It’s not uncommon for lenders to lose time and money while underwriting home equity loans due to outdated appraisal processes and unclear property data. Worse, failing to comply with Interagency Appraisal and Evaluation Guidelines (IAEG) can lead to costly delays or even regulatory scrutiny.
In this blog, we’ll demonstrate how combining Clear Capital’s ClearAVM™ technology with a Property Condition Inspection (PCI) or an Automated Property Condition Report creates a faster, compliant, and more cost-effective path to evaluating properties, helping you expedite loan decisions while meeting IAEG and FIRREA standards.
ClearAVM + property inspections: A compliant property valuation solution for HELOC underwriting
ClearAVM is our industry-leading, lending-grade automated valuation model (AVM). Powered by Clear Capital’s proprietary property information, over 75% of all homes in the U.S. have a ClearAVM with high confidence sufficient for use in residential mortgage-backed securities (RMBS).
Property Condition Inspections provide rapid updates on residential and commercial properties from experienced and trained professionals. Local brokers collect property data and deliver a clear risk summary report that visually highlights factors that could influence a property’s marketability.
An Automated Property Condition Report (aPCR) is an AI-powered report that features objective insights from aerial imagery and other data sources to provide highly accurate property condition details.When combined with ClearAVM, PCI or aPCR provide a complete, compliant, and cost-effective property evaluation that can be used in financial transaction decisions, including underwriting home equity loans.
How to expedite and standardize home equity loan underwriting using an AVM with property condition
In accordance with the IAEG, home equity loans require an evaluation to reflect the property’s current physical condition. Lenders may want to choose an AVM for HELOC or other home equity underwriting that incorporates property conditions into the valuation to ensure IAEG compliance.
ClearAVM combined with PCI or aPCR provides a nationwide evaluation solution to meet this requirement. Our nationwide network of real estate agents and brokers performs a drive-by inspection that is IAEG-compliant, providing a market value of the property in its current condition.
Alternatively, lenders using another source for property condition could also use Clear Capital’s Interactive ClearAVM, which incorporates the condition of a property into the predicted value.
Why is an AVM better than traditional appraisal
AVMs are more affordable than traditional appraisal methods and can be completed much faster, saving lenders time and money — time savings that can be passed on to borrowers. On average, a traditional appraisal takes one to two weeks and can cost as much as $1,000. Comparatively, using ClearAVM + a property condition inspection or aPCR takes around two days and costs hundreds of dollars less on average.
Using an AVM with an inspection cascade in home equity underwriting
Lenders can opt to use an inspection cascade in home equity underwriting. Clear Capital’s inspection cascade includes an aPCR. Clear Capital partnered with CAPE Analytics to offer the aPCR, an AI-powered report that features objective insights from aerial imagery and other data sources to provide highly accurate property condition details. The report covers 98% of U.S. residential properties and highlights characteristics that influence property value and marketability.
Clear Capital’s inspection cascade allows you to order a property inspection and receive the quickest result:
- Order an inspection report
- Receive an aPCR if aerial imagery has been taken within 150 days of the order
- If the aPCR is not available, the cascade automatically converts to a Property Condition Inspection (PCI)
When a valuation is needed with a property condition inspection, pair the aPCR with an AVM to underwrite with confidence.
If an AVM does not have a confidence score that is acceptable for use, a lender can immediately order an appraisal and not incur the time or cost of the AVM and condition report.
How lenders use ClearAVM for HELOCs in practice
ClearAVM has helped lenders boost valuation accuracy, enhance customer experience, and approve more loans. Download our ClearAVM Case Study to discover how Hitch, a digital HELOC provider, used ClearAVM to approve 30% more loans. Having access to instant and accurate valuations allowed Hitch to reduce time spent on underwriting, lessen processing costs, approve more loans, and improve client satisfaction.
Get started using a trusted, lending-grade AVM
Download our free ebook, “8 Questions to Ask Your AVM Provider for Home Equity Lenders,” to discover how to choose the right AVM provider and ensure you’re making the most of our powerful AVM technology.
Clear Capital’s ClearAVM™ is trusted by top 10 lenders for its accuracy and reliability. Learn more about ClearAVM, order now on our Product Portal, or email sales@clearcapital.com to begin enhancing your home equity lending marketing.