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Using a cascade is feasible for any size bank or credit union.

 

What is a cascade?

In the simplest terms, a cascade is the ultimate evolution of an AVM. A single AVM provides estimated values of properties.  By subscribing to multiple AVMs, you can rank-order them to choose the highest performing AVM for each situation, which we call using a Model Preference TableTM.  Finally, the highest evolution is a cascade, which combines that MPTTM with business logic and defines when an AVM’s response is acceptable and when it should be set aside for the next AVM.  The business logic can incorporate the Forecast Standard Deviation provided by the model and the institution’s own risk-tolerance to determine when a value estimate is acceptable. A cascade is the most sophisticated way to use AVMs.  It maximizes accuracy and minimizes forecast error and risk.

Uses of a cascade

Cascades can be used in real time, when valuing properties one at a time, or in bulk, when ordering value estimates by the thousands. Just like AVMs, cascades can be used to obtain the best possible value estimates in any application:

  • In HELOC originations that can utilize AVMs to value collateral
  • As a sales tool for Loan Officers
  • To help qualify and rank marketing leads
  • To value servicing portfolios and mortgage servicing rights
  • As an input to delinquent servicing decision systems

What does a cascade cost?

Cascades can be purchased different ways.  Buying a cascade on a per-transaction basis can cost as little as a dollar or two.  Buying an entire nation-wide cascade can run into the tens of thousands of dollars.  Buying a geographically limited cascade can cut that cost proportionately, so it depends on how you use and purchase a cascade.

Different ways to implement a cascade

Large institutions may find it preferable to purchase an entire MPTTM with logic and incorporate it into their own decision engines and ordering platforms.  Others can work with their service platforms to integrate a cascade for a small per transaction fee on the order of 5-10% on top of the cost of the AVM.

Next steps to Build your own cascade

Reach out to us to get started.  We are happy to talk you through the different ways you can implement a cascade.  We don’t mind answering questions and sharing what we know.

Call: 800.240.1049 or email Mike Coyne at Mike.Coyne@AVMetrics.net or you can fill out the form below.

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