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Home Value Explorer Point Value Estimate Available in Loan ProspectorFebruary 12, 2010

On February 28, Freddie Mac is enhancing Loan Prospector to help you review appraisal results early in the origination process. Loan Prospector will provide a point value estimate for the property address from Home Value Explorer® (HVE®), Freddie Mac's automated valuation model (AVM). This free additional service can help you more easily identify potentially inflated appraisal values that may need additional review early in the origination process.

The use of the HVE point value estimate along with the appraisal best practices guidance outlined in Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-18 issued July 10, 2009, can assist you with evaluating the accuracy of appraisals. The HVE point value estimate is not a substitute for an appraisal in any way, and you should continue to follow all of the appraisal best practices.

Loan Prospector will return the HVE point value estimate on the Loan Prospector Feedback Certificate. The HVE point value estimate should be used to identify which appraisals may need additional review.

Additional Data to Help You Review Appraisal Results

To receive the HVE point value estimate you must enter the property address in Loan Prospector for the transaction. The HVE point value estimate is returned on the Loan Prospector Feedback Certificate with additional related feedback data elements, that provide information on the accuracy of the HVE results and information on the difference between the HVE point value estimate and property value submitted. The following data elements will be provided:

The HVE variance, measured in percentage, is the difference between the HVE point value estimate and the submitted property value. The HVE variance is calculated as follows:

(Lesser of appraised value/estimated value or purchase price) – HVE point value estimate = HVE Variance %
Lesser of appraised/estimated value or purchase price


Please note: A negative HVE variance indicates that the HVE point value estimate is higher than the appraised/estimated value or purchase price.

HVE Point Value Estimate Feedback Messages

Based on the data described above, beginning February 28, Loan Prospector will return the following new feedback messages to provide you with the HVE point value estimate, for the subject property, as a property valuation tool to use in reviewing appraisal results early in the loan origination process.

Message Code Feedback Message Purpose
New Feedback Messages
LPN YO <<HVE point value>> is the HVE point value estimate of the subject property. Indicates a complete evaluation status and the HVE point value estimate for the subject property.
LPN Y1 <<HVE Standard Deviation>> is the HVE Forecast Standard Deviation of the HVE point value estimate of the subject property. Indicates the FSD of the HVE point value estimate for the subject property.
LPN Y2 <<HVE Confidence Level>> is the HVE Confidence Level of the HVE point value estimate of the subject property Indicates the confidence level of the HVE point value estimate of the subject property.
LPN Y3 Unable to determine the HVE point value estimate for the submitted address. Indicates no HVE point value estimate is available for the submitted property.
LPN Y4 The HVE point value estimate returned does not indicate Freddie Mac's acceptance of the appraised value or purchase price entered for the subject property. The Lender will continue to be responsible for the property appraisal as well as representations and warranties of the appraisal, regardless of the HVE Market Value. Indicates the HVE point value estimate returned is not a substitute for an appraisal.
Representations and warranties of the appraisal of the subject property are still required.
LPN Y5 The percentage difference between the estimated/appraised value or purchase price and the HVE point value estimate of the subject property is <<HVE value differential>>%. Indicates the difference between the property value submitted and the HVE point value estimate. Loan Prospector uses the borrower’s estimated value until an appraisal value is submitted. That value is compared to the purchase price. The lower of these values is then compared to the HVE point value estimate to determine the HVE variance.
LPN Y6 Review for Accuracy: The Estimated Value of Property or Net Purchase Price submitted for this transaction may be excessive for the local market. The appraisal should be carefully reviewed for this transaction. Indicates the appraised value or purchase price exceeds 20 percent of the HVE point value estimate.


Please note as part of this release we are adding a new feedback message (Y6) that replaces the current feedback message (6G).

The HVE point value estimate will be returned for the following when the data is available:

  • Conventional, conforming and super conforming loan transactions.
  • 1-unit properties (single-family, condominium and townhouse property types), excluding manufactured housing.

Recommended Tips When Reviewing the Feedback Messages

When reviewing the results on the Loan Prospector Feedback Certificate, you should continue to perform your regular best practices for the appraisal review process. In addition you should consider taking one or more of the following steps, which may include:

  • Greater than 20 percent HVE variance - If the HVE variance returned for a loan exceeds 20 percent and the excessive value message (Y6) is returned you should:

    • Escalate the appraisal for additional review by a senior underwriter or in-house appraiser, if available
    • Obtain a review appraisal, or a second appraisal from another appraiser and reconcile two appraisals
    • Reject the subject appraisal if you determine that the appraisal is unacceptable

  • 20 percent or less HVE variance - If the HVE variance returned for the loan is 20 percent or less; you should perform your regular best practices for the appraisal review process.

  • No HVE point value estimate - If no HVE point value estimate is available for the subject property, you should perform your regular best practices for the appraisal review process.

Please note: Receiving any of the above results does not indicate the appraisal value is acceptable. You are still responsible for reviewing all appraisals and ensuring the validity of their results, regardless of the HVE point value estimate and HVE variance returned. Freddie Mac does not view the HVE point value estimate as a replacement for an appraisal.

Additional Guidance About Using the HVE Point Value Estimate in Loan Prospector

The HVE point value estimates are informational and have no impact on the risk class assessed. After February 28, you will begin to receive the HVE point value estimate when assessing new loans and on resubmissions in Loan Prospector. Because the data provided by HVE and other AVMs are estimates, you should expect to see a difference between the HVE point value estimate and the appraisal value. Here is important information to keep in mind on how the HVE point value estimate is used and calculated:

  • Loan Prospector will calculate the difference between the HVE point value estimate and the submitted property value. Loan Prospector will compare the borrower's estimated value with the HVE point value estimate until an appraised value is submitted. Upon submission of an appraised value, Loan Prospector will then use the appraised value in the variance calculation and ignore the borrower's estimate value.
  • Loan Prospector will always compare the purchase price with the value used (either the estimated value or the appraised value). Whenever the purchase price is lower, Loan Prospector will use the purchase price to perform the calculation.
  • When the HVE variance is greater than 20 percent, you will receive a feedback message (Y6) indicating that the estimated/appraised value or purchase price may be excessive and warrants additional review of the appraisal information.
  • You should not share the HVE point value estimate from the Loan Prospector Feedback Certificate with the appraiser of the subject property; and should treat all HVE data as strictly confidential and maintain appraiser independence. For more information on the terms and conditions of HVE, refer to Guide Exhibit 32 and 44.3(a).

Resubmissions Using the HVE Point Value Estimate

If you resubmit a transaction on or after February 28, keep in mind the following:

  • The HVE point value estimate, FSD, confidence score and HVE variance will be included on the Loan Prospector Feedback Certificate and updated upon each resubmission, including pipeline loans.
  • The HVE database is updated monthly. As a result, the HVE point value estimate may change after resubmission if the HVE data has been updated. The HVE variance may also change if the HVE point value estimate changes.
  • The HVE variance may change when the appraisal value is initially submitted because the appraised value will be used in place of the estimated value in the calculation of the HVE variance. Any subsequent changes to the appraisal value will result in the HVE variance being recalculated.

Note About Look-Up HVE Value Tool in LoanProspector.com

Seller/Servicers should continue to use the HVE point value estimate automated look-up tool when originating the Freddie Mac Relief Refinance MortgageSM – Same Servicer. This tool offers immediate access to a free point value estimate to simplify your Relief Refinance – Same Servicer originations. The tool supports our mutual goal of providing more borrowers with affordable refinancing opportunities through the federal Making Home Affordable Program.

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© 2010 Freddie Mac

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