CECL Model Selection

In today’s volatile commercial real estate market—marked by lasting COVID-19 effects and changing interest rates—lenders face critical challenges in efficiently and accurately evaluating loan collateral, especially for loans maturing in the next 24 months. ARCSys addresses this need with its Automated Valuation Modeling (AVM) service, a sophisticated tool utilizing statistical methodologies like linear regression to identify correlations in external factors such as interest rate changes and price indices. AVM enables lenders to interpret valuation results, assess remaining equity and loan-to-value (LTV) ratios, and proactively identify loans at risk due to collateral value changes. By automating the property valuation process, ARCSys’ AVM is a faster and more cost-effective alternative to traditional appraisals, saving time and money while delivering accurate and efficient valuation of properties for both consumer and commercial loans.

ARCSys' AVM service provides crucial insights to support informed decisions on loan refinancing and cost reduction associated with manual reviews. The AVM report allows for effective analysis of model performance and prediction accuracy, helping institutions pinpoint loans that may require further evaluation or monitoring by comparing AVM-generated values to updated values and historical charge-off data. While AVM offers valuable estimates, the service emphasizes best practices by recommending its use in conjunction with other available information, such as market trends and expert opinions, to ensure accurate and reliable valuations and mitigate risks. Furthermore, ARCSys’ AVM service is fully customizable to include or exclude specific variables based on your organization's unique requirements. Utilize ARCSys’ AVM to ensure compliance with regulatory requirements and achieve more accurate credit loss estimates. Contact ARCSys today to get started!