Lenders face a variety of challenges. When it comes to mortgage origination, some of those challenges include increased turn times and valuation costs. While it’s critical for lenders to demonstrate to regulators that they are valuing the equity in an appropriate and compliant manner, it’s also essential to provide cost-effective mortgages that close in a timely manner in order to meet the expectations of borrowers.
While it makes sense to look at your operations and policies, focusing on the valuation products you’re using in the mortgage loan origination process could have the greatest impact on your overall cost to originate. Many financial institutions have identified lower risk combined loan-to-value (CLTV) positions and incorporated alternative valuations that still meet regulatory scrutiny while mitigating risk.
When it comes to property valuations, one size does NOT fit all! The borrower’s ability to pay, LTV/CLTV limits, acceptable property types, and loan purpose should drive what valuation products and scope are most appropriate. It’s wise to thoroughly evaluate all of these aspects, as well as the unique situation of the borrower and their loan so that your financial institution can make the most appropriate decision. While each situation is unique, here is a list of available valuation products and some of the best use cases for each:
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