The models should try to forecast the
fair market prices of assets / collateral, off of
estimated future lending conditions, so that at the end of the
loan,
estimates can be made as to whether
loans would be refinanced, extended, or default.
Appraisal: a document that gives an
estimate of a property's
fair market value; an appraisal is generally required by a lender before
loan approval to ensure that the mortgage
loan amount is not more than the value of the property.