Class Valuation aims to cut appraisal risk with new underwriting program

Class Valuation has introduced a new underwriting and appraisal assurance program designed to streamline mortgage lending workflows and reduce risk tied to property valuations.

The product, the Class Valuation Underwriting Engine (CVUE), combines artificial intelligence analysis with human review to deliver appraisals that lenders can accept without conducting their own internal review, according to the company.

Company data indicates that about one in four appraisals is returned for revisions during underwriting, often delaying closings by one to three days.

The new program is designed to reduce these delays by identifying and validating low-risk appraisals earlier in the process.

Class Valuation CEO John Fraas said the approach shifts responsibility for appraisal risk.

“For the first time, an AMC is stepping in front of the risk and standing behind its appraisals. That’s what CVUE does,” Fraas said in a statement. “After piloting the program, we’ve proven that lenders don’t need to review every appraisal to protect against buyback exposure.

“Class Valuation assumes that risk on qualifying files, giving lenders certainty of execution, a dramatic reduction in underwriting workload and fewer delays caused by appraisal revisions.”

The company said the program can eliminate appraisal revisions on qualifying files and reduce turnaround times by two to three days.

It also estimates that lenders can reduce appraisal review workloads by about 80% and save roughly $100 per file by limiting manual reviews to higher-risk cases.

The program includes repurchase risk protection for eligible appraisals, transferring certain financial risks from lenders to the appraisal management company.

The underwriting engine was tested in a pilot program involving more than 20 lenders, including several large institutions. According to the company, the results showed improved processing speed and reduced operational friction.

The guarantee applies primarily to lower-risk appraisals, which Class Valuation estimates represent about 80% of appraisal volume.

Eligible loans include conforming purchase and refinance mortgages sold to Fannie Mae and Freddie Mac, as well as Federal Housing Administration (FHA)-insured loans backed by Ginnie Mae.

Class Valuation said the program does not require additional technology integration, allowing lenders to adopt the system without significant operational changes.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.