The use of automated valuation models to assess the value of a home may no longer result in property value penalties, according to a new criteria report by Fitch Ratings. Under the new criteria, AVM review depends on individual lenders' processes and controls for using the models rather than the overall strength of the values in the regions the properties being valued are in, according to Fitch senior director Suzanne Mistretta. Going forward, Fitch "will discount property values by 5% or more if either a lender's usage processes and controls do not adequately mitigate overvaluation risk, or if a lender's processes are not disclosed to Fitch," she said. Previously, Fitch said it "would discount property values derived from an AVM assessment from 10%-15% in regional markets deemed 'weak' or 'soft.'" Fitch can be found on the Web at http://www.fitchratings.com.
