Take a break and have
a crack at our Canadian Mortgage Underwriting Word Search. Call Purview For
Lenders today at 1.855.787.8439.
http://purviewforlenders.com/game-time-crossword-mortgage-definitions/
Tuesday 30 September 2014
Monday 22 September 2014
Attn: Private Lenders: You Can Access the Same Tools as the Banks and Greatly Mitigate your Risk
As a private lender you are just
as susceptible to funding a bad deal or (in a severe example) falling victim to
mortgage fraud as a big bank. The difference is that the larger lending
institutions have access to a wide variety of tools and resources that you may
not feel you have access to. Well here is the good news – technology has made
it easier than ever to leverage some of the tools that your competitors do.
When you receive a deal - while
the credit worthiness, character and income of the borrower are often factors
in the decision to loan money and how much are factors in the lending process –
avoiding bad deals and identifying crucial information about a property and its
owners at the stage of an application being submitted is hugely beneficial.
Let’s face it - how many
applications do you receive, especially in the area of mortgage refinancing,
where the deal implodes at some stage in the lending process, often because of
one of the following?
·
The value is
overstated – the appraisal does not come in on value
·
Mortgages registered
are far greater than initially disclosed
·
Other mortgages are
registered that have not been disclosed
·
Liens are registered
on the property (FYI - Purview does not automatically show Liens – only
registered mortgages on title – Lenders would have to pull and pay for an
instrument image to get to these details)
·
Other people are on
title that are not indicated in the mortgage application
When this happens all sides to the
transaction lose considerable time and expense. This can easily be mitigated
using common reports that larger financial institutions have been using for
more than a decade. While real estate sales professionals turn to GeoWarehouse
to perform property reports and mortgage brokers turn to Purview For Mortgage
Brokers property reports, lenders turn to the Purview For Lenders property
report.
This enables you to access
information that identifies all of the above and more – including an automated
fraud check. In the event that other people turn up on title, the value is way
off or there are mortgages that create wide discrepancies in equity, you can go
back and ask your borrower or mortgage broker to explain them, before expending
time and energy underwriting the deal.
On the flipside, where more equity
is revealed than initially anticipated and everything else checks out, you can
proceed to order a full appraisal and potentially upsell the borrower to borrow
more money from you. There are so many advantages to making use of the tools
available to mortgage lenders that you no longer have to sit on the sidelines
without having access to the same tools that your big competitors do.
Being well prepared from the very beginning can not only
save you time and money, it can also help to encourage a strong and fruitful
relationship with your client. Not wasting their time is often as important as
not wasting your own.
For more about the tools you can access through Purview For
Lenders, contact us today at call 1.855.787.8439.
Monday 15 September 2014
Sneak Peak: Want to Do More Than Just Validate Property Value? Different Lenders Leverage AVMs in Different Ways
There are so many different types
of lending institutions that offer mortgage financing: banks, credit unions,
finance companies, mortgage investment companies, trust companies, private
lenders and more. While Automated Valuation Models (AVMs) have been a tool that
have been around since the 1990s, technology has made them more accessible and
so AVMs have become common place in many of the different types of lending
institutions mentioned above. Never mind the above mentioned types of mortgage
lenders – AVMs are also being leveraged cross-departmentally and not just in
underwriting. AVMs have been proven to be tools that offer even more value than
just validating property value.
As you may or may not already
know, an AVM is a computer generated analysis of a property value which may
assess data from multiple sources to generate approximate property values. An
AVM should not be confused with an appraisal which will determine a value by
comparable sales and/or by the income it produces and takes into consideration
interior and exterior condition.
Here are some examples of
different departments within lending institutions and how they are using AVMs:
Underwriting
·
Many lenders will
first generate an AVM as an initial measure and then couple it with an official
appraisal if the deal proceeds.
·
An AVM doesn’t just
include information about the value of a property - it can also include information
about who the homeowner is, sales history, mortgages registered and more. AVMs
are most commonly used for different reasons and at different stages in the
lending process.
·
AVMs can reduce your
overall costs and consistency, as an AVM is inexpensive, available immediately
and is completely objective because the program is generating the data.
·
AVMs save significant
time with regard to underwriting because problem deals can be identified
immediately, before significant resources have been expended on underwriting.
·
Makes tools that
larger lenders have available to private lenders who may leverage different
information in different ways.
Special adjudication teams use AVMs to:
·
Validate broker
submitted value.
·
Compare values to
active MLS listings.
Risk management – in risk management many lenders use AVMs
to:
·
Verify
their current portfolio.
·
Determine
price appreciation year over year.
·
Measure
housing prices trends against rates.
·
Mitigate
mortgage fraud - in the case of the AVMs generated by Purview, there is a
section that will flag attributes consistent with fraud. The program will
assess active mortgages, recent sales, prior foreclosures, if the vendor is a
corporation, that there are no concurring mortgages, active judgements, active
cautions, active liens, power of sale, unusual discharges and frequency of
power of sales in the course of performing the fraud check. This can
significantly reduce instances of mortgage fraud.
Collections – collections departments often use
AVMs to:
·
Assess
a property value as a more affordable alternative to or in conjunction with an
appraisal.
·
Evaluate
the overall value of their collection portfolio.
·
Identify
collateral where appreciation has occurred.
·
To locate and not only
validate the value of real property assets but also learn ownership
information, estimate the equity position and more. This enables you to
identify real property assets you can secure/enforce on. You can also identify
new addresses for mailing and serving documents.
An AVM is a very powerful tool in
a lender’s arsenal that offers so much savings that the actual cost becomes
negligible. If your department is not already taking advantage of AVMs and you
see the value you can find out more information at http://purviewforlenders.com/what-is-an-avm-or-automated-valuation-model/ or call 1.855.787.8439.
Monday 8 September 2014
True or False: Lenders No Longer Require an Appraisal When an AVM is Available?
This is an interesting topic
because some confuse the different ways that AVMs are relied upon in real
estate transactions. Many lenders use AVMs with other methods of assessing a
property value, such as an appraisal. AVM is the acronym for Automated
Valuation Model, which is computer generated and produces an estimate of a
property value based on analysis of public record data, property location,
market conditions and real estate characteristics at a specific point in time.
Automated Valuations may be based on a single model or a combination of
multiple models.
Some of the most popular models
involved:
·
The House Price Index
Model – leverages house price indices (sales in a specific geographic location)
to establish a value.
·
Tax Assessed Value
(TAV) models – leverages tax assessed valuations to estimate value.
·
Hedonic models –
leverages regression techniques to estimate value.
Simply stated, when a lender uses
an AVM tool like Purview to generate an AVM, the application will instantly
generate an estimate of the value. It will provide information such as who the
current homeowner is, recent sales history, information on the property,
indicative market value, comparable sales of similar properties, check the
application for attributes consistent with fraud and more…
An AVM may be able to identify
large discrepancies in value which can enable you, the lender, to go back to
your client, agent/broker to probe for more information about the deal/value.
This saves you and your partners greatly in the administration of deals that
are not likely to close because of undisclosed or misstated information.
So what about the question “true
or false: lenders no longer require an appraisal when an AVM is available?” In
the end, it will always come down to the lending policy of each
organization. While some lenders will
choose to proceed after generating an AVM and without an appraisal, in many
cases we see lenders taking advantage of all measures available to them, both
AVM and appraisal to make sure they have a firm idea of what their security is
worth.
For more about the benefits of
using both and AVM and an appraisal in your due diligence, please contact
Purview For Lenders today by calling 1.855.787.8439.
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