Institute of Housing Technologies
Improving the Real Estate Information Network
Automated Valuation Revolution!
To Big To Fail?
Downright un-American, and a system our fore-fathers
would have never even considered. Our banking system
has gotten out of control and if allowed to continue, it's
not a matter of "if," but only "when" a new financial crisis
will strike us. So, what do big banks and automated
valuation models have to do with appraisals? In the midst
of all this "appraisal reform" and controversy, big banks
have quietly amassed a new technology arsenal aimed
at taking real live unbiased appraisers out of the mortgage lending process. Their goal has been twofold.
First, banks are jumping at the thought of getting those pesky appraisers out of their hair. After all, bankers see this as "their loans" and they are intent on making the loan, whatever it takes. The days of actually being concerned with the home's true value and protecting their investor's money are long gone. Now, it's all about making the loan, and then selling the loan, making a nice profit along the way. Any problems later are no longer their problem. Investors beware!
Secondly, big banks have been looking for new ways to increase profits. They liked all those no-doc loans and the days of easy lending guidelines. So, a bright young executive suggested they find a way to eliminate the problem with honest, sometimes inflexible appraisers, and create a new high profit item at the same time. Genius!
Here's the pitch - how about we use automated valuation software, that gets its information for free, we try and convince the banking regulators how much more accurate they are now in this time of technology, and then we can charge consumers an appraisal fee a little less than what traditional appraisals cost, and we'll make a fortune. Plus consumers will think we are trying to same them money. We'll look like the good guys and it's the perfect time to blame all the problems of the past on appraisers. The timing just couldn't be better. As long as the government officials don't catch on, we've got this covered. Profits will soar once again. Talk about a win-win!
Appraiser roles are dwindling across the country. And, once they are gone, it will take decades to get new, good appraisers trained. And, even if we do have to start working with appraisers again, we can help set the rules they have to follow. There's just no way for us to lose.
Big banks have got everyone so confused about what is going on right now, they are calling all the shots while making others think they are in charge of the process. The one with the gold makes the rules, remember? This is the perfect example of that Golden Rule and all the while the fate of countless, hard-working honest appraisers rests with the few government officials who are in charge of mortgage lending rules. Who has the most clout? Big banks with billions to spend, or appraiser shops all across the country working hard every work to make an honest living, without the aid of a billion dollar lobbying budget?Unless consumers figure out that big banks DO NOT have their best interests at heart and speak up, demanding a real live person complete an appraisal before they make their largest lifetime purchase, we may have troubled waters ahead.