Bringing the Property to the Appraiser

Kenon Chen currently serves as the EVP of Corporate Strategy for Clear Capital. Chen’s background in technology, music, and consulting has led to a unique career infusing creativity and passion into solving challenging business problems. 

As EVP of Corporate Strategy, Chen sits at the intersection of the executive, product, marketing, and sales teams, guiding growth and ensuring Clear Capital delivers consistent and long-term value to its customers and partners. Since the beginning of Clear Capital, Chen has developed and launched some of the most forward-looking solutions, including ClearProp and ClearCollateral.

After honing his engineering and tech leadership skills in San Francisco as a Director of Technology for Roundpeg, Chen was introduced to the mortgage industry in the early 2000s leading tech projects for a large lender. 

Chen recently spoke to MReport about Clear Capital’s latest tool for lenders, the technology boom, and loan modifications announced by the Federal Housing Administration (FHA). 

 

Can you describe the new OwnerInsight product?

The story of OwnerInsight really started about three years ago during the last refinance boom during the year of Brexit. At that time, that refinance boom caused a lot of friction within the lending process, due to really just the capacity to do appraisals. We saw extended appraisal turn times, especially in the Northwest, Oregon, Washington, and Colorado, like what many others did. The appraisals took as long as six weeks. That left borrowers in a bad spot, even being stuck in hotels as their loans got delayed. We certainly resolved at that point to make some serious changes to appraisals and looked for ways to modernize it. At the same time, the FHFA, they had been directing Fannie Mae and Freddie Mac as well to look for ways to modernize the appraisal process.

We developed some technologies that would actually allow a non-appraiser to walk through the inspection process, be guided through the inspection process in a way that objectively collects data at the home, and bring that back to the appraiser. Instead of sending the appraiser to the property, it brings the properties to the appraiser in an objective, robust way, that then gives the appraiser what they need at their desk to do an accurate appraisal. 

We've done that over 60,000 times over the past year, where we sent a non-appraiser into a home to gather data, and we've done that on purchase and refinance transactions, along with some of our peers as well out there doing it. We've learned a lot from that, and that let us take those learnings and pivot very quickly to put technology in front of the homeowner that would guide them through in a way that would help the appraiser when right now, we're all thinking about ways to protect folks from being in harm's way and practice physical distancing, and yet, let people move on with our lives. 

Our team worked really hard, and in nine days we took it from where it was to make it ready for the homeowner. We decided it's the right thing to make this not just a Clear Capital product, but really make this an industry-wide service that anyone could use. We made it free and made it simple to utilize as a lender, as an appraiser. You don't have to be a Clear Capital customer at all to use the service.

 

How much quicker can this technology make the appraiser process?

We certainly see some delays right now with another refinance boom, when rates went down. We saw triple the applications come in for loans. And even before the impact of the COVID-19 pandemic, we were starting to see some constraints there. With the temporary flexibilities being offered by Fannie Mae and Freddie Mac around appraisal, actually that eliminates some of the capacity issues because now the appraiser's doing a desktop appraisal, as opposed to making an appointment to go out and see the property. What we've seen in terms of the modern appraisal approach, where we have a separate person doing the inspection from the appraiser who is doing the desktop appraisal, we're actually seeing those turn times get better, while traditional products' turn-times are getting worse. It's even as much as seeing a four-day difference of improvement when we're using modern techniques versus the traditional approach.

 

Do you believe this technology could become commonplace after social-distancing subsides?

I think it's really important for us in the industry and other companies in our position to not create a crisis in the midst of a crisis. To ensure that whatever techniques we put in place here to try to keep the loan pipeline moving are done with enough robustness, and with quality, with fraud prevention. We have to do this the right way, so that we don't look back on this and look at the data and say, "Wow, we need to actually take a step back in terms of the use of technology." We want to do this in a way that actually enables opportunities. I do believe that this can create some lasting benefits to the loan process, as long as it's done the right way.

 

What are your thoughts on the loan modification process by the FHA?

They're a step in the right direction. I really appreciated the changes that were made. In fact, we and several others had made proposals and recommendations, even a couple of weeks ahead of that, calling for flexibility. In general, I was really happy to see those changes being made. I think it's evolving. We keep hearing additional changes that are being considered, and we're seeing requests from the appraisal community, from others to maybe even go a little bit further, and reduce the need for interior inspections on refinances as well. 

 

What is next for OwnerInsight?

Our first approach was to just stand it up in a really simple way, so you can just go to the site, just go to getownerinsight.com and order it right there online. You don't have to stand up new technology. We thought that was really important. We didn't want to force new technology either on the lender or AMC or the appraiser side. We also didn't want to force new technology, of course, for the homeowner. So, for the homeowner, they don't need to download an app. It just works. They get a text message, and it just opens up using their mobile browser. Now we're working with several partners to get it fully integrated. It's important for us to make it a tool that appraisers can utilize in an optional way that works right with their appraisal form process.