New technology developed as a result of the foreclosure crisis known as "intelligent granularity" could lead the way to a more stable and productive lending industry, according to a new report from Integrated Asset Services, a Denver-based valuation provider.
The paper, "A New Era of Mortgage Servicing: Out of Crisis, Solutions," says the latest automated valuation products are helping make sounder decisions on short sales, REO, loan modifications and other workout scenarios.
"The black box automated valuation model, a standby product of the last decade, is no longer viable," the report said.
Through computing power and proprietary algorithms, mortgage services are producing "trend lines" for virtually any segment of the marketplace. Through this, lenders and investors gain insight into the subject property's neighborhood, including detail on multiple available comparable sales, usually twice as many as those shown on the primary appraisal, according to IAS.
In addition, they can assess the neighborhood's price ranges and the area's valuation trending, shown in "graphs rather than a list of numbers."
This new level of granularity is allowing valuation products to look beyond the largest metro largest areas into micro-geographies around the country, said Ryan Tomazin, president of IAS.
"From a servicing perspective, this knowledge and information should be part of any ongoing strategy, either with the borrower, with the borrower and the property, or just the property," he said. "We should see the trend line technology integrated all along the continuum, from automated valuation models to reconciliations."
