“Collateral Underwriter” – Fannie Mae’s Appraisal Risk Assessment Tool (for some). Appraisers take note – no CU for you!
In my previous Blog post January 15, 2015, the roll-out of Fannie Mae’s new appraisal risk assessment tool (Collateral Underwriter or CU) was discussed and recommendations were provided as to how lenders can best prepare for its scheduled implementation date of January 26, 2015.
Since lenders will be receiving CU risk scores, red flags and messages upon transmittal of the appraisal report via the Uniform Collateral Data Portal (UCDP), I stated that it was anticipated that underwriters would be contacting appraisers more frequently regarding these feedback messages to obtain better explanations and/or documentation to satisfy Fannie Mae’s concerns.
For example, in Fannie Mae’s posting of CU Frequently Asked Questions, they indicate that CU will be comparing the appraiser-provided comparable sales against a pool of “observed sales transactions in the same market area”. As a result, there should be many occasions in which CU will identify possible better comparable sales and the lender, upon receiving this feedback, will require the appraiser to review and comment on why he/she did not utilize these sales. This will lead to some rather interesting dialog between underwriters and appraisers regarding the sensitive and complex topic of selection of comparable sales data, not to mention the time delays that will be experienced while trying to resolve these concerns.
In light of these potential problems, one must question Fannie Mae’s decision not to allow appraisers to have access to CU. If one of the stated goals of CU is to provide transparency in the appraisal review process as well as to improve the overall quality of the appraisal reports performed on Fannie Mae loan transactions, why not allow appraisers to have access to the data being stored by Fannie Mae?
I have given this a lot of thought and could not come up with any downside for granting appraisers access to CU. Understanding that their access would be limited to the appraisal assignment in question.
Fannie Mae should be given a lot of credit for developing CU as this free review tool should ultimately result in better quality appraisal reports. Perhaps, they will reconsider their decision to not allow appraisers to have access to CU before its implementation date.
What do you think?