Appraisal management company Class Valuation, a subsidiary of investment firm Gridiron Capital, acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum.
Pendo, a national appraisal management company, has touted its standardized process for employee and appraiser relations, which it said yielded a higher quality appraiser network and employee base. Pendo’s presence is strongest in the Midwest and rural areas, where it has relationships with “high-quality appraisers,” according to a press release from the three companies. Pendo works with more than 150 lenders, per the companies’ statement.
Mike Peck, CEO of Pendo, in a statement accompanying the announcement, said Pendo will benefit from Class Valuation’s “scale, resources, technology and innovation platform.”
“I am proud of Pendo’s journey and the success this team has helped build,” said Pendo. “Looking forward, I am excited for the vast opportunities this partnership brings for our team and our clients.”
John Fraas, CEO of Class Valuation, said that combining the two firms “tech-enabled workflows and complementary areas of expertise” would help the consumer.
“We are excited to welcome the Pendo team to the Class Valuation family,” Fraas said. “Along with a strong cultural fit, we are aligned in our approach to provide our client partners with unparalleled quality and service.”
Investment bank Berkery Noyes advised Pendo Management on the merger. Gridiron, Class Valuation and Pendo did not return requests for comment.
Tech-focused AMC Class Valuation has been scooping up AMCs in recent years, and claims to be one of the top five AMCs in the country. AMCs provide appraisals to lenders by coordinating directly with appraisers, fulfilling the regulatory need for a firewall between mortgage brokers and the appraisal process.
In 2018, Class Valuation acquired Landmark Network, a reverse mortgage-focused appraisal management company, and changed its name from Class Appraisal to Class Valuation. A few months later, Class Valuation snatched up Texas-based appraisal management company Janus Valuation and Compliance.
In April, private equity firm Gridiron Capital acquired a majority stake in Class Valuation from another private equity firm, Narrow Gauge Capital.
Amid high demand for appraisals in the past 18 months, Class Valuation has sought to use technology integrations to increase efficiency. In a previous interview with HousingWire, Fraas said the AMC pays its appraisers within 24 hours of completing an appraisal, and aims to complete most appraisals within 10 calendar days.
The AMC sector is not without controversy. Appraisers have said AMCs — which became ubiquitous as a result of post-recession reforms — introduce inefficiency into the appraisal process, degrade their working conditions and cut into their pay.
The appraisal process itself has also come under fire, with growing concern over the role the appraisal process plays in the racial home valuation gap. In July, an Oakland woman filed a complaint to the Department of Housing and Urban Development accusing an appraiser, Class Valuation and two mortgage originators of undervaluing her home to the tune of $400,000.
HUD has also taken up the issue of potential bias in appraisals, and in July formed an interagency taskforce to study the matter and recommend policy interventions.