An excerpt of a larger article by Susan Kulakowski, a director in the residential mortgage group at Fitch. The entire article is available in the "Mortgage Principles and Interest" newsletter, a regular product from Fitch which can be accessed at

Mortgage lenders have traditionally relied on the "three Cs" of lending - Collateral, Credit, and Capacity - when approving or declining a mortgage application. In its rating approach, Fitch has described the credit and capacity issues of the origination process. This article describes the basic types of collateral valuation that are currently in use, focusing on automated valuation systems that complement the work of appraisers.

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