The appraisal tends to be a “hassle” for borrowers and loan officers, according to Reggora co-founder and Chief Technology Officer Will Denslow, who cited one example as being the actual paying for the appraisal.

“Processors often have to play phone tag with borrowers to take their credit card information over the phone, which can take a couple of days, or borrowers get a suspicious-looking email from an AMC they’ve never heard of,” Denslow told Valuation Review. “Another point of friction is scheduling the appraisal, which often involves another game of phone and email tag to find a time that works for the borrower and appraiser.

“Additionally, we can acknowledge the famous ‘black box’ of appraisal, which refers to the lack of visibility into appraisal status for both loan officers and borrowers,” he went on to say. “These issues, along with other inefficiencies in the appraisal process, can add to a lender’s cost to originate by an average of $258 per loan.”

As to Reggora’s payment platform providing a remedy to those issues, in particular, improving the borrower’s experience, Denslow told us that lenders who use Reggora’s the platform automatically collect payment upfront without having to do anything. Instead of taking a few days, he said, payment gets collected in a few hours.

“It’s easy for the borrower, takes no effort from the lender and, once borrowers have paid for an appraisal, they’re much less likely to go with another lender. Lenders can take them ‘off the market’ very quickly,” he said. “We also let borrowers select an available time on the appraisers’ calendar, eliminating that annoying back-and-forth process. We also give loan officers full visibility into the appraisal status so that they can keep their borrower updated every step of the way. And of course, the borrower can do this all inside the lender’s point of sale system, so they don’t have to log into another system to complete their mortgage.

“Mortgage operations tend to function largely on two key systems: the loan origination system (LOS), where most of the operational processes take place, and the point-of-sale system (POS) which is where loan officers and borrowers complete the key components of the mortgage purchase,” Denslow told us. “Some lenders will buy an out-of-the-box POS solution, such as Blend or SimpleNexus, but many lenders will build their own proprietary systems to solve their unique needs. This is where Reggora’s open API is extremely important. We are able to integrate with these proprietary systems.”

We also asked the executive what specific matters does he find that borrowers are not made aware of during the appraisal process. For one, he pointed out, borrowers are definitely “in the dark” when it comes to the appraisal process.

“First of all, they typically don’t receive a general overview of the appraisal process to understand the why, when, how and by whom,” Denslow said. “Secondly, the borrower is not listed as an intended user of the appraisal report, meaning they are not the client of the appraiser (and the appraiser is held to a standard of reporting to the client).

“Third, many lenders do not disclose up front if they have a formal policy on disputing the results and reporting of an appraisal,” he added. “Finally, there is not a uniform format to disclose and disseminate information about the appraisal process, including ordering, quality control, acceptance criteria, and what information the lender uses from the appraisal process to make their lending decision.”

With regards to making the mortgage process a little less stressful, Denslow pointed out that Reggora conducted a survey last year to better understand the challenges of the borrower experience. It was learned that, overwhelmingly, borrowers care about a positive experience during the appraisal portion of the loan process; appraisal timeliness (quick completion), the accuracy of the appraisal (no revisions needed), and communication/transparency during the process were ranked as the most important factors.

But still, challenges for mortgage lenders remain, while borrower fallout gets figured into the equation.

“When it comes to their appraisal operations, lenders typically want efficiency,” Denslow said. “How can they complete loans quickly with reduced overhead costs? The problem with appraisal, historically, is that lenders have been managing it very manually.

“Per the survey that I just mentioned, high interest rates are the number one factor that borrowers consider when selecting a lender,” he added. “As interest rates are largely out of the lender’s control, it’s imperative for lenders to focus on elements that enhance the borrower’s experience in order to retain and attract new customers.”

Pertaining to lost revenue from appraisal fees, Denslow said there is a Reggora guide on the company website that covers this very topic for lenders. The primary driver, he said, is that when a borrower walks away from a loan after the appraisal has been completed, the lender is often “stuck” with paying the appraisal fee.

Another issue is fee escalations. If the lender discloses an appraisal cost upfront, then the vendor issues a fee escalation above that for a reason that’s ineligible for a change of circumstance. Then the lender is stuck paying the difference. Both issues are far too common, he pointed out, and they cause lenders to lose a significant amount of money at the end of the year.

Reggora’s platform is equipped with nationwide appraisal fee data, including on fee escalations, which allows lenders to disclose the correct amount (or more) upfront. They’ve been able to nearly eliminate lost revenue from appraisal fees for their customers by leveraging this data and their payment solution to disclose and collect the correct amount upfront.

“Lenders have done a lot of work in recent years to streamline and modernize the mortgage experience for borrowers, but due to the complexity of appraisal, it’s been largely ignored. For many lenders, fixing the appraisal will be one of the last key pieces to delivering a fast and convenient digital mortgage experience,” Denslow said. “The lenders that can offer easy, fast, accurate, and transparent appraisals will be more likely to gain repeat customers and referral business. It’s one more thing that sets that lender apart.”