For reasons of safety, consistency and simplicity, reavs has developed a set of decisioning rules, much like credit scoring, which ultimately decide which transactions can be approved through reavs alone. reavs’ clients specify their risk tolerance using the different decisioning rules which reavs provides.

The loan-to-value percentage (LTV%) for any loan request is fundamental to reaching any lending decision and risk management departments have traditionally used LTV% limits as policy to control their exposure to risk. We use a variation of this same technique to derive an approval answer in each case. In addition, we consider a worst case scenario.

For each transaction, reavs’ patent-pending technology calculates and uses decisioning logic (as approved and customized by each lending institution) to effectively cap the loan. Generally, the requested amount of the loan will require that there be a necessary level of equity in the property.

In addition to a generally specified LTV tolerance, reavs offers a variety of criteria to risk management departments to further reduce this maximum LTV in the case of specific market conditions. This allowable LTV can be further reduced to reflect the following:

• The type of transaction i.e. sale, refinance, transfer or other.
• The reavs market variance.
• The property value as it relates to its neighbourhood.
• Sales activity in the marketplace.
• The range between the reavs value and the property value.

reavs automatically considers the potential downside of each transaction by estimating worst case scenario costs and ensuring they are within acceptable limits.

Any deal that passes this rigorous process is considered an acceptable risk. This does not imply that any deal that does not pass is not acceptable. It simply means that further scrutiny, perhaps a traditional appraisal, will be necessary. The overriding concern for safety allows little doubt that a deal approved through reavs is reasonable.