What a difference a year makes!
The message at the Predictive Methods Conference (PMC) changed markedly from previous years, where appraisers may have left wondering if they were going the way of the buggy whip. The mantra this year – from virtually everyone presenting, is that appraisers are not going away. AVMs are great tools – for review and quality control, but are not reliable enough to replace appraisers except in certain circumstances- where the data and the credit score of the borrower - are strong. (PMC brings together the leading providers and users of mortgage technology. And increasingly, interested parties from the appraisal industry.)
Statistics regarding AVM use are hard to pin down and can be misleading. While the percentage of loans involving AVMs is high – upwards of 60 percent, they mostly are used post funding for review and quality control, experts say. The percentage of new loans where AVMs actually replace appraisers remains fairly low - in the five-eight percent range. And that number is not expected to increase much.
Lenders are beginning to echo what appraisers have been saying all along: that rising housing prices over the past several years have covered most underwriting sins. But with rising interest rates and a cooling market, they predict lenders will put the brakes on AVMs while portfolio assets come under closer scrutiny