Moves come as GSEs accept online desktop appraisals
Last year’s acquisition of CubiCasa by Clear Capital, a national real estate valuation technology company, was just one step in the firm’s overall mission to modernize the appraisal process, a top official told Mortgage Professional America.
“We’ve been on a multi-year journey – certainly in earnest over the past three years – to modernize and digitize the appraisal process,” Kenon Chen, executive vice president of corporate strategy, told MPA. “We’ve been highly involved in collaborating with industry participants, lenders, the GSEs [government-sponsored enterprises] on finding ways to better digitize the property inspection process and bring in opportunities to speed up the appraisal process while increasing quality.”
Stated simply, it’s figuring out how to bring the home to the appraiser rather than always sending the appraiser to the home, he said. That quest led Reno, Nev.-based Clear Capital to acquire the Finland-based proptech start-up CubiCasa late last year.
The purchase furthered Clear Capital’s expansion of mobile technology that automates floor plan sketch creation and digitizes property data collection, company officials said at the time of the purchase. As part of the deal, CubuCasa continues to operate with autonomy while servicing a wide variety of customers and verticals, officials added.
Read more: Clear Capital launches lending-grade automated valuation model
“We discovered CubiCasa because we realized it’s not an easy thing to train someone on measuring a home accurately and consistently using standards that are a very manual process that comes through years of training,” Chen said. “In Europe, especially in the northern countries, floor plans are a pretty normal part of the listing process. In fact, if there isn’t a floor plan in the listing, people wonder what you’re hiding about the home.”
Chen described how CubiCasa developed a method of using smartphones to do a five-minute walkthrough of a home to generate an accurate floor plan with measurements through artificial intelligence and computer vision. “It’s almost like a magical process, and even works on older smartphones,” Chen said. “As soon as we saw that and tried it out in the field, we realized that we really had something here that was going to change the way appraisals are done.”
One change is the immediacy, Chen noted. “We see hybrid appraisals to be five to eight days faster than the traditional process with advantages to the borrower with more convenient scheduling times.”
The digital focus comes at a time as Fannie Mae and Freddie Mac both announced, as of March 19, they will accept remote desktop appraisals on eligible transactions. Purchase transactions for one-unit principal residences that meet specific requirements outlined in the DU release notes will be eligible for this option, Fannie Mae announced.
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“It’s one of the biggest policy changes in appraisals in decades, so that’s where our focus will certainly be as lenders make that transformation from traditional appraisals to now making desktop appraisals,” Chen said. “We’ll be launching our ability to do desktop appraisals, as well as providing the floor plans in support of desktop appraisals, by the end of March.”
Clear Capital’s prescient plans are in full swing amid a shortage of appraisers too. The number of appraisers now hovers at around 40,000 nationwide, Chen said.
“On purchase loans now, lenders have the option of doing a desktop appraisal as long as the appraiser has access to a floor plan and that floor plan has to be a digital floor plan, not a hand-drawn floor plan,” he noted. “So, the idea that someone can just walk through the home in five minutes opens up all kinds of great opportunities to remove the inspection from the appraisal, which can really speed up the appraisal process for lending.”
As it happens, the CubiCasa acquisition comes as Clear Capital marks the 20th anniversary of its founding. Almost concurrently, the company launched ClearCollateral Review, a system that automates collateral underwriting in compliance with internal credit policies and GSE guidelines, and introduced ClearLabs, an in-house innovation lab which sets out to solve the real estate and mortgage industry’s most pressing challenges.
“We are involved in several projects to modernize the appraiser process itself,” Chen said. “We’re highly involved in making desktop appraisals available that are accurate and consistent as well as continuing to expand hybrid appraisals and speeding up the process. The last piece we’re working on is really automating the collateral underwriting process – the actual review of the appraisal work – once it’s complete.”
Its early jump toward narrowing the digital divide has fueled expansion at the company, Chen noted, with plans to add more than 100 positions to accommodate that growth. “We have 130 positions open,” he said. “We’re still growing. We consider ourselves a real estate fintech company, so a lot of our open positions are in engineering, machine learning, as well as operations. We continue to invest quite heavily in technology and innovation - we think can have a positive impact in the industry.”
