Reggora says it will cover mortgage repurchase, LLPA losses tied to appraisal defects

Reggora CEO Brian Zitin said his company is looking to help mortgage lenders by removing the need to manually underwrite most appraisals.

Appraisal management software company Reggora is adding a repurchase and loan-level price adjustment (LLPA) warranty to its appraisal review solution.

The valuation tech company said it will cover any financial loss associated with a repurchase or LLPA adjustment due to an appraisal defect. Reggora is believed to be the first company to do so based on the results of its appraisal technology, Reggora Appraisal Review.

In a statement on Wednesday, Reggora — a HousingWire Tech 100 winner — said that approximately 70% of a mortgage lender’s appraisals are eligible for the warranty. This will enable lenders to eliminate manual underwriting reviews on the majority of appraisals without additional risk.

“As the mortgage industry prepares for volume to increase, we wanted to help lenders handle that volume much more efficiently,” Reggora CEO Brian Zitin said. “Eliminating the need to manually underwrite the vast majority of appraisals goes well beyond a technology improvement and truly allows lenders to close loans faster at a lower cost.”

Loan buyback requests from the government-sponsored enterprises Fannie Mae and Freddie Mac have been long-enduring and expensive proposition for lenders.

Seller repurchases of Freddie Mac mortgages rose to $430 million in the second quarter of 2024, a 29.1% increase from the first quarter, according to an analysis of public filings by Inside Mortgage Finance. By contrast, sellers of loans through Fannie Mae repurchased $268.5 million in noncompliant loans during the same period, a 27.7% decline from Q1 2024. Overall, buybacks dropped by 0.8%.

Mortgage executives told HousingWire that income verification was the biggest reason for a buyback initiation, followed by appraisal issues. LLPAs on refinances are another pain point for the industry.

Last week, mortgage tech firm Candor released an expansion of its Loan Engineering System to include Federal Housing Administration (FHA) loans. The company now fully automates underwriting decisions for FHA loans — minus collateral — and offers a warranty on income calculations and cleared conditions for funded FHA loans.