December 9, 2008 - Several lenders are allowing their borrowers the opportunity to provide an outside appraisal as part of the process of re-opening a frozen line of credit and to determine the new credit limit. Others are allowing potential borrowers to use outside appraisals in the origination process. Typically, an outside appraisal is acceptable to a lender, if it’s less than three months old.

However, beyond the basic requirement of age, these lenders are concerned that these appraisals meet their underwriting guidelines, quality and content, as well as, for appropriateness and applicability.

That’s where the ELS Valuation Review Form (VRF) answers the call. The VRF is a review process for the quality and content of an appraisal. A simple pass/fail rating is provided along with notes to support this outcome. The notes can be cut and pasted into the lenders system for future reference. Another unique aspect is that an Automated Valuation Model (AVM) is run in an effort to validate the value determined in the appraisal.

The form itself can be customized to meet specific lender guidelines. Several examples include:
- is the property now listed for sale
- subject to completion of new construction
- external detriment, deferred maintenance
- extreme physical depreciation
- proximity of comparables
- identity of a declining market

All of these can be specially-noted on the VRF to help a lender determine whether the outside appraisal can be used as part of an underwriting decision.

What makes the VRF most attractive to lenders who are using it? The use of an AVM to validate the appraisal value and the ability to cut and paste ELS comments to support the pass/fail grade. If you’re interested in learning more about the VRF, please request more information or contact your ELS sales rep.