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The CFPB’s TILA-RESPA Integrated Disclosure (TRID) Rule has been in effect since last October, many in the origination process feared the rule’s additional compliance would result in costlier and slower originations. Even lenders are not consistent on how TRID has affected them, as it depends on several factors. The rule’s effect on the appraisal process has also been discussed and a recent survey confirmed that while appraisal fees and turn-times have increased over the last year, it’s not because of TRID.
The Appraisal Process and Turn-Times Survey, conducted by STRATMOR, featured responses from 56 lenders between August 16 to September 16 of this year. In the survey, post-TRID appraisal turn-times were found to have increased by 5.74 days (79% higher) for purchase loans and by 6.28 days (81% higher) for refinance loans compared to before TRID. Many of the surveyed lenders did not attribute the turn-time increases to TRID, but instead cited a big increase in origination volumes from Q2 to Q3 and a dearth of qualified appraisers as factors.
Paul Prentice, Senior Managing Appraiser at PEMCO Limited said, “In the post TRID era we have seen appraisal turn times rise across the board, by roughly 45-50%. I do not believe this to be specifically attributable to TRID but is due to a substantial increase in volume over the past quarter in loan origination. This, in conjunction with less availability of qualified and seasoned appraisers, has changed the landscape of turn times.”
Prentice said, “as an AMC, we do have access to a large panel and through proper management including determining location of appraisers versus the property, we are able to assist in maintaining reasonable turn times. We analyze what the appraiser has coming to us in the pipeline and then determine if ordering more than one appraisal in the same area, or zip code would be more efficient for the appraiser by decreasing transit times between appointments.”
“Doing this also assists in having less overlapping routes between two appraisers, and while this takes additional time and analysis for the AMC, it seems to yield positive results by increasing efficiency”.
The survey found that appraisal fees have also increased, but not as much as turn-times: rising an average of 15.8% over pre-TRID appraisal fees. None of the surveyed 56 lenders reported a decline in appraisal fees since TRID went into effect.
Prentice underlines that higher fees may be the result of rush orders, “as long as originations are at a high point and appraisers are in high demand, I do not see a substantial change coming any time soon. It should be noted that while fees in some areas have risen, much of the demand is centered around turn time and often the appraiser has several commitments prior to taking on an appraisal that may be a rush, for example, which generally would require an increased fee. The increased fee does not allow the appraiser to place other files on hold or shirk those already made commitments, and with schedules typically booked solid, the fee increase does not guarantee that a rush is possible. When we know that there is potential for an increased turn time on a specific file, we will typically inform the client immediately so we can set a reasonable expectation and keep everyone informed. This assists in a less stressful process for all parties involved. We also do our best to develop solid relationships with our appraiser panel so they will be more likely to work to prioritize our files, if possible. In my opinion, this is the best result that we can hope for.”
One-third of the 56 lenders that were surveyed reported they used either an in-house appraisal panel or a combination of an appraisal panel and an appraisal management company. Two-thirds of lenders said they used only appraisal management companies to obtain appraisals.