The first customer for Clear Capital’s valuation review product, ClearQC, was Clear Capital itself. The company developed the tool for internal use to review appraisals and BPOs based on complex risk data. Now ClearQC is available as a commercial offering, and one of its most recent clients is Freddie Mac. The GSE chose Clear Capital as its technology provider for appraisal data validation in the Uniform Collateral Data Portal to give in-depth feedback on the quality and accuracy of its appraisals.
“As a company we’ve been very focused on technology since day one, and that growth of data is paying dividends now by allowing us to do all of this analysis so quickly,” said Alex Villacorta, vice president of research and analytics at Clear Capital. “Only through our investment in that kind of technology are we able to take on a client like Freddie Mac.
“We developed ClearQC by leveraging the best of our data and analytics and tech infrastructure, and incorporating our knowledge base of how the valuation world works,” he said. “After using this for 10 years internally, we knew there was a demand from our customers for this type of product.”
ClearQC uses algorithms to rate valuation reports, generating valuation risk and report quality composite scores that make decisioning faster. This automated review, in real-time, verifies valuation report data and the methodology of the valuation to determine if characteristic features — a garage, for example — were taken into account, and if the report is internally consistent.
The review pulls data from many sources, and that data is dynamic — the models immediately adapt to new data sets coming in. Along with local comparable sales, proprietary ranking technology populates the review with a listing of properties that are “most similar” to the asset under review.
“One thing we learned is that values are a very fluid concept. They can be subjective, and ultimately, complex in how they’re derived. We wanted to find the common ground of value on all sides,” Villacorta said.
The client selects the parameters of the ClearQC review, and controls the weight that is given to each rule. ClearQC provides a Report Quality Score that ranks the valuation from zero to 10 based on the weight of the rules that fail, and provides deeper insight into the context of the score with maps and graphs. It also provides a Valuation Accuracy Score that ranks the risk of the valuation.
All of this data aggregation and analysis happens in seconds, delivering not only scores but detailed insight into each rule run and its result. This gives the client the ability to take next steps and make quick decisions, Villacorta said.
“The ClearQC review is completely configurable, so users ensure the analysis reflects their specific needs and contextually to the market,” Villacorta said. “It allows clients to build automated rules that are directly in line with their underwriting or quality control guidelines as well as regulatory guidelines. This product is malleable enough to stay on top of any forthcoming guideline changes.”
Clear Capital works with clients to develop rules specific to their needs, but also offers an off-the shelf option of rule sets that it developed from its internal use of ClearQC. In order to optimize the expertise of their staff, rules can be sorted and filtered for specific categories, and then clients can route work to the right underwriter or team.
The review prioritizes assets with higher risk, which can be especially important with large loan pools.
“Providing solutions in this industry is a tricky balance of making sure everyone’s voice is heard and their priorities are understood,” Villacorta said. “One of our greatest strengths is that our clients span the entire spectrum of the housing industry, and being in the middle of it all gives us that perspective from all of those different roles.”