Appraisal News and Business Tips

Fannie's Collateral Underwriter (CU) will make big changes in how we do appraisals starting January 26, 2015 !!

UAD is annoying and only relates to data consistency, not appraising real estate. Collateral Underwriter, which is regression based, uses UAD data to compare your appraisals to your “peers” and Fannie’s “model”, which is regression based. It also compares the appraisal with previous appraisals you have done where the same comp was used. It compares only what is coded by UAD. In other words, it does not address pools, patios, and other non-UAD data. For example, you use $40 per sq.ft. GLA adjustment. CU compares your adjustment to your peers and to the “model” adjustment and you are different than 4 out of 5 other appraisers and the “model” has a different number.

On the plus side, now underwriters are only getting messages based on “rules”, not actual data. With CU, they will have more information to decide if something needs to be changed. I am sure that a lot of “flakey” appraisers who are not very competent, rush through appraisals too fast to get them done, etc. will be identified. More important, the really bad appraisers who may be competent but choose to use “fake” comps, change comp sales prices to get a higher value, etc. will be found out.

I am working on an article for my January 2015 newsletter on CU and am studying all the Fannie documents plus interviewing industry insiders to see what it means for you. Reading all these Fannie documents is giving me a headache!!

Go to www.fanniemae.com/singlefamily/collateral-underwriter  and listen to Fannie’s two webinars for underwriters (listed under OnDemand eLearning Courses) – very good with excellent illustrations and explanations. You need to register, but it is very easy and you go directly to the webinar and can return at any time. There are lots of links on the web page for more information.

Also listen to Jeff Bradford’s recent webinar athttps://goto.webcasts.com/viewer/event.jsp?ei=1050667 . It starts with the Big Picture of Big Data and discusses CU. It also includes information on his new Redstone report which has adjustment support and other information. Redstone can be attached as an addendum to any forms software you use. You can skip this part, if you want. But, I found it very interesting. Projected pricing is $5-$15 per report, depending on what you need. Jeff is writing an article on the Big Picture of Big Data for the February issue of the paid Appraisal Today.

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3 Comments
  1. I just sat through the ‘Introduction to Collateral Underwriter” webinar.

    Apparently CU will now supply “up to 20 comparables” that are “ranked by risk” to the lender and/or AMC partner based on Fannie Mae’s proprietary algorithms. They will include the appraiser’s comparables (that have each been assigned a risk rank) along with their computer generated comparables.

    Does anyone work with a lender/AMC that has a process for ‘value reconsideration’ in place already? Most of you? Thought so… Now consider that not only are appraisers expected to respond to these additional comparable requests but will also be expected to respond to reviewer supplied CU risk rated comparables. Most lenders and their AMC partners currently do not have access to local data. Now they will as a routine course of business. It is a sure bet that many cost conscious AMCs will use low cost unlicensed staff to ‘review’ these computer generated comparables and ask for the originating appraiser to respond to any that have a lower ‘risk rank’ than the comparables selected by the appraiser.

    That’s just the tip of the iceberg. The trainer specifically states that there is no standardized way of determining neighborhood boundaries. So Fannie Mae’s solution is to break down market areas by what the US Government calls ‘Census Block Groups’. They abbreviate this as “CBG”. Watch out for this acronym. It’s an arbitrary and silent killer. Why? Because in many cases CBGs often do not align well with actual neighborhood boundaries. Further, the trainer specifically states that Market Conditions and trends will also be calculated using, in part, CBGs. This is in stark contrast to Fannie Mae’s own Market Conditions Addenda were appraisers are required to use only neighborhood data. Appraisers will most likely be expected to reconcile any differences.

    What do you think? Am I jumping to conclusions? Any chance appraisers get to raise fees to cover this extra work? Anyone think NAR will be up in arms once they find out that CU computer generated comparables are killing Realtor’s deals?

    -Mike Turner
    AMCho

  2. Common sense isn’t so common anymore….

  3. During the Bradford webinar, the presenter stated they asked Fannie Mae why Fannie Mae does not allow the Appraiser’s access to the CU and UCDP validation and analysis tools. Fannie Mae stated the CU does not work correctly and Fannie Mae did not want Appraisers to have access to the CU since the Appraisers might modify their appraisal process to avoid the CU errors.

    As a follow-up question, the presenter was asked why Fannie Mae is using the CU to blacklist appraisers when they know it does not work? No response was provided.

    The Bradford webinar also explained how the Redstone product generated results similar to the CU. Fannie Mae has stated the CU does not work correctly, so any other tool that generates similar results must also be questioned.

    Makes you wonder if the people in charge have any common sense.

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