June 11, 2004

I spoke to Jorge Sauri today. He's the CEO of VueCentric Inc. in Austin, Texas. He gave me an update on his experience at this year's NAMB show. "The usual players were all there," he told me, "but, as far as technology goes, there wasn't anything you would say 'Wow!' about." Jorge is working hard to promote his company's MortgageDashboard application. Sallie Mae is using it now, he says, but that's not something he has released broadly yet. I have plans to call on them in the near future and see how they like it. He also said that there was quite a bit of talk at the show about a national licensing system for mortgage brokers, which he thought would probably help the industry. "Mortgage brokers just don't know how to wield their power," he said.

Also heard back from Tony Merlo, chief operating officer at eAppraiseIT. Earlier this week, the company announced an upgrade to its EagleCert program. The company's new "soft coverage" will cover a lender that uses an AVM in the event that collateral valuation issues muck up the sale of the loan. That sounded a bit too good to be true, to me, so I asked Tony some questions about the program.

With this new "soft" coverage, what exactly is covered?

Soft coverage provides protection to the lender in the event the loan is rejected for sale in the secondary market to a faulty appraisal. We will assist in the discounting of the transaction if the appraisal event can not be cured, or pay the difference between the original valuation tool and a retroactive appraisal, whichever is less.

How are claims made?

The lender or investor simply files the claim with our insurer. The insurer will perform a preliminary review and involve us for mitigation and research. The process is outlined in the program documents and very simple.

What "issues" qualify?

We will cover gross negligence and/or fraud on the part ofo ur appraisers. We do not cover market depreciation or any event that occurs after the valuation is completed and that would decrease the value of the property.

How does the pricing compare to the previous insurance offered by eAppraiseIT?

There is no additional charge for the enhanced coverage.

Is there a waiting period or a number of investors you have to try to sell the loan to before a claim can be filed?

No. We will respond upon the first issue or investor challenge and coverage goes back to the first dollar loss.

Thanks for getting back to us, Tony. The rest of you guys: have a great weekend.

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June 10, 2004

So we've got a great idea for an upcoming RETI issue, in fact, we're doing this for the issue of August 10 (there is no Issue on July 20). We want to talk to as many CTO/CIO executives as we can for this issue. We want to know what key issues are affecting them in their daily work and find out what they are working on now that really excites them. If you are one of these executives, drop us a line. I'm not sure how many people we can feature in the issue, so let us know if you're interested as soon as possible.

Timing truly is a huge factor in success, which is why I guess the guys over at eAppraiseIT are smiling about now. We've been writing a lot about the race to set AVM standards and testing policies, which could lead some lenders to conclude that we just don't have any consensus yet on how these things should be used. Today, eAppraiseIT announces that it's new product will protect a lender who uses an AVM to originate a loan and then has problems selling it into the secondary market because of collateral valuation issues. I've put the word out that I need more details on exactly how this works and will report back to you when I get it. On the surface, it sounds like a product that could allay some of the fears that have kept some lenders from cutting their expenses with automated valuation tools.

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June 9, 2004

So this AVM testing thing just keeps getting more complicated, in my humble opinion. You probably saw the story we posted yesterday.

Near as I can tell, the whole thing traces back to FNC starting up its Collateral Risk Management Consortium (CRC) over a year ago. Of course, as Vicky Cassens Zillioux points out, it's not FNC's anymore. The company has officially spun it off and since FNC sold its AVM model to DataQuick, it has no vested interest as an AVM developer. Though, FNC certainly has a great deal of interest in sitting down with a bunch of the nation's top lenders in a setting that lacks any other vendors.

So what do you do if you're a vendor left out in the cold? Do what 7 of the nation's top AVM developers did and form your own committee, the Collateral Assessment and Technologies Committee (CATC) under the Real Estate Information Professionals Association (REIPA). Then there were two organizations working toward the same goal, as outlined in our RETI feature from last issue.

But now the CRC has joined with the Appraisal Institute and, hopefully, the International Association of Assessing Officers (subject to its board's approval) to form a joint industry task specifically for AVMs. The details are all in the story, including the fact that the new group hopes to get a bunch of other folks involved, including the CATC. No one from the latter organization has commented yet, but they say they're working on it. I'll be very interested to see what they say.

I've talked to members of all of these groups and they all say pretty much the same thing: they want to make it easier for lenders to use AVMs, which will save them money and give them a decision much faster. The big questions are: (1) who will set the standards for AVMs and AVM testing, (2) how much do lenders (and competitors) get to know about what goes into making the various models work, and (3) how will lenders be able to document for investors that their use of AVMs is part of a suitable program of risk management?

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June 8, 2004

The new issue is online now. We know you're reading it, so send us some feedback! We'd love to hear from you.

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June 7, 2004

Many of you are in Salt Lake City today for the NAMB show. Hope that's going well for you. Meanwhile, we're tracking a developing story for you back here. On Friday, AMCO, the national relocation company and collateral valuation provider, alerted us that they had sent a cease and desist letter to FNC in regard to that firm's ValueSource desktop valuation platform for appraisers. Apparently, AMCO thinks it infringes on technology it is attempting to patent. One patent attorney has already told us that a pending patent application offers no legal protection. That doesn't come into play until after a patent has been granted. But that's a potential problem, too. See our breaking story for the details.

The new issue of RETI will hit the website tomorrow. Many of you already have your issues. Please be sure to send us your feedback. It's not just to make us feel good (or bad), you know. It's one of the best ways to make sure that what we're working on is really information you need to be more successful.

Speaking of what we're working on: the next issue of RETI will include a story on thin title plants and the technology that makes them work. There's been a bit of controversy stirred up over these new tech-savvy title players and we intend to get to the bottom of it. Have you ever worked with a thin title plant? Under what circumstances do you find their databases, which don't go back into history as far as traditional title plants, suitable for your uses?

I'll tell you about more of the stories we're working on later this week.

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