Many involved in the origination process feared that the additional compliance and resources required as a result of the CFPB’s TILA-RESPA Integrated Disclosure Rule (TRID) rule would result in costlier and lengthier originations. TRID went into effect on October 3, 2015.
STRATMOR’s Appraisal Process and Turn Times Survey, released as part of the company’s Insights report for October 2016, found that appraisal fees and turn times have indeed increased over the last year—but not because of TRID.
The survey, which featured responses from 56 unique lenders during a one-month period from August 16 to September 16, 2016, found that appraisal turn times in the post-TRID originating world had increased substantially—by 5.74 days for purchase loans and by 6.28 days for refinance loans. Those numbers calculated to increases of 79 percent and 81 percent, respectively, from pre-TRID turn times.
Many of the lenders surveyed did not attribute the increases to TRID, however. According to STRATMOR, many of the survey respondents cited a sharp increase in origination volumes from Q2 to Q3 as well as a lack of qualified appraisers.
“TRID has had very little direct impact on appraisers from my standpoint,” said Erik Richard, CEO of Landmark Network. “TRID did affect some appraisal pricing, however AMCs, for the most part, have shielded appraisers from any significant adjustments. The current turn-time delays and noteworthy price shifts in certain markets can be traced to an increase in volume coupled with the reduced number of active full-time field appraisers working in the mortgage financial transaction market.”
Appraisal fees have also increased, though not as much as turn times. The survey found that appraisal fees in the post-TRID origination world climbed by an average of approximately 15.8 percent over pre-TRID numbers. Not one of the 56 lenders who responded reported that appraisal fees had declined since TRID went into effect. But just like with appraisal turn times, the lenders surveyed reported that the increased fees were the result of a lack of qualified appraisers and a spike in origination volume.
Two-thirds of lenders surveyed said they use appraisal management companies (AMCs) to obtain appraisals. The other one-third said they used either an in-house appraisal panel (AP) or a combination of AMCs and an AP. The lenders who said they use AMCs said that property location and service where the primary factors in their decision.
Click here to view the entire STRATMOR Insights report for October 2016.