Unlike a full appraisal, a desktop appraisal is completed by a licensed appraiser without a physical inspection of a property.  Working remotely, an appraiser uses public records such as property listings and tax records to provide an appraised value.  Using technology and available information, an appraiser can complete a desktop appraisal in less time than it takes to complete a full appraisal, and generally at a lower cost to the borrower.

The GSEs began allowing the use of desktop appraisals in 2020 as temporary flexibility in response to the COVID-19 pandemic when appraisers needed to be able to perform valuations during lockdown periods. 

Fannie Mae and Freddie Mac (the “GSEs”) recently released additional information regarding the implementation of desktop appraisals for specific types of loan transactions.

Fannie Mae issued release notes for an upcoming Desktop Underwriter update that states that loans submitted on or after March 19, 2022, will have the option of using a desktop appraisal under certain conditions.  Loans must be for a purchase transaction, secured by a one-unit principal residence, have a loan-to-value ratio of 90% or less, and receive an Approve/Eligible recommendation in Desktop Underwriter.

Fannie Mae also issued a Fact Sheet that broadly details appraiser and lender responsibilities and steps for loans utilizing desktop appraisals. Appraisers must use Form 1004 and may use data from various parties and from secondary data sources such as public records and the internet.  The desktop appraisal must include a floor plan with interior walls and include sufficient data to provide a credible report. Additionally, any data provided by an interested party to a sale must be verified by a disinterested source.

Freddie Mae issued a guide to Loan Product Advisor Feedback Messages, as their system will begin providing feedback on whether a loan is eligible for a desktop appraisal, effective March 6, 2022.  The guide provides new message codes and text related to eligibility for use of a desktop appraisal.

The GSEs previously announced in October 2021 that they would be updating their Selling Guides to allow for permanent use of desktop appraisals for certain purchase loans after temporarily allowing their use from March 2020 until May 2021 due to COVID-19 lockdowns.

Related Content:

• GSEs announce plans to limit purchases to loans meeting revised General QM rule (5/11/2021)
• CFPB rescinds 7 pandemic-related policy statements (4/7/2021)
• CFPB issues statement on financial institutions serving LEP customers (2/3/2021)

On November 30, 2021, the Consumer Financial Protection Bureau, together with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, posted a notice to the Federal Register and its website regarding the annual adjustment to appraisal requirements for higher-priced mortgage loans (“HPMLs”). The new threshold exemption applies to loans in an amount not exceeding $28,500. 

HPMLs are subject to additional appraisal requirements under Section 35 of Regulation Z, including the requirement to obtain two independent appraisals in some circumstances. 12 C.F.R. 1026.35(c). However, these rules do not apply to loans in the amount of $25,000 or less, with the $25,000 amount to be adjusted annually based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) as of June 1, each year. If there is no annual percentage increase in the CPI-W, the threshold amount from the prior year will carry over, as was the case in 2021 when the threshold remained at the 2020 adjusted amount of $27,200.

The Bureau of Labor Statistics reported the CPI-W on June 1, 2021, with a 4.7% increase from the CPI-W for the prior year.   Based on this increase, a new threshold amount of $28,500 will be in effect from January 1, 2022 through December 31, 2022.  

If you have any questions regarding this article, please contact DocMagic’s Compliance Department.

Related Content:

• CFPB annual threshold adjustments for Regulation Z (11/3/2021)
• U.S. Treasury and FHFA suspend provisions of the PSPAs (10/20/2021)
• CFPB publishes analysis of consumer complaints (10/13/2021)

DocMagic announced the rollout of eDecision™, a solution that significantly expands the level of analysis applied to e-eligibility determination for eClosings. The result is a clear-cut, highly accurate decision that tells users exactly how far they can take a digital closing based on the unique attributes of the loan transaction—all the way down to county-level eRecording acceptance.

eDecision is powered by DocMagic’s sophisticated audit engine, which begins the decisioning process as soon as the first set of disclosures are generated and continuing with e-eligibility checks throughout the entire loan process. The solution accesses and compiles first-party data, leveraging an immense amount of information to improve the digital closing process.

“Our goal in developing eDecision was straightforward: to help clients execute flawless eClosings and bring a new level of automation to the overall process by providing lenders with an immediate determination of how “e” they can be,” stated Dominic Iannitti, president and CEO of DocMagic. “Simply put, eDecision equates to eSuccess for all parties involved in the closing process.” 

The eDecision solution does not force users to leave DocMagic’s platform and visit another website, use a third-party application, or access an ancillary database. Everything eDecision offers is available within DocMagic’s core process and is provided as an integral component of the eClosing workflow, ensuring a seamless and efficient eClosing process each and every time.

eDecision’s core capabilities:

• eClosing selection – eDecision automatically determines how “e” lenders can be with DocMagic’s Total eClose solution, which offers four distinct types of compliant eClosings. From the moment the first document package is generated, the highest level of hybrid available or a fully-paperless eClosing is instantly identified. 
• eNote certification – eDecision automatically confirms whether a lender is certified to originate eNotes, is registered with MERS, and has completed their MERS end-to-end testing.
• eRecording readiness – eDecision automatically validates whether the local recording jurisdiction is able to accept an electronically executed security instrument.
• Knowledge-based authentication (KBA) – eDecision automatically confirms whether KBA is required in the closing state where it occurs.
• eNotary acceptance – eDecision automatically identifies which type of notarization is accepted within the jurisdiction: remote online notarization (RON), in-person electronic notarization (IPEN), or traditional in-person notarization.
• Investor acceptance – eDecision will also soon provide a determination whether an investor will purchase an electronically closed loan, saving time for secondary marketing departments.

All analysis and results from eDecision are incorporated into DocMagic’s Loan Detail Report (LDR), which is automatically included with all document requests and is accepted by most investors as proof of regulatory compliance.

Iannitti concluded: "We strive to eliminate manual processes and improve the overall user experience. We don’t want our clients having to go elsewhere to research or rely on disparate third-party systems for what we believe should be fully-integrated analysis. eDecision gives lenders, settlement providers and notaries a completely integrated digital closing determination process — and the confidence they need to offer eClosings on a widespread scale.

DocMagic’s Director of Product Development, Michael Morford was selected as a 2021 Tech Thought Leader by PROGRESS in Lending Association.

 The association says it developed the annual award to identify industry leaders who are out-of-the-box, solution-oriented technology thought leaders that are helping to address industry-wide issues and challenges.

Morford has more than 23 years of industry experience; 17 of those with DocMagic. He joined the company as the Integration Services Manager where he oversaw the development of interfaces with a multitude of third-party software providers. Now serving as Director of Product Development, Morford is directly responsible for DocMagic’s portfolio of solutions and services.

“I am elated to be honored with PROGRESS in Lending’s Tech Thought Leader award,” said Morford. “We’re always innovating at DocMagic and driving the industry to leverage leading-edge technology to gain newfound efficiencies that ultimately benefit our lender clients and their customers.”

As lead coordinator for the design, development and implementation of DocMagic’s web-based suite of digital lending solutions, Morford is at the forefront of innovating and enhancing software applications. He has seen the industry’s drive to adopt eMortgages steadily grow over the years, and in the last five years, he has helped DocMagic develop highly effective solutions while operating in a very fast-paced, dynamic, and constantly changing mortgage market.  

Morford regularly sits on industry technology-based panel sessions, serves as a thought leader in the mortgage media, and attends key conferences to share his ideas and help move the industry forward.

DocMagic’s Director of Client Services, Lori Johnson, was recently given the 2021 Elite Women in Mortgage award from Mortgage Professional America (MPA).

Now in its fifth year, MPA created the award to recognize the exceptional work of women whose efforts and contributions are paving the way for future generations.

Johnson is credited with helping DocMagic’s lender clients achieve a huge uptick in growth – via eClosing technology. The remote implementation model she oversaw during the pandemic was wildly successful in helping lender-clients to go live without disruption to operations. Johnson accomplished this by transitioning her entire team virtually overnight to a work-from-home (WFH) environment where they were able to execute tasks just as effectively as when they were at DocMagic’s headquarters.

“Being recognized alongside other accomplished females that are doing exceptional things for the industry is a huge honor for me,” stated Johnson. “For years, the outstanding team I work with at DocMagic has been moving mountains to help lenders, settlement providers, investors, and other relevant parties automate manual workflows and remove paper from antiquated processes.”

Johnson works tirelessly to ensure that complex and precision-based eClosing and digital mortgage technology implementations are executed flawlessly, delivering a level of customer satisfaction that lenders and partners rave about.

Johnson’s efforts helped DocMagic land on the 2021 Inc. 5000 list, with a 67 percent three-year growth rate from 2017 to 2020. 2021 will be another banner year for the company in sales, new client implementations, solution enhancements, seamless integrations, and more.

 DocMagic’s Chief Compliance Officer, Gavin T. Ales, has been honored by National Mortgage Professional (NMP) magazine with its 2021 Top 40 Under 40 award.

The annual list highlights the industry’s most influential mortgage professionals under the age of 40 who exemplify professionalism, perseverance, leadership, and excellence in their respective fields.

Ales has implemented numerous complex compliance regulations into DocMagic’s software applications, supporting thousands of lending entities across the mortgage supply chain. He oversaw the implementation of TRID, works closely with the CFPB, the GSEs, and ensures lenders remain in compliance at all times---from the moment borrowers and originators engage at the point-of-sale all the way to underwriting, closing, secondary, and servicing. Most recently, he has been key in launching compliant eClosing solutions and eNotarization functionality.

“I am flattered to be acknowledged as someone who has made industry contributions that have had a positive impact,” commented Ales. “DocMagic has truly moved the needle with innovative technologies that are digitizing the lending process. What’s more, adoption of our solutions is at an all-time high. I feel honored to have earned this accolade, but at the end of the day it’s a team-based effort here at DocMagic that’s making the real difference.”

Ales’ legal and compliance department ensures that state, federal, CFPB, and investor-level compliance changes are assessed and accurately incorporated into DocMagic's software platform in a

timely fashion, this includes overseeing constant changes to many loan documents for compliance adherence. Ales specializes in mortgage banking compliance; federal and state regulatory compliance; financial services law; real estate law; and consumer credit law, among other focuses.

The complete list of 2021 Top 40 Under 40 honorees are showcased in the December issue of National Mortgage Professional magazine: https://nationalmortgageprofessional.com/news/nmps-40-under-40-2021.