A number of valuation firms are providing warranties for the values they come up with. The services are primarily being promoted by appraisal management companies looking to increase the value of their offerings.
The latest company to offer such a service is Nationwide Appraisal & Settlement Network.
The Oldsmar, Fla.-based firm said in a news release Tuesday that its appraisal values are now backed by an insurance policy. The policy names Nationwide Appraisal as the insured and ensures that the report is “free from defect.”
The policy “covers losses from claims filed as a result of an error in the property value that results in direct loss to the financial institution or the transferee through loan default or foreclosure,” according to the Mortgage Daily advertiser.
“The ValueShield Warranty Program will protect the financial institution against an actual financial loss if the warranted collateral value is ultimately determined to be in excess of the variance of the collateral value determined as of the date of the original appraised value,” Nationwide Appraisal stated. “When a loan defaults or foreclosure occurs and a valuation inaccuracy is discovered, the insurer steps in and pays the claim subject to the terms and conditions of the insurance policy.”
But Nationwide Appraisal isn’t the only firm offering warranties.
Back in 2007, FirstClose said it would guaranty values derived from its automated valuation model. An errors-and-omissions insurance policy backed all of FirstClose’s AVMs — protecting lenders against any type of loss, including foreclosures.
StreetLinks National Appraisal Services said last year that it has been providing a warranty of appraisal quality and appraiser competency on each of its appraisals. The warranty provides indemnification for lenders in the event of a verified appraisal-related repurchase demand.
Around the same time, DartAppraisal.com unveiled a custom appraisal warranty on loans up to $750,000.
This year, Coester Appraisal Group announced a guarantee that ensures its reports will stand up to repurchase demands. The protection has the AMC initiating and fulfilling a formal rebuttal campaign to refute the repurchase request at no cost to the lender. If Coester is unable to refute the repurchase demand, and the lender is required to repurchase the loan — then Coester will find a buyer for the loan.
More recently, Kirchmeyer & Associates Inc. announced a new collateral valuation insurance program that is provided through a partnership with Group9 Insurance Solutions. The coverage protects against default losses, including repurchase expenses, on first mortgages, second liens and home-equity lines of credit.
“The program protects the financial institution against an actual financial loss if the warranted collateral value is ultimately determined to be in excess of the variance of the collateral value determined as of the date of the original appraised value,” Kirchmeyer’s press release said. “When a loan defaults, forecloses, or a loan repurchase demand occurs and a valuation inaccuracy is discovered, the insurer steps in and pays the claim subject to the terms and conditions of the insurance policy.”
