If your home equity valuation company doesn’t offer multiple valuation solutions, then it may be time to reconsider who you’re doing business with. Today, the smartest institutions are using multiple home equity valuation solutions to meet differing loan risk profiles. Lending institutions should look for a partner that offers an array of products to meet their valuation needs, including:
- AVM-Derived Solutions —Automated Valuation Models (AVMs) and Interactive AVMs (iAVMs), use mathematical modelling and comparables to calculate a property’s value at a specific point in time. Before the housing crisis, a simple AVM used to be enough validation to close many home equity loans. Today, to use an AVM for a home equity loan appraisal, a property inspection has to be performed to take pictures and confirm the property’s condition. An AVM with a property inspection meets interagency guidelines and is a cost-efficient solution suitable for home equity valuation on lower risk loans.
- Evaluation —An Evaluation can be a cost-effective option in the 34 states where broker/agents are allowed to provide an Evaluation containing a market value. Similar to a Broker Price Opinion (BPO) in terms of information, an Evaluation differs in that a market value is determined instead of a price opinion. Evaluations can be used in the following states: Alabama, Alaska, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin. They can also be used in Massachusetts and Vermont for Non-Federally related transactions.
- Desktop Appraisal — A Desktop Appraisal with a full property inspection is the closest thing you can get to a field appraisal without it being an actual field appraisal. They are more economical, more flexible, faster, but also compliant and accurate. For home equity valuation, a desktop appraisal is completed by a state credentialed appraiser in adherence with USPAP, and includes all the data seen in a full field appraisal, including subject property inspection, subject condition, appraiser selected comparables, subject and comp photos, adjustments and full appraiser reconciliation commentary. It is a cost-effective alternative to traditional 2055 and 1004 type Field Appraisals.
- Field Appraisals — A Field Appraisal is the gold standard, when you need the most accurate valuation. Both the external 2055 and full interior 1004 are used for home equity.
While each of the featured solutions has its own advantages, smart institutions today are turning to home equity valuation companies who can offer a combination of solutions to better align with loan risk.
In addition to a full suite of valuation solutions, your lending institution should look for a provider that offers a well-documented quality control process. By using both manual and automated review, you can catch issues before the home equity loan appraisal is in front of your underwriter. Often, an automated QC check that mimics Collateral Underwriter can be used, bringing structure to the process.
Stewart Valuation Intelligence offers home equity valuation solutions that can fit anywhere within your risk parameters. Each of SVI’s valuation products is backed by Intelligent Quality Control — a solution designed to enhance loan appraisal quality by giving appraisers and review staff the data, tools and workflows needed to address issues before an appraisal is submitted.
Contact us today to learn more about our full suite of home equity valuation solutions.
