Innovation, data and risk management

Mark Blackwell, lending and surveying services director at eTech Solutions, discusses the latest developments in the valuations world

This article was originally published in the Mortgage Finance Gazette July 2017 issue

Lenders have better access to more data and technology than ever before to improve property underwriting efficiency, combat fraud and deliver a better customer experience. Surveyors in turn are bringing new services to lenders to help shorten time to offer periods, reduce post valuation queries and increase the quality and consistency of mortgage valuation reports.

Surveyors remain mindful of the potential of being sued for negligence or fraud. Today they have better defences against such claims with stronger defensible claims databases created through electronic site note collection, intelligent form mapping and geo locating mobile devices and photographs.

Accessing multiple data sources, even whilst in a property and carrying out the valuation, provides a more timely and immediate assimilation of data linked to the security and the inspection, therefore improving assessment quality.

New build

We provide data driven tools to help surveyors and lenders get a better handle on new build developments.

The data or lack of it to date to help lenders manage many new build risks, including concentration and transaction risk, has been a known blind spot. Creating greater transparency across each transaction is now achievable and the potential for sharing data across multiple stakeholders including lenders is enormous.

Our new build database solution offers lenders compelling weaponry to deal with these issues and uncertainties with up to date dynamic information in an easy to use format combined with a surveyor’s expertise where needed.

Methods of construction

The quality of homes built using modern methods of construction (MMC) has improved considerably over the years but the challenge is still for lenders to determine how they assess value. A small but growing sector of the market will benefit from growing volumes of data available in the assessment process that can provide robust, defensible, comparable valuations.

In fact, 98% of large and medium sized house builders and housing associations have used or considered at least one form of MMC in the last few years. The most widely adopted form of MMC is sub-assemblies and components with two thirds having used them on at least one home in 2015. This category includes items such as door sets, prefabricated chimneys and dormers.

A shared data set of where these properties are, who built them, out of what materials, and their historic and current values will offer growing value as the sector grows over coming years.

Lenders have struggled to access property level detail where in any given location properties of non-standard construction, including in situ concrete, steel framed, and precast reinforced concrete, exist. In these instances one method of dealing with non-standard construction properties is to black ball an area, not just the individual property, due to lack of available data.

Improved data quality at property level provides a more forensic approach to property underwriting and subsequently unblocks capacity in a market stricken by undersupply.

Leasehold

Leasehold issues have been in the news recently including remaining years on a lease and escalating ground rents on new build. Valuers and lenders are now armed with immediate access to lease data to allay concerns here.

Getting this information to valuers before an inspection with appropriate guidance on how to deal with that information greatly reduces post valuation queries in this area and delivers more certainty to the mortgage offer process.

Information regarding new build and escalating ground rent has featured heavily in recent lender guidance updates we have received. The valuer is not just commenting on any adverse effects on value this may have but whether the case should proceed or not.

Flooding

There has been an increase in flooding over the last decade. A property’s propensity to flood will be used as one of several data points combined to create a risk score for a property.

Surveyors can access this data on their iPad whilst they are carrying out the valuation. This data used in conjunction with other datasets can provide a strategic view of a property’s overall risk and gives a lender an informed view of whether to lend or not or at what price.

Summary

New technology and new data products are driving traditional surveying and data analysis insights to higher levels of quality in property underwriting. Whilst there is a lot of market noise about the dominance of the physical valuation coming to an end nothing could be further from the truth.

What we are witnessing is the harnessing of professional property expertise and greater data availability to deliver robust and articulate property underwriting assessments to lenders.