Why is AVM usage recommended early in the origination process?
Freddie Mac has seen an increased risk of default in loans where the appraised value of a property is found to have varied by more than 20 percent of the HVE point value for the property. Unfortunately this variance is being discovered too late in the mortgage process and is usually determined when the loan is already in default. Freddie Mac recommends incorporating HVE or other tested and validated AVMs early in the origination of the mortgage to help identify loans where the appraised value and the AVM value are vastly different and can potentially be corrected before the loan closes.
