Appraisal management company Clear Capital, in the latest effort to revamp the appraisal process, hopes to automate property photo reviews to ensure data and photo consistency with its photo review product, ClearPhoto.
Clear Capital’s data science team developed the product and built it into the already existing platform, a review system that automates collateral underwriting in compliance with internal credit policies and government-sponsored enterprise guidelines.
According to Clear Capital, the tool uses computer vision technology to highlight the right files automatically so underwriters can make more efficient and informed decisions. According to a recently published study by the U.S. Government Accountability Office, in 2018, the average number of days needed to complete a residential real estate appraisal by state ranged from seven days in California to 21 days in North Dakota.
“One of the last-remaining, untamed areas of the appraisal process is the understanding of photo quality, and most lenders and AMCs are manually reviewing photos with inconsistent, slow, and wildly expensive processes,” Jeff Allen, executive vice president of innovation labs at Clear Capital, said in a statement. “Employing computer vision and machine learning help streamline the inspection process, lower the cost of collateral underwriting, and reduce the time it takes to get collateral approval.”
In addition, the ClearCollateral Review platform now performs automatic checks throughout the appraisal review process, including a check on the labeling of photos. It also validates that the number of unique rooms shown in imagery and sketches matches the appraisal data for bedrooms, bathrooms, and kitchens is consistent with the appraisal data.
The FHFA recently announced that desktop appraisals will become permanent. This change will give lenders a wider variety of appraisal options for each loan type, leading to greater agility and flexibility while they balance cost, turn time and the quality of loans.
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At the moment, the technology is being piloted internally. It will be widely available to users sometime during the first quarter of 2022 through ClearCollateral Review.
Erik Allen, Clear Capital’s chief data scientist, said that the company’s existing platform and capabilities made it clear that pursuing photo AI and automated review was the natural next step.
Clear Capital acquired CubiCasa, a Finnish PropTech start-up that automates floorplan sketch creation, in September 2021. Earlier in 2021, the company launched ClearInsights, a mobile application that enables real estate professionals, homeowners and appraisers to generate a complete digital picture of a home using CubiCasa’s technology, and ClearProp, a property valuation and analytics tool that enables users to quickly come to propter value conclusions.
Other stakeholders — including AMCs, lenders and federal regulators — have also sought to speed the appraisal process, reduce its cost, and make it less susceptible to bias.
In October of 2021, the Federal Housing Financial Agency announced that desktop appraisals, which were first implemented in March 2020 as a way to keep the mortgage industry afloat at the onset of the COVID-19 pandemic, will become permanent, helping speed the appraisal process. With a desktop appraisal, appraisers do not need to drive from property to property to complete an in-person appraisal.
United Wholesale Mortgage also hopes to make its stamp on the appraisal space. The wholesale lender announced in September that it was launching an AMC-free appraisal program. During a pilot test of the AMC-free option, UWM reported a substantial improvement in the time it took to complete an appraisal.