It is often beneficial to look at how other countries handle appraisal. Several countries in Europe, particularly Germany, require that appraisers provide a “Mortgage Lending Value” (MLV) as part of the appraisal for home loans. This goes beyond the American appraisal process of simply providing a Market Value. RICS advises, though it does not require, that Market Value (MV) also be provided alongside MLV.
The purpose of using MLV is to reduce the problems of fluctuating MV going into the future. It is, therefore, an issue of “Prescriptive Analytics.” First, you predict where Market Value, financing, and maintenance costs are headed some time into the future, say 8+/- years, deduct certain predicted costs from the predicted low value of the MV, further deduct predicted foreclosure processing costs, then arrive at something close to an MLV. The details of how exactly this is done are determined by the national laws and banking guidelines which are invariably more involved.
This exercise appears, therefore, to come under Predictive and Prescriptive Analytics. I propose it also comes under Value Engineering in that it focuses on the functional utility of the MLV in case foreclosure occurs at a future date.
References:
https://www.pfandbrief.de/site/en/vdp/real_estate/valuation/mortgage_lending_value.html
