At the 2022 National Association of Appraisers Conference and Trade Show, Fannie Mae Single Family Marketing Lead Associate Keisha Wilkinson said appraisals are the foundation of how Fannie Mae manages collateral risk.
“Appraisals are used to help determine the loan-to-value ratio (LTV), which is a fundamental driver of our business and is used throughout the lifecycle of a loan,” Wilkinson told Valuation Review and conference attendees. “LTV is used in determining loan eligibility, loan pricing, mortgage insurance, credit risk transfers, loss prevention, and loss mitigation.”
Wilkinson also discussed the large number of appraisers are nearing retirement, and the industry’s need to attract new folks into the profession. Wilkinson elaborated on the specific steps Fannie Mae takes to support a range of diverse talent choosing appraising as a career.
“First and foremost, we value experienced appraisers. But we also recognize that it’s important to continue to add new appraisers to the rolls – whether they are just starting a career or embracing a second career,” she said. “In 2018, Fannie Mae partnered with the National Urban League to create what is now known as the Appraiser Diversity Initiative (ADI). Since its inception, ADI has awarded more than 250 scholarships for initial appraiser education to prospective new appraiser trainees, with 16 ADI participants currently working as appraiser trainees.
“With the added support of core partners, the Appraisal Institute and Freddie Mac, as well as a number of industry sponsors, ADI has grown to provide scholarship winners additional benefits such as books, calculators, advisor assistance, conference reimbursement, and job placement assistance upon completion of the program,” Wilkinson added. “Fannie Mae allows appraiser trainees to perform the entire appraisal report if they are qualified to do so (See Selling Guide B4-1.1-03, Appraiser Selection Criteria, Appraiser Trainees for more details). We encourage lenders and appraisers to welcome the next generation of appraisers.”
Wilkinson also sees the new technology that’s been implemented due to COVID restrictions as a door of opportunity for new appraisers to walk through noting that innovation in inspection technologies was well underway prior to COVID-19. The pandemic created a greater sense of urgency and increased demand for such tools, she told us, which further stimulated investment and development.
It also provided a set of real-world mortgage lending results as proof of concept, which has helped risk investors and regulators become more comfortable with these kinds of innovations, she suggested.
“There are so many new technologies that can be used to provide appraisers the information they need without having to physically visit the property,” Wilkinson said. “Numerous companies are advancing this technology to include floor to ceiling scanning, machine learning, virtual tours, GLA/floor plan, and HD photos. Leveraging this technology can allow appraisers to focus on the analytics of the appraisal, where their expertise is needed, instead of spending hours driving and gathering data.”
As to whether the Fannie Mae associate thinks these opportunities will entice potential new trainees to take a good look at the profession, as well as seeing veteran appraisers demonstrating an “improved” attitude regarding working with trainees, Wilkinson said it is encouraging for new entrants to the profession to have the opportunity to choose the way they work as an appraiser.
In a profession where an opinion of value is formed after careful consideration of data, it is empowering to have so much more data available at our fingertips than even a few years ago.
“I know of several veteran appraisers who have worked with trainees their entire careers and continue to benefit from working with them,” Wilkinson said. “We encourage appraisers to reach out to other supervisor appraisers to discover how they benefit from working with trainees. As I mentioned earlier, for many years, Fannie Mae has allowed appraiser trainees to perform the entire appraisal report if they are qualified to do so. We can actually see how trainees measure up against non-trainees looking at appraisal risk scores as determined by Collateral Underwriter (CU).
“Overall, we’ve found that both groups have findings that are remarkably similar, with trainees performing less than one percentage point better than non-trainees. This shows us that trainees are contributing quality appraisals,” she added. “Anecdotally, we’ve heard in conversations with appraisers and supervisors that trainees can bring insight and different skill sets to their supervisor’s appraisal firm. That may be a new organizational method, technology familiarity, or a new specialization for the firm. We continue to encourage properly trained new entrants to strengthen the profession in all these ways.”
Wilkinson also detailed for the audience how CU is recognized as a review tool where it allows lenders to segment appraisals by risk profile, facilitating efficient workflow management and resource allocation.
CU also helps lenders reduce time spent on appraisal review, leading to fewer, but better-informed, requests to appraisers, she said.
“Appraisal feedback at the point of submission enables lenders to proactively address potential issues and improve the overall quality of loans delivered to Fannie Mae,” Wilkinson said. “The risk analysis performed by CU is for use by the lender in that lender’s analysis of the appraisal report; information may be shared with the appraisers in proper context upon completion of the lender’s due diligence review.”