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Table of Contents

Why Automated Examination & Valuation? .................................................................................................... 3

Introducing StreetLinks QX ............................................................................................................................. 4 The Rules Engine ................................................................................................................................... 4-10

Rule Construct ................................................................................................................................................... 5 Rule Structure Diagrams ................................................................................................................................... 5 Rules Engine Attributes .................................................................................................................................. 6-7 The Rules ........................................................................................................................................................ 8-9 Rules Characteristics .................................................................................................................................... 9-10

ValueComp .............................................................................................................................................. 11

Manual Examination Manager ............................................................................................................ 12-13

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Why Automated Examination & Valuation? Real estate appraising is the practice of developing an opinion of the value of real subject property,

usually its market value. The need for appraisals arises from the heterogeneous nature of residential

property: no two properties are identical and all properties differ, to some degree, from each other in

location – which is one of the most important determinants of their value. There cannot exist a solely

adequate, centralized, market-based pricing mechanism for trading real property assets and thus, the

need for expert appraisal/valuation by a skilled, licensed appraiser.

For the purposes of the information contained in this document, appraisals refer to the summary report

completed on industry standard forms for the purposes of mortgage collateralization. Within an

appraisal, it is the responsibility of the appraiser to credibly and thoroughly develop a value opinion to

the extent that it may be understood and relied upon by the intended user – the lender.

The development of a value opinion is an exercise in the application of defined appraisal principles and

practices. The appraiser determines the variables that are available and relevant for analysis, which

include, but are not limited to, market conditions, site and improvements characteristics and condition.

While industry standard forms have done well to itemize the most commonly relevant variables

required to credibly establish value for real property, the true conveyance of the appraiser’s analysis to

derive a value opinion is contained in the appraiser’s narrative description of such.

Just as the heterogeneous nature of residential property stifles the use of a purely automated pricing

mechanism and demands the expertise of a skilled appraiser for property valuation, it also impacts the

ability for the lender to understand and rely on the appraiser’s analysis upon receipt of the appraisal.

Lenders making decisions based on collateral valuations have been commissioned by regulatory control

with the responsibility to procure and account for professional quality appraisals. The ramifications of

negligent valuation procurement and examination are significant. For this reason, the lender must

employ skilled analysts and sophisticated tools to understand the contents of an appraisal in order to

meet its regulatory commissions and make correct lending decisions.

Undoubtedly, the most accurate account of an appraisal is received from an equally qualified, unbiased

appraiser that is geographically competent in a subject’s marketplace. This is due largely to the historical

lack of access to local market data and/or inability to validate proper selection and reconciliation of the

most relevant market data available when determining appraisal accuracy. Nevertheless, cost and turn-

time constraints have historically been prohibitive for lenders in relying solely on local appraisers for

valuation examination.

In effort to reduce the cost and turn-time of appraisal examination, lenders have continually sought an

appraisal examination process with the power and sophistication to emulate a local market examination

appraisal in a fast and cost efficient manner.

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Introducing StreetLinks QX The FIRST groundbreaking solution in StreetLinks’ new Automated

Examination & Valuation division.

StreetLinks QX (Quality Examination) is the culmination of the most sophisticated automated rules

engine, automated valuation examination model and manual examination manager ever developed.

Residential appraisal principles and practices have been infused in QX directly by its developers,

consisting of a panel of certified residential appraisers, computer programmers and mathematicians. All

components of QX work together and are adaptive to data extracted directly from the appraisal report

and parameters defined by the user in its application of appraisal principles and practices.

QX’s rules engine and valuation module supports a comprehensive automated report validation of the

standardized, itemized components of the appraisal while incorporating access to and analysis of real-

time local market data. Every conceivable administrative and correlative component of the appraisal

examination is intelligently automated leaving only specific narrative elements that require human

interpretation to the manual examination process.

The comprehensiveness and dynamic capabilities of QX enables users to focus the specific expertise of

their appraisal examination analysts to manually validate the narrative construct and support of the

appraisal in a cost and time efficient manner using the necessary market data.

QX is appraiser expertise perfectly fused with automated modules that are equipped with robust market

data and reconciled in a systemic fashion by specifically skilled analysts.

The Rules Engine The QX Rules Engine is utilized to automate the examination and analysis of the complex and time

consuming verifications and “checks” required within the lending process. This includes valuation

analysis, underwriting and any other data verification.

It is important to reference that the rules “engine” is not limited to only valuation analysis. StreetLinks

has used the engine to develop a comprehensive appraisal analysis and verification product (QX);

however, that alone does not provide an inclusive understanding of what the engine can do. In order to

fully understand the power of the engine, an explanation of how it operates is required.

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Rule Construct The sophistication of the QC Brain Rules Engine enables diverse rule structures including “nested” rules

that are capable of incorporating multiple internal and external data sources coupled with dynamic

result actions. The rules engine is based on a very simple premise with the ability to implement it in very

complex ways. The premise is illustrated with a simple logic equation. There is a left value and a right

value with an operator in the middle. The unique and complex nature of the rules engine is found in the

attributes or features placed around this simple premise to achieve highly flexible and sophisticated

rules.

Example: Value A = 1, Value B = 2, Operator equals < (less then)

1 < 2 = TRUE.

Rule Structure Diagrams

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Rules Engine Attributes

Import Mappers The rules engine includes an import data mapping feature that allows for unlimited unique data formats

or files to be mapped to our internal data format. For example, for QX, we provide native appraisal

mapping formats for ACI XML, A la mode XML and PDF conversion of appraisals to our standard format.

MISMO XML is not natively provided as it does not contain enough data from the appraisal to complete

a full and conclusive examination, thus QX requires native XML or PDF conversion.

Data Envelopes In addition to supported, complete data files running through the rules engine, it provides the ability to

receive an envelope of data along with the file that can be used in the comparison process. An example

would be an envelope of “order” data, including the subject property address, which enables a rule to

compare the subject property address in the appraisal file to the subject property address on the

“order” received from another system.

Rule Chaining / Decision Tree

Another critical feature is the ability to chain together rules. This allows for complex logic to be executed within a single rule to solve a single business question. Multiple assertions, or logic equations, can be assessed in a single question using a conditional decision tree.

Below is a simple example of chained rules to identify wrong way adjustments: Does the appraisal report contain at least 3 comparable sales? – Yes. Then: Loop (defined below) all comparable(s) for adjustments where the subject property attribute is superior to comparable property attribute. – Yes.

Then: Determine if adjustment is given. – Yes.

Then: Determine if adjustment is a positive value. – No / FAIL.

Looping Examining the comparable sales within the Sales Comparison Approach can be a complicated portion of analyzing an appraisal given the need to consider multiple data elements that can vary across multiple comparable sales. Our looping feature allows us to collect data elements over any number of comparables or other groups of data elements within a file, and complete operators (sum, average, frequency, greater than, less than, etc) and logical comparisons against those data elements.

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Operators The operator is the function being performed between the left and right values of a logic equation, from

which rules are based. The rules engine can support any Boolean Operator.

Synonym Variables A powerful feature of the rules engine is the use of Synonym Variables. With the use of synonyms, the value of a data element can be determined or found even if that data element is described in different ways. For example, if a rule is written to take action on a data element when it means “Average,” synonyms can be assigned to make such a determination when the data element is presented in different ways such as: Avg., A.V.G., Avg, etc. On a more sophisticated level, synonyms can be expanded to include strings of words that are given a value or meaning from which action can occur once identified.

Rule Manager

The rules engine includes a web-based utility that allows for the development and management of all rules. Rules are written, verified, coded, tested, certified and released directly from the Rule Manager. The testing process requires a test file to be uploaded and applied to a rule to cover a specific node (conclusion) within the rule. Complex rules can contain hundreds of nodes. A rule is not available to be certified until its entire set of nodes has passed testing by yielding the expected conclusion. This is critical to ensure accuracy and confidence in every rule within the engine. Once a rule is fully tested it is then available within our workflow process to be certified as accurate and moved to production.

Graphical Rule Examination Utility

Testing and certifying complex rules can become very complicated. Our Graphical Rule Examination Utility simplifies the process by creating a visual representation of a rule in “flow chart” style. When a test file is applied to a rule, the Graphical Rule Examination Utility visually displays the precise assertion path taken to the resulting node and the specific data elements considered to get there within the flow chart. This process ensures that rule conclusions are behaving exactly as desired, removing any assumption to their accuracy.

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The Rules Every rule in the engine carries a related appraisal examination - true or false, question and/or action -

and this collection of questions and actions encompasses every component of a quality appraisal

examination to be perfectly aligned with all regulatory commissions, appraisal principle and practices

and client specific expectations.

Client-Specific Underwriting Criteria While rules within the engine are comprehensive, additional rules and questions can be added.

Appraisal For-Specific Criteria All industry standard appraisal forms will be supported by the QX Rules Engine, including URAR,

Condominium, Multi-Family, Manufactured Home, Field Examination, Ancillary Products, etc.

To the extent that XML data is available, any form can be examined by the QX Rules Engine.

Regulatory-Specific Criteria All regulatory commissions are covered, including:

UAD

FHA

203K

USDA

REO

USPAP

State Legislation

Fannie Mae

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Freddie Mac

Appraisal Content-Specific Criteria Some of the most powerful rules are those that drive behavior based on the actual content of the

appraisal under examination.

Risk-Specific Criteria Risk criteria are identified in many ways and may be as simple as a “declining” market or as complex as a

specific permutation of specific components of the appraisal. StreetLinks QX has been “hard wired” by

Certified Appraisers and senior level Compliance Officers to identify truly relevant areas of risk primarily

as they relate to comparable selection and reconciliation in Sales Comparison Approach to value.

Other risk criteria include:

FEMA Disaster Areas

Appraisal Inconsistencies

Public Data Conflicts

Immediately upon feeding QX with an appraisal product for examination, its engine immediately goes to

work firing rules, which are then systematically processed and solved to determine their applicability

and defined actions, like a sophisticated neural network.

Rule Characteristics Rules are constructed to answer or assist in answering questions required to validate the credibility and

accuracy of appraisals. While the content and impact of rules and questions carry literally hundreds of

categories, their general characteristics can be described as follows:

Rule Impact Fully Automated

Rules that automatically and completely satisfy the corresponding question content.

Auto-Assist

Rules that automatically extract and display all of the data required for an examiner to satisfy the

corresponding question content.

Auto-Prompt

Rules that automatically determine the relevance of the corresponding question based on extracted

data.

Manual

Questions that are applicable on every examination assignment that cannot be automated or assisted by

automation.

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Question Content Independent of the corresponding “rule impact,” questions are defined in the QX Rules Engine by tier

level, which reflect the human skill set required to satisfy the question content.

Tier 1

Simple - Fields that must always contain data.

Simple Consistency - Fields that must or must not contain data dependent on other variables.

Tier 2

Simple Tolerance – Elements within the appraisal that require common parameters - timeframe,

distance, percentages, etc.

Simple Support – Elements within the appraisal that require simple explanation.

Tier 3

Complex Narrative – Appraisal problems requiring significant explanation involving complex appraisal

principles and practices.

Complex Reconciliation – Reconciliation scenarios that require specialized experience to identify and

validate.

Risk Analysis - Identifying elements within an appraisal that may have material impact on marketability

and/or on reconciliation and support of a value opinion for the subject property.

Custom Tier – Custom Skill Set

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ValueComp ValueComp is a robust collection of purified data resources and variables that are analyzed with

exceptional accuracy through our proprietary Adaptive Automated Valuation Examination Model

(AAVRM). The QX Rules Engine and ValueComp work harmoniously with internal and external databases

to thoroughly validate and analyze appraisal data and conclusions.

The key to ValueComp’s accuracy is its ability to verify the logical consistency of data extracted directly

from the appraisal to “learn” before performing its own analysis. ValueComp utilizes adaptive pattern

recognition and applies appraiser-infused principles to particular situations. ValueComp coefficients are

sensitive to market information and variables extracted directly from the appraisal being reviewed in

order to establish market-specific coefficient relevance before emulating appraiser methodized value

reconciliation.

ValueComp is used by the Rules Engine specifically to analyze the Sales Comparison Approach, including:

Accuracy of subject property & comparable data

Appropriateness of comparable selection

Actual location and distance of the comparables from the subject property

Overall comparable reconciliation

Final value opinion

Unlike traditional automated valuation models, ValueComp does not simply display a map and laundry

list of area sales that may or may not be relevant to the subject property. ValueComp extracts the

comparables utilized in the appraisal, verifies the logical consistency of subject data extracted directly

from the appraisal and analyzes the information together with local market data. The results of

ValueComp’s analysis are fed to the QX Rules Engine for further processing and the high level results and

recommendations are presented in report format.

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Manual Examination Manager

Simple Point and Click In an effort to reduce the cost and turn-time of appraisal examination, lenders have been seeking an

appraisal examination process with the power and sophistication to emulate a local market examination

appraisal in a fast and cost-efficient manner. In order to serve cost expectations, traditional appraisal

examination process providers have suggested that in the absence of “flagged risk factors,” appraisals

do not need to be analyzed. The StreetLinks QX Examination Process takes a completely different

approach, given the aforementioned heterogeneous nature of real property and the highly volatile

marketplace in which it is traded.

Although to varying degrees, true validation of an appraisal report requires skilled manual examination

and interpretation. The feasibility of such a requirement can only be realized by the creation of a manual

examination that is maximally efficient.

The QX Manual Examination Manager coordinates and organizes all input received from ValueComp and

the Rules Engine to display only the precisely relevant examination questions. This degree of

specialization results in the cost and time efficiency required to commit to properly examining every

appraisal.

Users are not simply presented with a list of failures, alerts and warnings that provide general

examination guidance in potentially risky transactions, but rather, receive the exact “questions” that

must be answered to truly validate the appraisal for every transaction. The Manual Examination

Manager gives the examiner a precise “examination playbook” that is systemically and dynamically

created for a particular examination assignment. Conclusions to questions made by individual

examiners are automatically cumulated and compared to benchmarks in order to immediately identify

potential user inconsistencies. All guesswork is removed from the examination process as examiners are

able to execute precisely what is instructed by the Examination Manager – nothing more, nothing less.

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Manual Examination Manager

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Start Using QX Today!

Thank you for taking the time to learn more about how StreetLinks QX can help you save time,

increase appraisal quality and reduce repurchase demand. Contact us to optimize your collateral

underwriting process with QX today!

p: 1.800.521.6926 | e: qxsales@streetlinks.com | www.streetlinks.com