Enable Additional LTV (loan to value) Risk Metrics

How to turn on:

This feature will automatically be turned on for all customers on the dates listed above.

NOTE: This feature was initially enabled in beta environments on 4/19, however we canceled the production date due to feedback we received regarding how we were calculating government loans (FHA, VA and USDA). When this was initially introduced, our calculation used the total loan amount, which included financed fees. Going forward, this calculation will use the base loan amount for government loans.

The original content of the release note has been pasted below, with the updated calculation for government loans called out in the New Behavior section.

Purpose of Update and Benefit:

Blend will begin surfacing CLTV (combined loan to value) and HCLTV (high credit loan to value), in addition to LTV. The LTV ratio will also be updated to account for total loan amount instead of base loan amount, with the exception of government loans. These changes will be available for customers using Blend for loan structuring for mortgage loans.

Lenders must have the Loan Structuring feature enabled in their environments in order to see this change. In addition, individual loan team members will need to be assigned the following Role Permissions:

• Access to PAB sidebar

• View pricing

Please contact your Blend Representative if you would like to enable these prerequisites.

Current Behavior:

Currently, Blend calculates LTV using this formula: Base loan amount divided by lesser of sales price or appraised value for purchase transaction. LTV is currently the only risk metric that we surface in the lender application.

New Behavior: 

New/Updated Calculations:

The LTV metric has been updated to include the total loan amount (vs. base loan amount), and we will now surface CLTV and HCLTV. The formula for each value is noted below:

• LTV (Loan to value) = The total loan amount divided by lesser of sales price or appraised value for purchase transactions(1)
• CLTV(2) (Combined loan to value) = The total of the loan amount (for the new mortgage loan), the drawn portion (outstanding principal balance) of a HELOC, and the unpaid principal balance of all subordinate loans(3) divided by lessor of sales price of appraised value for purchase transactions(1)
• HCLTV(2) (High credit loan to value) = The total of the loan amount (for the new mortgage loan), the full amount of any HELOCs (whether or not the funds have been drawn), and the unpaid principal balance of all subordinate loans(3) divided by lessor of sales price or appraised value for purchase transactions(1)

(1) For refinances, there is just one field for property appraisal value 

(2) Terminology note: Fannie Mae uses the terms CLTV and HCLTV whereas Freddie Mac uses the corresponding terms TLTV (total loan to value) and HTLTV (high total loan to value); the calculation logic is the same between the respective terms.

(3) The term “subordinate loan” means an additional mortgage loan taken out in combination with the primary loan amount or any existing mortgages on the subject property that are not getting paid off as part of the new mortgage transaction. This is often used to help finance the funds used as the down payment.

For government loans (FHA, VA, USDA), the calculations for each will be the same, but will use the base loan amount instead of the total loan amount.

UI Changes:

Loan team members who have the “Access PAB Sidebar” and “View pricing” will be able to see all three calculations at the top of the sidebar.

Clicking “View details” at the bottom of that portion of the sidebar will surface a modal that shows a breakdown of the calculations.

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