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Why Lenders Relying on the 4Cs of Automated Review Thrive

David Rassmussen
Feb 10, 2014

Lenders using the 4Cs of automated appraisal review are thriving. Technology is not taking the place of qualified human reviewers; instead the 4Cs are better aligning operations for efficient, consistent and more compliant review. At Veros, we define the “4Cs” through the four primary components of VeroSCORE: Completeness, Compliance, Credibility and Complexity. Let’s take a look at how applying a technology-based focus on those four critical areas of the appraisal are providing valuation teams with tremendous lift in operational efficiency. Completeness and Compliance checks are no-brainers (yes, I believe that is the technical term). By this, I don’t mean to imply we should assume every report will be complete and compliant, what I’m saying here is that in today’s day and age it is unacceptable for a lender not to have a process by which they can verify an appraisal is in fact complete and meets basic compliance standards. This basic level of functionality should be readily available in any marketable appraisal scoring tool. “Why not simply have my internal team perform these checks,” you ask? Two reasons: Automating this logic process will save you and your team tremendous amounts of time, allowing you to reinvest those hours in more fruitful activities. Secondly, no matter how skilled your team, mistakes can and do happen and manual processes that vary from person to person encourage error, inconsistency and are difficult to document from a regulatory compliance standpoint. An automated check in these two functional areas on the appraisal report put time, reliability and audit trails directly back into your organization, often, without lifting a finger. As important as those areas are, the latter two components of appraisal scoring are where a lender really begins to gain traction. A common concern raised in the arena of Credibility scoring is how an automated tool can assess and quantify this attribute. The answer is two-fold. First, by comparing the appraisal data to known and verified data or trusted analytics outside of the appraisal report and scoring against weighted measures for issues such as data integrity; and second, by reporting the supporting data related to identified discrepancies back to the user, allowing a qualified human reviewer to take the next appropriate action. The final area, Complexity, is an aspect to appraisal scoring introduced by Veros earlier this year. Some homes are cookie-cutter, sitting within highly conforming neighborhoods with a steady market trajectory and plenty of recent sales data to consider. However, this description fits only some homes in certain market conditions and one of the fundamental reasons the appraisal profession exists is that it isn’t always quite so black and white. Before jumping to the conclusion an appraisal report is “wrong,” or that an adjustment discrepancy detected by a compliance check needs correction, a reviewer of any skill level would benefit from understanding how difficult the valuation assignment is believed to be and to review the data supporting or rejecting this measure of complexity; thus, creating context and the opportunity for a more informed conversation with the appraiser. It’s important to view automated scoring tools as a supplement to the lender’s due diligence practice and an opportunity to establish common ground based on verifiable data when value disputes arise between a reviewer and an appraiser. David Rasmussen is senior vice president of operations at Veros Real Estate Solutions. For more information, call (714) 415-6300 or visit
Feb 10, 2014