One of the main challenges lenders face is prioritizing the resources they devote to the appraisal process. The key is to devote appraisal resources first to those properties that are at greatest risk.
As Michael Sklarz, president and CEO of appraisal software provider Collateral Analytics, explains, ‘A 10 percent to 20 percent appraisal error is of little consequence for a loan with an initial loan-to-value (LTV) ratio of 40 percent to 50 percent, but can be very important for a mortgage with an LTV of 80 percent to 90 percent.’
For this reason, Collateral Analytics has developed CA Value-CR, a new product to help lenders prioritize their resources devoted to the appraisal process. The system combines company's CA Value automated valuation model (AVM) with a new product called CA Credit Risk Model to help identify those mortgages with the most potential for appraisal valuation risk, according to a press release.
CA Value-CR can be run on a new or seasoned individual loan – or a mortgage portfolio or pool, the company says.
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