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The impact of UWM’s appraisal shakeup

The wholesale lender's Appraisal Direct program bypasses appraisal management companies

HW-UWM
UWM’s headquarters in Pontiac, Michigan.

United Wholesale Mortgage (UWM) announced late last year that it would turn the appraisal space on its head by launching an in-house appraisal program.

Even if it has not made quite the outsized impact UWM said it would, appraisers mostly like the wholesaler’s new program. Some appraisers take issue not with the program itself, but with the software and payment platform it uses.

When it launched the Appraisal Direct program in October 2021, UWM said it wanted to address some of the problems of appraisal management companies (AMCs) and eliminate a bottleneck in the origination process. It also added a sweetener for appraisers: In contrast with AMCs, UWM would not take any part of an appraiser’s fee.

According to a dozen appraisers interviewed by HousingWire, UWM’s program pays more and more quickly than other AMCs, is welcoming to trainees, and has friendly members on its team assisting appraisers.

The main flaws, according to appraisers, are the third-party vendors that UWM uses to run the appraisal program. Appraisers dislike Anow, the program’s appraisal management software, and Stripe, its payment processing platform.

Appraisers have called the Anow platform “busy” and “confusing.” They also say the fees for using both vendors are higher than comparable services. However, despite the fees, appraisers are still pocketing more money by using UWM’s program than other AMCs.

Melinda Wilner, head of operations at UWM, said that “nothing is perfect” but that the lender has made a lot of gains since launching the program.

New blood in the appraisal space

UWM announced that they would coordinate appraisals in-house in September 2021 and the following month, it was available to the public. 

Currently, the program has a team of 250 people “dedicated to assigning, taking down orders, all those great things,” Wilner said.

Before launching the initative, Mat Ishbia, CEO of UWM, said in a Facebook Live address that while AMCs add value to the industry, appraisals have been a stumbling block for the mortgage industry and UWM would fix that. 

 “We’re going to take one of the biggest negatives in the mortgage industry out of play,” Ishbia said.

The Detroit-based wholesale lender is working to address some shortcomings that have been associated with AMCs — mainly that they don’t pay appraisers on time, and they sop up a substantial part of appraisers’ fees.

UWM promised last year that appraisers would be paid the next business day after a successful appraisal completion, and for the most part, that has been the case. Appraisers said the average time for receiving payments ranges from one to three days.

Paul Charron, a Massachusetts-based appraiser who has done 50 orders through UWM’s program since signing up in October, said that he receives his fee within two to three days after uploading the report. That stands in sharp contrast to his other clients, where 99% of the time Charron said he gets paid within a month.

Jennifer Quinn, an appraiser based in Oregon, said that UWM pays above average rates.

“Fees paid are good,” she said. “They accept my turn times, which are typically about four weeks out. They don’t have a lot of superfluous revision requests, which is nice.”

Appraisers say that they pocket close to $470 for a conventional property through UWM’s program. Appraising the same property for another AMC amounts to an average of $400. 

Wilner said that UWM is putting “more money in the appraiser’s pocket” because it does not charge the fees AMC’s typically do.

“We’re not a company that’s out there trying to make money off of the appraiser’s backs,” Wilner said.

Dana O’Hara, a veteran appraiser of over two decades, said that UWM is the only AMC that is friendly towards trainees. 

“UWM has open arms for that, and I have a wonderful trainee who is really bright and he’s picking up on stuff and it’s really good,” said the Florida-based appraiser. “There is a lack of appraisers, and there’s going to continue to be a lack of appraisers and the industry has been making it impossible for people to bring in new blood, so I think that UWM is really the leader here.”

Overall, appraisers are excited that a new player has entered the appraisal space.

“As far as Appraisal Direct goes, I want it to succeed in a massive way,” said Matthew Vasicek, chief appraiser at Expert Valuation and Consulting. “It took a huge set of onions for them to run a program on short notice and up against some of the competitors that are involved, and sort of say, Look, you guys aren’t getting the job done, so maybe we can.”

Third party discontent

When the program first launched, there were some growing pains. One appraiser complained about a late payment for an appraisal, while another said that he received double payment for an order. 

An appraiser from Colorado noted that UWM’s appraisal program is not mindful about the time that it takes to complete an appraisal in rural parts of the country. She emphasized, however, that she hopes the wholesale lender will succeed in the appraisal space.

Another point of annoyance for some appraisers is UWM’s underwriting.

“I write my report so that it can be understood by a high schooler,“ an appraiser who requested anonymity said. “But I don’t think that at this level, I should have to write them to be understood by a fifth grader. There are some common terminology or appraisal principles that I’ve mentioned in reports where they just don’t get it and need further clarification.”

But the primary complaint about UWM’s appraisal program has nothing to do with the program itself.

Appraisers don’t like Anow, the appraisal management software used by UWM.  

For one, appraisers complain that the software is not user-friendly.

“It’s very busy,” said Jennifer Quinn, appraiser at Jennifer Quinn Appraisals. “Working for AMCs, I get a letter of engagement and everything that I need to know is right there on the letter of engagement. When I first started using the Anow platform, it took a while to figure out.” 

Quinn added, “I just feel like they’re trying hard to do something that doesn’t really need to be done.”

Laura Jones, a Virginia-based appraiser, said that for a one-person appraiser shop, the software platform is too overwhelming.

“They have a comparable database that you can build and there’s an analytics thing that you can use, but there’s nothing here that’s of interest for me, but that may be because I’m a single person office.”

Wilner said that UWM looked at multiple vendors and settled on Anow. She noted that Anow is quick to receive feedback and make changes.

Appraisers also say that they have to pay a $15 platform fee to use Anow, which is higher than what other software platforms charge—with fees on these platforms ranging between $6 to $8, appraisers noted.

Appraisers say they prefer platforms that are easier to navigate and cost less, such as Mercury Network, Appraisal Scope and Appraisal Valet.

UWM is currently offering a one-year free trial to access Anow, but once the year is up, appraisers will also have to pay a monthly fee to access the software, appraisers said.

Loni Pincocki, a Michigan-based appraiser, said that if UWM continues to partner with the software company she won’t be using UWM’s appraisal program. “I’m already nickel-and-dimed to death as an appraiser,” she said.

After the Great Recession, AMCs became a ubiquitous part of the appraisal process, acting as a “firewall” between a lender and the appraiser, but by doing so, AMCs significantly cut into appraiser’s pay. And appraisers are bracing for more pay cuts after Fannie Mae announced it would start accepting desktop appraisals. 

Appraisers also complain of the 2.9% fee Stripe, a third-party payment app the UWM program uses to pay appraisers, charges.

“UWM didn’t really tell anybody in advance that they would have to pay, they would only pay through Stripe, and Stripe charges pretty hefty fees to send payments to the appraisers,” said Vasicek.

Wilner said that other AMCs often include vendor costs into the portion of the fee they take from the appraisal, which UWM doesn’t do. She reiterated that UWM’s program puts more money into the appraiser’s pocket than competing AMCs.

Industry reacts to UWM’s appraisal program

Many in the appraisal space see the entry of new players as a good thing and expect more lenders to follow suit.

Jody Bishop, president of the Appraisal Institute, said in a statement that “any progress that further evolves client relationships toward using the services of highly qualified designated appraisers is a win.” 

“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,” said Bishop. 

Brian Zitin, CEO of Reggora, an appraisal tech company, said that he’s observed a movement where lenders want to be more involved in the appraisal process. 

 “[Lenders] want to be able to react with the market and have more control over our appraisal performance,” said Zitin. 

Zitin noted that while this may be an operational investment for some lenders, there are advantages.

“You have faster appraisals for the borrowers than what was happening before,” said Zitin. “With a lender going directly to the appraiser, there isn’t that AMC cut, so appraisers are making more money.”  

However, no other major lender in the space has followed UWM’s lead in doing AMC work in-house. 

Phil Shoemaker, president of originations at Homepoint, said that he doesn’t think that there will be a trend of lenders running their own national appraisal panels because it isn’t a cost-effective or scalable solution.

“If you’re doing it correctly, you still have to do all the work that an AMC does,” he said.

Instead, Shoemaker said that Homepoint, another pure-play wholesaler, is taking a hybrid approach. 

“We believe there are certain markets that are challenged and will remain challenged because of their growth dynamic, so we’ll establish our own internal panels and be highly focused with our resources in those areas,” Shoemaker noted. “But for 80% of the national market, there are really good AMCs out there and we will continue to align with those AMCs because we think that is the best way to support our broker partners.” 

Wilner said that she is slightly surprised that lenders did not follow suit right away by launching something similar.

“We tend to get a lot of followers of the things that we do but on the other hand, I don’t know how many lenders are willing to not make it a profit center,” she said.

James Kleimann contributed reporting.

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