of our customer support. Very proud. You can read about it and see pictures of our people in action by going here: http://tinyurl.com/nb6x7t

Or here: http://www.alamode.com/company/corporate.aspx

What the FDIC had to say about booms and busts back in 2005

Scott Kinnaird (a la mode) — Tue, 21 Apr 2009 13:37:30 -0700

Busts don't follow booms: FDIC

February 17, 2005

Though we keep hearing that recent home price appreciation is "unsustainable" and will lead to a substantial "correction" - that is, that the home price boom may be followed by a home price bust - the Federal Deposit Insurance Corporation (FDIC) did something radical: It took a look at the data. History suggests that a boom alone is insufficient to cause a bust.

The FDIC considered 21 instances in the last quarter century of markets in which home prices fell at least 15 percent in five years. (PDF graph available here.) Few were associated with "booms" first: there were 54 "boom episodes" in markets in the 20 years prior to 1998, and 45 of them did not see a subsequent bust. In 83 percent of post-boom markets, nominal prices continued to inch up and any declines after inflation were very modest. "Home prices in these markets simply stagnated, or stalled out, following their booms rather than going bust," the report found.

Instead, localized economic stress, most profoundly in the "oil patch" areas of Texas, Oklahoma and Louisiana in the 1980s and "the early 1990s recession, massive defense downsizing after the end of the Cold War, a significant commercial real estate collapse, and either a sharp downturn in population growth or outright population loss," which combined to severely depress property values in California and the Northeast in the 1990s, were to blame for the majority of property value "busts." Even busts in Peoria, Ill. and Hawaii can be traced to local economic factors.

All that said, the report tries to identify reasons why history might not be an accurate guide with reference to today, when a record 33 markets are in the midst of home price booms (there were 24 in 1988, the previous record). "[C]hanges in credit markets ... are pushing homeowners - and housing markets - into uncharted territory," the report notes.

Subprime mortgage originations grew 25 percent per year between 1994 and 2003, a nearly ten-fold increase in volume in nine years. Home buyers are also availing themselves of "higher leverage mortgage products" - higher LTV loans, "piggyback" second mortgages - that make them more susceptible to delinquency and foreclosure than at any other time in the housing economy's history. Finally, a run-up in home prices that is unprecedented makes a market itself more susceptible to economic "shocks" that might not otherwise be enough to cause a "bust."

Still, the data and analysis show that a "boom" itself is probably not enough of a reason to forecast a "bust" - good news at the tail end of a widespread, historic home price boom. The FDIC report is available on the Web here: http://www.fdic.gov/bank/analytical/fyi/2005/021005fyi.html

http://www.alamode.com/news/article/busts_dont_follow_booms_fdic

January 2005 - Crisis coming so more attention should be paid to the value of the collateral backing the mortgage loan

Scott Kinnaird (a la mode) — Tue, 14 Apr 2009 12:34:55 -0700

Home equity crisis coming, report says; blames lender pressure in part

January 20, 2005

American households cashed out $333 billion worth of equity from homes between 2001 and 2003, the beginning of the refinancing boom - levels three times higher than any period since Freddie Mac started tracking the data in 1993, a new report highlighted.

A House of Cards: Refinancing The American Dream is a new report released last week by Demos, a nonpartisan public policy organization based in New York. The problem is not that so many Americans took advantage of historically low rates and relaxed credit qualifications, the group said: Rather, a majority of households that refinanced between 2001 and 2003 used cash equity from their homes to cover living expenses and pay down credit card debt, further eroding their home's cash value, which many families rely on for economic security.

A striking finding from the report: Between 1973 and 2004, homeowner's equity actually fell - from 68.3 percent to 55 percent. In other words, Americans own less of their homes today than they did in the 1970s and early 1980s.

The report highlights the dangers of Adjustable Rate Mortgages (like we did, here). As the Federal Reserve continues to raise interest rates, a mortgaged family with an adjustable rate mortgage will experience a significant increase in their monthly mortgage payments, the group said. The combination of higher mortgage payments coupled with rising costs of basic living expenses represents a growing financial threat.

Of most immediate interest to appraisers, the report fingered "appraisal fraud" as one of the main culprits of the crisis it predicts. Happily, it hits on the culprit: pressure from clients. "One of the most alarming findings in the report is the role that mortgage fraud, in particular appraisal fraud, plays in the refinancing process," the group said in its press release. "There are growing numbers of third party brokers pressuring appraisers to inflate home values in order to ‘close the deal' and reap larger fees or bonuses. The consequence can be dire for homeowners who refinance and draw out more cash equity than their home is actually worth."

Its report, viewable here (12-page PDF), states "Who wins? Third party mortgage brokers, primarily, reap significant rewards in this process with increased commissions or closing fees. The banks providing the loans also benefit, although they may be left in the dark on illegalities. These mortgages are purchased from banks at the inflated appraisal price and bundled into risk pools by governmental, quasi-governmental, or private firms. Government agencies that participate in the securitization of mortgages include Ginnie Mae, Fannie Mae, and Freddie Mac. Because the loans are held for such a short period by mortgage issuers, due diligence is an often ignored concept."

The report also points out (as we did here and in the pages of the latest Mortgage Technology magazine) that the amount of debt American homeowners have taken on is staggering. "As home equity has fallen, household debt service burdens have risen to record levels. Between 2001 and 2003, the ‘financial obligations ratio' - the amount of disposable income needed to pay down debt - averaged 18.44 percent. Since 1980, the first year data was collected, the single year record occurred in 2002 with a financial obligations ratio of 18.56 percent."

The report does not conclude based on this (but we do) that more debt-burdened homeowners (and consumers in general who will be homeowners in the next few years) means lower credit-quality borrowers, means more attention needed to be paid to the likelihood of default, and therefore the value of the collateral for the mortgage loan. Appraisers are poised to be the solution to this next crisis, if it comes, not scapegoated as the problem.

http://www.alamode.com/news/article/home_equity_crisis_coming_report_says_blames_lender_pressure_in_part

Mercury Network -- the best way for RE appraisers and lenders to cope with the HVCC

Scott Kinnaird (a la mode) — Thu, 09 Apr 2009 13:10:24 -0700

Complex Problem, Simple Solution

Employing an age-old constant in a period of unprecedented chaos

by Dave Biggers

Dave Biggers is the founder and Chairman of a la mode. With a REALTOR® mother and an appraiser father, he was pre-destined to be holding "the dumb end of the tape" with his dad while still in high school, and paid for college as a residential and commercial appraiser. An engineering and economics major, Dave used his technical background and understanding of appraising to start
a la mode while still in school in 1985.

With each issue of The AppraisalPress, we find ourselves discussing how dramatically things have changed in the short span since the last issue. While we originally thought we'd be dealing with a rapid comment-and-revision cycle on the proposed HVCC a year ago, we never envisioned it dragging out this long (the "final" HVCC takes effect May 1st), nor did we think there would be so much chaos and tumult along the way. It's an understatement to say that things have been out of control. It's certainly made our jobs harder, but even more importantly, it's made yours almost completely unpredictable.

Even with a final set of HVCC regulations out, there's still not a definitive view of what will happen from a regulatory perspective in the industry. Both the final HVCC and the "new" Federal Reserve guidelines (see "Our official response to the new Federal Reserve regulations") are so riddled with loopholes and exemptions that, even if we had a stable overall governmental outlook, there would be no way to accurately assess how the regulations will be implemented on a day-to-day basis.

The only constant thus far has been that the damage to appraiser independence is already done, a tragic "fait accompli". Starting just a few weeks before the HVCC was announced in early 2008, Fannie Mae released a memo to lenders which contained much of the core structure of the HVCC itself, in particular the "firewall" language which caused a rush to AMCs, along with a September compliance deadline. After it morphed into the official HVCC document, nothing was ever publicized telling lenders that the September deadline was moot. Not surprisingly, our data shows that by August, lenders were shifting much of their work to AMCs, and more and more appraisers were being forced to accept severely reduced fees as a result. And then by the widely published yet subsequently delayed January 1st deadline, even more business had shifted.

The chart below is testimony to the process. The blue line, showing total appraisals delivered directly to AMCs via custom XSite plugins, shoots up from August 2008 to January 2009, almost doubling in those few months to just under 200,000 reports in January from under 100,000 reports in August. At the same time, the red line, showing the number of appraisers who used plugins to send reports to those AMCs, also shot up by 75%. The consequence, of course, is that a larger and larger portion of appraisers are taking a huge haircut on a larger portion of their fees by being forced to go through AMCs. (Refer back to our story on the fee loss caused by the HVCC for a dollar value to attach to that shift to AMCs: "Economic Impact of HVCC", June 2008.)

Click the image to view a larger version.

Steep increases consistent with the HVCC deadlines over the past year are seen in both the number of appraisers using one or more of their XSite AMC-specific plugins, and the total number of reports they delivered to those AMCs.

All is not lost however. There will always be lenders who don't fit the AMC profile or who want to manage the process themselves, but with better protection from potential liability. Even if the regulations were scrapped tomorrow, the economic and legal climate faced by lenders, along with their fear of increased scrutiny under a new administration, would drive them to still seek some sort of protection from claims of coercion.

As we've said before, that's where Mercury Network comes in. We know you believe us, because you've signed up for Mercury en masse, and you've granted us permission to use more than 240,000 of your database contacts as leads for our Mercury salespeople. So why haven't we publicized it and sent out those e-mails? After all, we're the "marketing machine", right?

The answers are pretty simple - because of all that change we referred to, we decided to let the dust settle a bit on the regulatory front while we polished up the final firewall components of the Mercury Network. Even more critical however was the need to get our own firsthand research under our belts before massively marketing Mercury to lender clients who've been operating in an ever-evolving environment too. If our "message" was off, we'd be wasting the precious attention span that those lenders grant us in reading emails, faxes, or taking calls.

We did that by creating a new dedicated Mercury-only sales department and letting them loose on the phones, making exploratory calls to lenders, trying different combinations of marketing and advertising angles, and tweaking the product and its presentation in response to their suggestions. What we know now about "what works" is light years beyond what we knew just 90 days ago. We've been able to very carefully narrow down the optimal client angles depending on the size of the institution, and we've gotten crystal clear insights into their personas and buyer behavior. Our sales and marketing will be much more effective now, and we believe we're ready to pull the trigger on it.

While we can't reveal detailed strategies in a public article read by vendor network competitors - and they're popping up like mushrooms these days - we can share with you two key discoveries, which will drive our process from this point forward, and which we want you to employ as well.

First, there's clearly a definable segment of lenders who absolutely do not want to abdicate control of this key process to AMCs.

Some don't want to move to AMCs because they've created positive relationships with an internally managed panel of appraisers whose professional opinion they consider crucial. So long as they're able to show that they've exercised prudent judgment and built reasonable safeguards into an in-house appraisal management function, which is exactly what Mercury lets them do, they'll stay with the appraisers they have and shun the outsourced AMC option.

Others want to use Mercury and retain internal control, while still documenting clearly that they're not applying pressure, precisely because they're one of the lenders who've already engaged one or more AMCs - and they're hating how it's working out. We've heard some horror stories. So, even the activities that drove that blue line of AMC transactions up so fast on the cover page's chart may work in our favor in the long run.

It's only after the lender switches to an AMC that they see the difference between the sales pitch and the reality. The simple fact is that some AMCs just aren't very good at implementation. Some will sell blue sky on the golf course all day long, but when the back office is a jumbled mess of antiquated technology that's brittle and breaks on rollout, it turns to rain pretty quickly. That's when we sell umbrellas.

The second important conclusion we've derived from our testing process should come as a surprise to no one: The single most important factor in successfully landing a lender client is the level of involvement of the appraiser.

We can send emails, faxes, and phone calls all day long to lenders, but the leads we get from appraisers who call our sales line and tell us that they've been personally talking to their clients about Mercury are many orders of magnitude more likely to get on board. It can be as simple as just calling your key clients and asking them what they're planning to do, telling them to consider Mercury, and then calling us to follow up with them. They then take our calls and they know why we're calling.

It's a simple personal introduction, and it's a sales technique as old as the hills and twice as powerful. In this case, we've found that it's crucial and can be the difference between success and failure. Just call your client, then call us. You don't even have to be good at selling. You just have to tell them briefly about us and tell them to expect our call. We'll take it from there.

In a time of unending chaos and confusion and pervasive technology, especially in the real estate sector, it's nice to know that the simple sales technique used by your parents, your grandparents, and every generation before them, is still the most effective way to achieve an important goal. And there's no goal more important to us than preserving your fees with the Mercury Network.

http://www.appraisalpress.com/news/articles/complex_problem_simple_solution/

When it comes to electronic commerce, who's actually slowing down whom?

Scott Kinnaird (a la mode) — Fri, 03 Apr 2009 15:18:48 -0700

Sometimes it's the obvious stuff that people skip over. Like who really embraces technology and who doesn't. Or, who talks a lot about technology and who actually quietly uses it on a daily basis.

Visit a typical real estate appraiser's office and check out the technology tools in use, then visit other mortgage and real estate professionals and notice the filing cabinets, paper folders, and fax machines. It's a real eye-opener. My educated hunch is that not much has changed in the past five years.

Featured news - posted March 16, 2004

Waiting for the banks to catch up

We're very grateful to the nearly 1,500 appraisers who filled out our online survey about lender-side adoption of electronic appraisal ordering, follow-up and report delivery. The results show that appraisers are ready and able to do business as efficiently as your clients may demand.

We asked you about your capability to accept electronic orders, take and respond to follow-up or status requests electronically, and deliver electronic reports (through Mercury, through your XSite, with a plain old PDF e-mail attachment, or whatever) five years ago and today. The numbers were fairly consistent in all three categories.

Are you capable of accepting electronic orders?
More than 50 percent were capable in 1999. More than 97 percent are today.
Are you set up to handle follow-up/status requests electronically?
Just about 50 percent were capable in 1999. Ninety five percent are today.
Can you produce and deliver PDFs or other electronic format reports?
Forty five percent could in 1999. More than 97 percent can today.

As to whether your clients are on board, that was a different story. We didn't ask anyone to estimate their total volume of business, so we can't use the survey results to extrapolate and tell what percentage of overall appraisal business is conducted electronically today. But we did ask you to estimate the volume of your orders, follow-ups and reports that take advantage of today's technology.

Half of you said that 35 percent of your orders or fewer come in electronically - Mercury, WinTOTAL, e-mail or other electronic method - today.
Four of every ten of you who said you were capable of receiving orders electronically, said that 80 percent or more of your orders are still coming in via phone and fax.

"The local banks have not yet modernized to e-mail," Opie G. Boyer, of Opie G. Boyer, Jr. Appraisal Service in Huntington, Pa., said. "Maybe we should charge $50 more for paper appraisals," he suggested. "The banks have got to catch up." (We asked and received permission to quote Mr. Boyer.)

Half the appraisers who completed the survey reported that three quarters or more of their clients' follow-up "calls" are just that - phone calls or faxes, rather than electronic - Mercury's daily status summary, real-time status management, e-mail or other electronic communication.

Even in light of these results, unsurprisingly, electronic reports have caught on.

Half of you said that 95 percent or more of your reports today are delivered electronically - through our Mercury servers, via e-mail attachment or otherwise.
But 12 percent of those of you who said you were able to produce electronic reports said that half or more of your appraisals are still going out as hard copies!

It's obvious from the survey results that not every lender client - it may not even be a majority! - is on board with electronic ordering. We'd like to do something about it, with the Mercury Network and our new Mortgage XSites, because it's good for our and your business. Something as simple as being able to import property and assignment information directly into the formfilling software of your choice rather than typing it from a fax saves considerable time and aggravation, and lets more appraisals get done in the same amount of time. That's simply more productivity for not as much work.

What we hoped to make clear with the survey is that when lenders complain (and they do!) that appraisals don't happen fast enough, they're cursing the darkness when they could, at least to an extent, be lighting a candle. We hope what the lender community takes away from the survey is that its complaints about turn times (and their appraisers) would have greater credibility if they were doing as much on their end as you are to do business efficiently.

http://www.alamode.com/news/04/0316.aspx

Back To The Future -- marketing in a downturn -- September 7, 2004

Scott Kinnaird (a la mode) — Tue, 31 Mar 2009 12:57:08 -0700

More important to invest time, money in marketing during a slowdown than at any other time

-- posted September 7, 2004

Stop us if you've heard it: The mortgage boom is almost over. Yes, it's been almost over since about November, 2002, but who's counting anymore? Home sales are in record territory, Freddie Mac's benchmark 30-year fixed mortgage rate hit a five month low last week, and August, though down from July, saw an amazing 1.379 million transactions pass through our Mercury servers, a leading indicator that there continues to be a robust mortgage pipeline.

But the Fed has stared hiking the federal funds rate, the economy is improving - much of the recent spate of cash-out refinancing has been driven by hard times in the broader economic arena - and lenders, your customers, are bracing for a downturn. Which means they're planning on spending less. There aren't suddenly going to be fewer appraisers, so with less money to go around, how do you stay at top of mind when your best clients need the services of a professional appraiser?

Sam Walton, asked about his plans for a recession, once famously answered, "We don't plan to participate." He didn't, and his company's doing o.k. today. Walton believed the old saw that when times are good, you should market your goods or services, and when times are bad, you must market your goods or services.

A McGraw Hill Research study of U.S. recessions, analyzing 600 companies over a five-year period emerging from an economic downturn, found that firms which had maintained or increased advertising during tough times averaged 275 percent sales growth in the five years coming out, while those who cut back on advertising grew only 19 percent.

The biggest factor driving this reality is human nature. Many of your competitors will spend less - and we're talking about resources and effort as much as we're talking about money - on marketing when orders start to peter out. By simply maintaining your current level of marketing, you will "gain" in visibility and be top of mind to your clients.

Beyond the human calculus, there's good old-fashioned market research: Companies that regard marketing as an investment rather than an expense are shown to earn larger long term dividends. Marketing aggressively during a downturn projects an image of corporate confidence and stability. And it costs a great deal more to re-acquire customers or clients after you've lost them than it does to devote marketing money and efforts to keeping them.

Soon, Enterprise level Appraiser XSites will include a suite of services called XSellerate, which is a built in comprehensive marketing kit for appraisers. It will allow you to set up marketing campaigns wizard-style. You'll be able to send promotional or, better yet, informational campaigns to a contacts database that you create and XSites maintains and manages for you. XSellerate works in conjunction with Contacts and Scheduling so that you can set reminders for your campaigns which can be set up as a one time distribution or multiple scheduled distributions over time. XSellerate will also offer marketing aids for ongoing education refreshers.

We're developing XSellerate when we are because differentiation will be more important than ever as the current mortgage boom recedes. But even if you're not yet an XSite owner, there are a number of tips you can use to keep yourself in front of your current clients, and even gain new ones, when business slows:

Stay in contact. When you're dealing with a particular client on a weekly basis, you're never far from his or her mind. During longer periods between orders from that client, a personal e-mail or phone call keeps you in front of him or her. If you worry about seeming too "clingy," how about forwarding them an interesting article you found on the Internet (it would be great if it was from the a la mode e-Newsletter, but something from usatoday.com, Yahoo News, or anywhere)? Whether it's an article about something exceptionally important to them or not, remember the idea is to get your name in their mind. The personal touch of "I read this and thought you would find it interesting" adds value, too.
Be a resource. If your mortgage business dips, it's because your clients' business is slowing down, too. Be frank with your clients. "Remember those two week turn times from last summer? My volume, like yours, is a lot more manageable now. I'm able to turn assignments around more quickly than ever, I've invested in learning new techniques and tools for producing quality reports more quickly and efficiently (you can say this after Aurora comes out!), and my attention is more focused on the needs of my clients than ever." Asking for a client's business is always a good idea; offering them a good reason to give it to you is even better.
Understand your clients. Do you subscribe to National Mortgage News? Affordable Housing Finance? Your marketing is no good if not targeted to the specific concerns of a specific constituency. By spending some time each week or month reading what your clients are reading, subscribing to e-mail newsletters they may receive and generally following the news and developments in their industry that they do, you learn what they need, want and are interested in.

Some of these things are free and easy, some take time, and some take money. But investing time and money in marketing is more important during a down period than at any other time.

Same as it ever was.

http://www.alamode.com/newsArchive/04/0907.aspx

Trillions of dollars of new originations with no appraisal requirements. WTF?

Scott Kinnaird (a la mode) — Fri, 27 Mar 2009 21:02:48 -0700

By Dawn Kopecki

March 27 (Bloomberg) -- Mortgage originations may double to $3.1 trillion this year as historically low interest rates and looser financing standards at Fannie Mae and Freddie Mac lure more borrowers, Bank of America Corp. analysts said.

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The rest of the article is located here: http://tinyurl.com/cn68fu

If you read the article, please notice this part:

“The fact that the GSEs are taking away the appraisal requirements increases capacity inherently,” Ravi said, referring to government-sponsored enterprises Fannie and Freddie. “You don’t need to do a portion of the work that you were doing before on these mortgages.”

And, we're supposed to be happy that trillions of dollars of mortgages will be originated without anyone taking the time to see if the house is standing, sitting next to a landfill, has the walls kicked in, or even analyze the local comparable properties to give a non-commissioned opinion about the value of the collateral backing up the loan?

Automated valuation models failed during the boom. They're even worse in a bust.

Did we not learn our lesson the first time around?

Unbelievable.

I said this about AVMs in Mortgage Banking Magazine four years ago this month:

"Market penetration for AVMs hovers in the 10 percent range because they don't work in the other 90 percent of cases," says Scott Kinnaird, chief strategy officer with a la mode Inc., Oklahoma City.

Kinnaird believes real estate sales are "personal, microeconomic" transactions, and appraisers are ultimately needed for valuing collateral. "AVMs can't smell a bizarre deal. AVMs can't see a peak has been hit by looking at current listings, because Realtors won't release that data, and AVM data is at least 90 days old. Appraisers do all of those things every day," Kinnaird says.

It's like groundhog day. We're going to rely on the government to jumpstart the housing market with cheap loans and loose underwriting.

Yeah, that makes perfect sense.

Check out what Dave Biggers, the founder of our company has to say about AVMs relative to the upcoming HVCC. Food for thought.

http://www.youtube.com/watch?v=UNis3QG9MaY

Bankers who met privately with the President today

Scott Kinnaird (a la mode) — Fri, 27 Mar 2009 17:25:30 -0700

JP Morgan's Jamie Dimon, Bank of America's Lewis, American Express Corp. (AXP) CEO Ken Chenault, Freddie Mac's Koskinen, State Street Corp. (STT) CEO Ronald Logue, BONY-Mellon's Kelly, Northern Trust Corp. (NTRS) CEO Rick Waddell, PNC Financial Services Group Inc. (PNC) CEO James Rohr, Goldman Sachs Group Inc. (GS) CEO Lloyd Blankfein, Morgan Stanley (MS) CEO John Mack, Citigroup Inc. (C) CEO Vikram Pandit, Wells Fargo & Co. (WFC) CEO John Stumpf, and U.S. Bancorp's Davis. Cam Fine of the Independent Community Bankers, Michael Paese of the Securities Industry and Financial Markets Association, and Edward Yingling of the American Bankers Association also attended the session.

Blast from the past - June 8, 2005 - AVMs under federal banking reg scrutiny

Scott Kinnaird (a la mode) — Fri, 13 Mar 2009 16:34:51 -0700

AVMs, Owner's Estimate of Value under federal banking regulator scrutiny

a la mode Featured news - posted June 8, 2005

Last month, five federal agencies issued "Credit Risk Management Guidance For Home Equity Lending," to "promote sound risk management practices at financial institutions with home equity lending programs." The guidance includes some items of keen interest to appraisers.

The guidance cautions that for all their promise of quicker and cheaper values, AVMs must be accompanied by much more due diligence. "When AVMs are used to support evaluations or appraisals, the financial institution should validate the models on a periodic basis to mitigate the potential valuation uncertainty in the model," the guidance says. This includes back-testing a representative sample of valuations against market data of actual sales.

AVM "confidence scores," often supplied with the valuations by vendors, can mean almost anything. They "come in many different formats and are calculated based on differing scoring systems. Financial institutions that use AVMs should have an understanding of how the model works as well as what the confidence scores mean," regulators said.

The guidance gets to the heart of the biggest selling point for AVMs to commissioned brokers, correspondent lenders and other originators: "cascading values." Institutions should "[i]mplement policies and controls to preclude 'value shopping.' Use of several valuation tools may return different values for the same property. These differences can result in systematic overvaluation of properties if the valuation choice becomes driven by the highest property value. If several different valuation tools or AVMs are used for the same property, the institution should adhere to a policy for selecting the most reliable method, rather than the highest value."

Several AVM vendors tout "cascading AVMs" as a way to hit several automated values and then pick the "best" one for the loan. Coupled with the guidance's caution against meaningless "confidence scores," it's clear federal regulators are getting that AVMs are often more trouble then they're worth.

Last year at about this time we heard from a lot of appraisers on the subject of whether the Owner's Estimate of Value was a legitimate tool or a way to try to subtly influence the value opinion. See here. The regulators' guidance to banks actually prohibits supplying an Owner's Estimate to appraisers.

As part of an institution's "appropriate collateral valuation policies and procedures that ensure compliance with the agencies' appraisal regulations," banks should "ensure that an expected or estimated value of the property is not communicated to an appraiser or individual performing an evaluation."

On the same day the guidance was issued, Washington Mutual notified its appraisers that effective May 21 the Owner's Estimate of Value field would be removed from its appraisal assignment documents. The information will be collected optionally and retained in the lender's system, but will not be provided to the appraiser.

"Credit Risk Management Guidance For Home Equity Lending," issued by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the National Credit Union Administration, can be found in PDF form here. WaMu's Appraisal Newsflash announcing its policy change can be found in PDF format here.

http://www.alamode.com/newsArchive/05/0608.aspx