North Olmsted, OH, July 31, 2024 – Corporate Settlement Solutions (CSS), a full-suite provider of real estate settlement solutions, today released results from its mid-year analysis of the types of valuation products that lenders are using to originate home equity loans and found a significant increase in the use of Automated Valuation Models.
The CSS Home Equity Valuation Analysis reviews full loan portfolios for 19 lenders within the CSS footprint to track lender preferences for five types of valuation products: Automated Valuation Model/Property Condition Reports; Appraiser-Valued Hybrids; Full Appraisals; Non-Appraiser-Valued Hybrids; and Drive-by Appraisals. In the first half of 2024, CSS clients used Automated Valuation Model/Property Condition Reports on 35% of their home equity loans, representing a year-over-year increase of 20 percentage points compared to the first half of 2023 when this product type was used only 15% of the time. It’s the only product category among the five that had an increase. Appraiser-Valued Hybrids were the second most-frequently selected valuation model at 25% (down from 34%), followed by Full Appraisals at 17% (down from 21%), Non-Appraiser-Valued Hybrids at 11% (down from 17%) and Drive-by Appraisals at 11% (down from 13%).
Home equity lending is expected to increase over the coming years, given record equity that American homeowners have amassed due to historically high home price increases since the pandemic. According to industry estimates, homeowners with mortgages have an average of approximately $300,000 in home equity, about $200,000 of which is “tappable” or available to the homeowner. Because home equity lending is typically a no- or low-cost offering by most lenders, AVMs have grown in popularity as a fast, efficient and inexpensive way to value properties for home equity loans and home equity lines of credit.
“Our analysis shows that lenders are increasingly tapping into the benefits — from both an economic and time-saving perspective — of using AVMs combined with Property Condition Reports,” said Ashley Jelinek, CEO of Corporate Settlement Solutions. “The industry is expecting a significant uptick in home equity lending since so many homeowners have high levels of equity and are reluctant to refinance their ultra-low-interest first mortgages. Homeowners will want to tap that equity while they can for home improvements, expansions and other big expenses such as college. For lenders, the home equity lending equation works when they can rely on accurate, but also fast and inexpensive, valuations for these loans,” she said.
About Corporate Settlement Solutions
Corporate Settlement Solutions (CSS) provides title, valuation and closing solutions for commercial and residential real estate transactions. CSS’ real estate settlement solutions combine the personal touch and responsiveness of local providers with the geographic scale and technological superiority of large national providers. Our mission is to foster long-term partnerships that enable customer growth.