What you need to know: How AVMs can power property valuations for home equity lending

John Holbrook, Vice President of Digital Valuation Solutions at ICE Fixed Income & Data Services, was featured in MBA NewsLink and illustrated how lenders can tap into this trillion-dollar market using the latest property valuation solutions, including ICE’s customer facing solution Validate, which allows the borrower to securely capture current photos and details of their property using their mobile device. Below is an excerpt, with a link to the full article following.

Higher interest rates and home values have created a unique opportunity for lenders to grow their home equity lending business in today’s challenging market. Even with the recent interest rate reduction, the demand for home equity products remains strong as homeowners want to maintain their historically low interest rates and are waiting for rates to be lowered further in the future. According to ICE’s Mortgage Monitor, tappable equity has grown by $5.5 trillion due to a more than 50 percent rise in home prices since the fourth quarter of 2019. Average tappable equity per borrower has increased by nearly $95,000.

With increased equity available due to higher home prices, homeowners are turning to home equity products to renovate their existing homes or pay off high-interest credit card debt using their equity. Lenders can tap into this trillion-dollar market by incorporating automated valuation models (AVMs) and digital property condition reports (PCRs) into their collateral valuation workflows. Home equity products, which typically fall under Interagency Guidelines (IAG), do not always require a traditional appraisal, making AVMs an ideal time- and cost-saving solution.

One of the highest costs lenders often accumulate when originating home equity loans is for property valuations. Leveraging credible and reliable AVMs combined with a thorough PCR can provide lenders an edge when competing for home equity business by delivering faster approvals for borrowers while helping to reduce valuation costs. In cases where further confirmation of property value is needed, a desktop appraisal with a PCR can also be a great option.

Read the full article here.