Automated Valuation Model for Management of Distressed Assets

DataQuick offers CMV-Distress™, an AVM designed specifically for default servicing managers, investors and REO professionals. CMV Distress™ delivers estimated property values for residential properties considered to be in financial distress.

When to use CMV-Distress™

Standard AVMs use multiple methodologies to estimate the expected price of properties irrespective of the status of the obligation secured by the property. These values are generated with the assumption that property condition is average and that the eventual sale would follow typical market dynamics. However, individuals or institutions facing financial distress may be motivated to pursue different disposition strategies, attempting to sell their properties more quickly by introducing some level of discount to facilitate a sale.

The three levels of distress:
A property owned by an individual that has defaulted on their mortgage loan is considered to be under financial distress. Properties under financial distress generally follow one of three paths of disposition:

  • Pre-Foreclosure sale: The institution may accept a discount to avoid the costs of foreclosure;
  • Auction or Judicial Sale: The institution may accept a discount to avoid the costs and risks associated with holding a property in its REO portfolio;
  • REO sale: The institution may accept a discount to avoid further exposure of holding a property in REO or the property value may be adversely affected by market conditions as an REO property.

CMV-Distress™ Process:

Start with a qualified value

To provide Default Managers with more accurate property intelligence, CMV Distress™ first calculates the CMV-Portfolio™ property value by applying DataQuick’s proprietary technology that analyses input from four discrete valuation submodels then leverages this intelligence to produce a highly qualified value.

Determine the “Distressed Price” at a local level

CMV Distress™ then estimates the expected price of the distressed property correlated to the local (zip code) market’s experience with each of these three common disposition paths, pre-foreclosure, auction and REO.

Why CMV-Distress™

By using a patented valuation methodology DataQuick’s CMV Distress™ outperforms standard market AVMs when evaluating loss severity. This is critical for portfolio managers, servicers and secondary market investors in determining the optimal disposition strategy for distressed assets. Additionally, REO managers have access to a better solution for validating projected sales price estimates received in REO alternative valuations, including Broker Price Opinion.

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