How to enhance home equity loan underwriting using an AVM

In part one of our home equity lending series, we discussed home equity lending and how lenders can use an AVM to market to home equity customers. In this second part, we’ll discuss how to meet interagency guidelines for property valuation while expediting underwriting by using  ClearAVM™ + Property Condition Inspection (PCI).

ClearAVM + PCI: A holistic view of a property

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 US 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.

When combined with ClearAVM, PCI provides 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 underwriting using ClearAVM + PCI

In accordance with the Interagency Appraisal and Evaluation Guidelines (IAEG), home equity loans require an evaluation to reflect the property’s current physical condition. HELOC lenders may want to choose an AVM provider that can incorporate a property’s condition into the AVM for their valuations to comply with the IAEG.

ClearAVM combined with PCI 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 compliant with the IAEG, 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.

This solution is more affordable than a traditional appraisal method 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 costs nearly $1,000. Comparatively, using ClearAVM + PCI takes around two days and costs hundreds of dollars less on average.

Using an AVM cascade in home equity underwriting

When an AVM returns a confidence score that is within the risk tolerance acceptable for use, the PCI is then ordered. 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 + PCI.

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 and email to begin enhancing your home equity lending marketing.

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