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Low interest rate, high refinance rates and high front costs are forcing lenders to seek faster and less expensive loan originations. This is particularly true in the second and home equity market wherein most if not all expenses are retained by the lender. By far, property valuation has drawn the most attention in recent years. Property valuation is essential to the loan origination process in that it verifies the adequacy of collateral securing the lender’s mortgage position and establish a Combined Loan to Value (CLTV) and the amount of credit to extend. Historically, property valuations have been performed to varied degrees by professional appraisers. However, Automated Property Valuations (AVM) have been accepted by most major second and home equity lenders for some defined portion of the mortgage originations. Nevertheless, acceptance is not universal. Based upon several factors (such as loan position, loan amount, credit quality, valuation expense, turnaround time and willingness to take risk), each second and home equity lender establishes their own unique criteria for valuing property. This may range from a full Interior / Exterior Appraisal (Uniform Residential Appraisal Report or URAR, FNMA 1004 or FHLMC 70) or a Drive-By Appraisal (FHLMC 406 or 2055) to Broker Price Opinions (BPO) and Automated Property Valuations (AVM). Our Property Valuation Insurance product lends the comfort that many financial institutions need in moving toward either an AVM or some lesser degree of valuation. For example, utilizing a Drive-By Appraisal for a second or home equity formerly requiring a URAR, or utilizing an AVM for a second or home equity formerly requiring a Drive-By Appraisal. For more information on this product, contact FIS. |