Artificial Intelligence (AI) is at the forefront of technology news as we head into 2023. AI programs can produce art, music, and writings that are often indistinguishable from those produced by humans. And now, remarkable new AI technology is making its way into the mortgage industry too.
Most recently, we’re seeing AI technology that can verify the Property Condition Rating of a home in a snap, which leads to better comparable analysis, better efficiency, and fewer repurchase requests.
Condition modeling AI can now detect inaccuracies in appraisals and confirm whether the rating matches the actual condition of the home. This exciting development in machine learning has lenders scrambling to integrate condition modeling AI into their systems. Learn how AI is used to verify Property Condition Ratings in residential appraisals and discover the new condition modeling AI tool for making confident investment decisions.
Verify Property Condition Ratings to Prevent and Address Repurchase Requests
The recent increase in repurchase loans can be attributed to three key things: more purchases and fewer refinances, appraisal quality issues, and greater scrutiny because of the market’s high volatility.
The accuracy of appraisals is crucial to secondary market investors who hold the most risk. The two largest purchasers of loans – Fannie Mae and Freddie Mac – have robust property data and tools to scrutinize the quality of appraisals. Because of this, it’s crucial for lenders to implement quality data and intelligent models into the origination process.
When there is an increase in repurchase requests, there is increased scrutiny on the comparables used within the appraisal and the resulting value conclusion. Understanding the condition of a home is crucial to understanding whether the comps selected are the best available, and are truly representative of the value of the subject.
Condition modeling AI tool for lenders
At Clear Capital, we’re continuously innovating solutions to lenders’ most pressing concerns. That’s why we built Condition Model — a property condition modeling AI tool — that’s available to lenders through our industry-leading automated underwriting review system, ClearCollateral® Review, and Risk Assessment API.
Condition Model uses computer vision and machine learning to do an instant check of the Property Condition Rating. It quickly assesses the home’s condition using appraisal photos and property data, and compares it to the appraiser’s C-rating to flag any discrepancy. This extraordinary AI tool is the only one currently available on the market, and is transforming the appraisal review and loan decision process.
Even if a loan has already been submitted, lenders can use Condition Model to do post-close quality control. Here’s how Condition Model benefits lenders:
- Accelerates appraisal reviews — Condition Model analyzes the appraisal photos and checks for accuracy, so there is significantly less time spent on manual photo reviews.
- Reduces appraisal review subjectivity — The tool provides a consistent assessment of appraiser C-ratings, removing the chance of appraisal bias.
- Enables confident decision making — Condition Model informs you of the reliability of an appraiser’s C-rating and if a Revision Request is needed.
How Condition Model works
Using advanced artificial intelligence algorithms, Condition Model examines the photos and data provided in the interior appraisal to estimate the property’s condition. The estimate is compared against the appraiser’s C-rating and provides an accuracy confidence score to flag any discrepancies. In addition, the tool highlights photos that contribute the most to the prediction, so you can review the images that impact the model’s assessment of the condition rating for yourself. The condition model has been trained by decades of experience in the valuation field, combined with Clear Capital’s in-house computer vision and machine learning teams
The model is part of the standard appraisal review tool set within ClearCollateral® Review (CCR) and the ClearCollateral Risk Assessment API.
See the tool in action!
As appraisal modernization takes hold of the mortgage industry, AI technology will likely become a standard tool lenders use in the collateral underwriting review. Get a leg-up on the market — harness AI technology to streamline the appraisal review process and make informed investments!
To learn more about Condition Model and get a live demo of this groundbreaking AI tool, reach out to us at sales@clearcapital.com and discover why lenders across the nation depend on Clear Capital for their real estate data and mortgage solutions.
