- Joined
- Mar 11, 2008
- Professional Status
- Certified Residential Appraiser
- State
- Texas
Exactly. Credit underwriting addresses the risk of delinquency (or should). Collateral underwriting addresses the risk of loss in the case of a delinquency.Delinquency rate is not the proper metric to use when comparing effectiveness of ACE / waivers versus appraisals. The purpose of the valuation is not to prevent delinquency or default, but to manage the amount of losses in the event of default. It is credit risk (credit score, employment history, and income) that are linked to delinquency and default rates.
You are an intelligent person so I know this is not news to you. The delinquency rate metric is just being used to push the use of waivers forward.
Fact is nobody will know how ACE performs compared to appraisals until there is a big decline in market values and then someone analyzes losses on loans with appraisals versus losses on loans with waivers.