How AVMs Affect Your Credit Union Home Loan
One tool that will gain even more importance in home equity lending is Automated Valuation Models (AVMs). Although AVMs have been used extensively for home equity lending in the past, the type of AVM credit unions choose will become much more important.
What is an AVM?
AVM results can vary greatly from one location to the next. So, credit unions need to ramp up their due diligence when it comes to selection to be certain they are using the best AVM for any given subject property being considered for a home equity loan/line. The easiest way for credit unions to make sure they are selecting the best AVM for each property is to employ a cascade AVM that leverages multiple AVM suppliers and distinct databases. That’s because cascade AVMs automatically determine which AVM provider will deliver the most accurate results for any given market.
When choosing a cascade AVM, credit unions should look for one that includes an extensive variety of compliant AVM models, and that relies on prior observations in order to select the best AVM. To ensure the most accurate AVM selection, credit unions should choose a cascade AVM that is updated on a quarterly basis.
Your Home Loan
Credit unions want to ensure there are no unwanted surprises when attempting to demonstrate their compliance with the new regulations. Make sure to ask questions about how new regulations may affect your loan eligibility and the AVM your credit union uses to evaluate your loan reliability factor.