The nation’s biggest wholesale lender, United Wholesale Mortgage, is launching a new in-house appraisal capability on Oct. 1 that it says will speed up the process by allowing mortgage brokers to bypass appraisal management companies.

The new service, UWM Appraisal Direct, will be optional — mortgage brokers will still have the ability to work with any of approximately 100 UWM-approved appraisal management companies (AMCs).

Mat Ishbia

Mat Ishbia

“We are no longer going to require using appraisal management companies,” UWM CEO Mat Ishbia said in a Facebook Live announcement. “They’re still great — you can still work with them if you like working with them. We love the appraisal managers.”

In January, UWM announced that its approved AMCs had made a commitment to complete appraisals within 10 days, or refund 50 percent of the appraisal cost back to the consumer. UWM had also capped AMC fees at $125 per appraisal, Ishbia said.

But for brokers who want to see if UWM can do a better job, the lender has been building a team of 100 employees and developed software that will allow it to work directly with appraisers to schedule, execute and deliver appraisals in 5 to 7 days — without charging a management fee.

“We’re going to manage the entire process, from start to finish, at UWM,” Ishbia said. “We’re going to collect money from the borrowers, 100 percent of that money goes to the appraiser, paid same day or next day.”

Ishbia characterized the new service as a win for all involved.

“It’s a win for the appraisers, they’re going to get 100 percent of the comp,” he said. “It’s a win for borrowers, because they’re going to pay less, and get better quality appraisals. It’s a win for brokers, you’re going to get better quality appraisals, faster appraisals, and the best appraisers are going to work with UWM.”

UWM Chief Strategy Officer Alex Elezaj told Inman that the program is “100 percent compliant” with appraisal independence requirements adopted in the wake of the 2007-2009 housing crash and recession that are intended to protect appraisers from being coerced by lenders.

To make sure lenders are complying with those requirements, for example, Freddie Mac allows lenders to use “a pre-approved list or panel” to select appraisers, — as long as the employees of the lender who choose appraisers for the list “are independent of the loan production staff,” and “the loan production staff is not involved in selecting appraisers off the list for particular appraisal assignments.”

Before he was hired by UWM in 2018, Elezaj was the CEO of an AMC, Class Appraisal, that counted UWM as a client.

According to UWM’s last annual report to investors, Ishbia and his brother Justin had an ownership stake in Class Appraisal, which rebranded as Class Valuation in 2018, and another AMC, First Look Appraisals LLC. UWM paid the companies about $700,000 over two years for home appraisal contracting and review services, the company’s annual report said. UWM CEO Mat Ishbia’s interest in the AMCs was “disposed of” during the first quarter of 2021, the company said in its most recent quarterly report, and Elezaj said UWM no longer has any ties to Class Valuation, and only a “very small” connection to First Look.

Rocket Cos., the parent company of UWM’s biggest rival, Rocket Mortgage, owns Amrock, a title and settlement services provider which operates an AMC with a network of more than 4,500 appraisers.

Elezaj told Inman that UWM Appraisal Direct is not an AMC, but an internal team within UWM that will hire appraisers as contractors — just as many retail mortgage lenders have an “appraisal desk.”

That echoes comments Ishbia made in his Facebook Live presentation to mortgage brokers, in which he suggested that business model gives retail lenders an advantage when tackling appraisals.

“We’re going to treat appraisers [and] appraisals just like retail has,” Ishbia said. “That little bit of edge? No longer, that advantage is gone.”

In a statement, Rodman Schley, president of the Appraisal Institute, said the professional association “supports innovation in the lending industry, and any progress that further evolves client relationships toward using the services of highly qualified designated appraisers is a win for consumers and the industry as a whole. We are hearing about more situations like this, and other innovations, including internal staff models and use of technology platforms or ‘portals,’ that help lenders manage the appraisal function with quality top of mind.”

Email Matt Carter

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