Snow Angels and Appraisals?
We all are obviously aware that the world record for most simultaneous snow angels is held by North Dakota, but we don’t generally think of them when it comes to changes in our industry. A new request from the governor’s office could see North Dakota leading a change in our industry, just as they lead the nation in honey production. I’ll spare you more North Dakota trivia (enjoy more facts here), but Governor Doug Burgum has requested that limits on appraisal requirements be increased due to a shortage of appraisers and long turn times. We have all experienced long appraisal turn times, and with the speed of mortgages continuing to increase, it is even more necessary to get a valid appraisal back as soon as possible.
We saw last week that the current Administration is looking to make some drastic changes to our industry and automated property appraisals could be where we are going. As we move towards a fully digital mortgage, the appraisal is always a sticking point because the entire loan is based off the value of the property. Turning over the human element of the valuation of the property could open the door to more fraud and incorrect valuation of the collateral that backs the mortgage. Removing the human element could prevent appraisers from being biased and allow a standard valuation model for all loans, but removing a person takes out a third-party view of the true value of a property that is not influenced by buyers, sellers, agents, and banks.
The North Dakota release is interesting because they are trying to get the financial institutions the ability to control and complete the appraisal in house as long as the loan is under $500,000. With the median home value in North Dakota at $164,000 (according to the census bureau) this could eliminate requirements for many rural appraisals in the state. We will have to see how this all plays out but Lise Kruse, the commissioner of the Department of Financial Institutions, said “North Dakota financial institutions are community based and relationship oriented, they are well prepared to fairly and accurately assess property values, which will provide relief to the existing supply of appraisers.” This line really drives home the reason for the change. As our industry drives forward and gets faster and faster, we need to make sure we slow down to value the relationships that we have with the communities and getting solid loans to homeowners.
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.