Home Value Explorer (HVE) FAQ

Home Value Explorer^® (HVE) is consistently rated among the top automated valuation models (AVMs) in the industry for accuracy and coverage. Freddie Mac participates in testing with third-party AVM testing companies and with large lenders on an ongoing basis. We use the results of these tests to continue to improve the performance of our model. HVE has an average national hit rate of 85%, making it among the leading AVMs for overall geographic coverage in the United States.

HVE is continually tested by third-party AVM testing companies, distributors and large national lenders. HVE undergoes regular analysis within Freddie Mac as part of our internal model validation process. We perform extensive in- and out-of-sample testing. Each quarter, the model is recalculated based on analysis of the current quarter’s data which ensures the ongoing accuracy of the values.

HVE is licensed and serviced through a distributor network; each distributor provides unique value-adds with distinct pricing, packaged products, reseller networks, and/or service commitments.

HVE is also provided for no fee through Loan Product Advisor^®.

The HVE model is created with Freddie Mac's proprietary algorithm that blends model estimates returned by the repeat sales model, which uses property sales data, and the hedonic model, which uses property characteristics data.

The HVE point value can be returned on 1- or 2-unit properties, including single-family, condominium, and townhouse property types. HVE is not available for manufactured homes, 3- or 4-unit properties or commercial properties.

Yes, provided the Guide eligibility requirements are met. Those requirements include, but are not limited to, the following: 

•  Property must be a 1-or 2- unit attached detached dwelling or a unit in a condominium project or planned unit development.
•  Property must not be a manufactured home, dwelling on a leasehold estate, or if a Seller is permitted to deliver cooperative share mortgages, a cooperative unit. 
•  You must confirm that the forecast standard deviation for the HVE point value estimate is no greater than 0.200 (corresponding to a Medium or High Confidence Score).

As of the note date of the Relief Refinance Mortgage, the HVE point value estimate may not be more than 120 days old, from the date the HVE value was generated.

See Guide Section 4302.2(d) for additional information and Section 4302.3 for special delivery requirements for mortgages using HVE point values. Please remember that receiving HVE point value estimates from the look-up tool does not indicate loan eligibility for the Relief Refinance offering, nor property eligibility for use of HVE point value estimates.

HVE point value estimates received on the Loan Product Advisor Feedback Certificate can be used to determine the property value for Relief Refinance Mortgages – Open Access for certain 1- or 2-unit properties. This is effective for mortgages with Freddie Mac settlement dates on or after March 15, 2012.

•  Property must not be a manufactured home, dwelling on a leasehold estate, or if a Seller is permitted to deliver cooperative share mortgages, a cooperative unit.
•  You must confirm that the forecast standard deviation for the HVE point value estimate is no greater than 0.200 (corresponding to a Medium or High Confidence Score).

As of the note date of the Relief Refinance Mortgage, the HVE point value estimate may not be more than 120 days old, from the date the HVE value was generated.

See Guide Section 4303.3(g) for additional information and Section 4303.4 for special delivery requirements for mortgages using HVE point values.

Yes, HVE covers all 50 states and the District of Columbia, with data from more than 3,100 counties.

Rural areas are those outside metropolitan and micropolitan statistical areas, where homes are commonly separated by a great distance.

When evaluating any property, HVE uses both hedonic modeling and repeat sales modeling to generate a point value estimate. In many cases, however, rural areas are harder to evaluate due to the lack of available sales activity. Generally, confidence level tends to be lower in rural areas with insufficient data on which to model.

The HVE model is completely rebuilt each month using data from the Freddie Mac loan portfolio and external data sources that capture repeat sales and tax assessor data.

HVE is one of the most accurate AVMs in the industry. All AVMs are challenged to maintain accuracy in such an unprecedented and volatile market. The HVE model is continually analyzed and performance is monitored using internal as well as external testing.

Less than 5% of all properties evaluated by HVE receive a low confidence rating. And although the confidence level is low, the HVE valuation can provide valuable information, especially in the case of rural properties. Low confidence is commonly the result of a lack of good data or recent sales data in the area.  An appraiser will have the same difficulty obtaining good information in rural areas.  An HVE value with a Low Confidence Score can be used as a “trigger” to review the appraisal more closely. The goal is to enhance the collateral review of as many loans as possible.

HVE is consistently rated as one of the industry’s top AVMs in accuracy and coverage. All AVMs have geographic strengths and weaknesses that are due to the availability of data to the AVM in that locale. HVE has an advantage over other AVMs due to the fact that it incorporates the property data from Freddie Mac’s portfolio of loans. We have more than 101 million property addresses in our database. In addition, because our large database is based on our portfolio of loans, HVE has the unique advantage of being able to value many properties within the 12 nondisclosure states.

Freddie Mac obtains new property data each month and completely rebuilds the model using this data.

The hedonic model is a statistical model that estimates a property value by treating it as a bundle of characteristics (number of bedrooms, number of bathrooms, etc.). There are no advantages to using only a hedonic model. Best estimates are provided when both hedonic information and repeat sales information are used and combined statistically.

Each HVE point value estimate is accompanied by a Forecast Standard Deviation (FSD). The FSD represents the probability that the AVM value falls within a statistical range of the actual market value, measured against a sales price. The lower the FSD, the smaller the error in predicting actual market value and the higher the level of confidence HVE has in the value (the closer the AVM value will be to the actual sales price).

HVE derives the confidence levels from the FSD and summarizes within high, medium, and low value ranges. The confidence levels can be defined in the following manner:

• High – at least as accurate (typically more accurate) than an average appraisal
• Medium – comparable to or somewhat less accurate than an average appraisal
• Low – less accurate than an average appraisal (more common for rural areas)

Confidence Levels Related to Standard Deviation

• High: <.130 FSD | ~70% of HVE estimates
• Medium: > .130 and <.200 FSD | ~25% of HVE estimates
• Low: > .200 FSD | ~5% of HVE estimates

For quality control purposes, document the mortgage loan file with a screen print from the HVE look-up tool, a copy of the Loan Product Advisor feedback certificate, or the HVE report received from a distributor.

Yes. After some natural disasters it may become necessary to temporarily remove certain properties that are located within zip codes identified as eligible disaster areas by the Federal Emergency Management Agency (FEMA) from HVE. Once these areas have been removed from the FEMA list, the affected properties will be added back to HVE. Visit our Natural Disaster Relief web page to learn more about Freddie Mac disaster relief policy.

In addition, the changes to HVE will impact Loan Collateral Advisor^® and Automated Collateral Evaluation (ACE) as HVE is an integral component of both tools. Loan Collateral Advisor will not be able to provide valuation risk scores for appraisals on properties removed from HVE and therefore, will not be able to grant collateral representation and warranty relief eligibility. Similarly, ACE eligibility will not be available for properties removed from HVE.

A newly constructed home is incorporated into the HVE model when either Freddie Mac purchases the loan and obtains the property information, or the deed of the property is recorded in the local tax assessor’s office and that information is captured and sold to Freddie Mac by independent data aggregators.

No, there are no known REO, short sales, or restructured loans included in the model.

No, manufactured housing is not included in the HVE model, and an HVE point value will not be returned.

If Freddie Mac purchases a loan secured by property in a nondisclosure state, it will include the property data in the HVE model.

HVE contains limited data on cooperative properties (co-ops). Therefore, hit rates may be lower for co-op property types.  Additionally, Freddie Mac frequently receives co-op data that is coded incorrectly as a condominium and could be included in the model as a result.

Some key reasons why properties do not receive an HVE point value are:

• The submitted property address could not be verified by United States Postal Service standards.
• The property is a newly constructed home and information on the property is not yet available to HVE.
• The property may be located in an area where HVE does not have enough raw data to generate a value with a sufficient degree of confidence (e.g., rural properties).
• The property is a manufactured home, cooperative unit or a 3- to 4-unit property. HVE does not provide data on these property types.

In some areas, HVE does not have assessment records and must complete the valuation using the repeat sales method ONLY. In that instance, HVE must have prior transaction information in order to valuate. If no prior sales data is available in the area, then there will be no valuation.

HVE performs statistical checks on its data. If the variance on that data is too high, HVE will not produce a value.

Home Value Explorer Fact Sheet

Originally Published: May 2022
Last Updated: 08/18/2022