BLOG VIEW: On Jan. 26, 2015, Fannie Mae will unveil its Collateral Underwriter (CU), a new risk assessment tool designed to help lenders manage appraisal quality. On that date, any appraisal submitted to Fannie Mae through the Uniform Collateral Data Portal (UCDP) will get appraisal risk scores, flags and messages in real time from CU.
That's when the severity level for 21 Fannie Mae proprietary appraisal messages that relate to eligibility violations will be changed from a warning to a hard stop. Several other Fannie Mae proprietary appraisal messages were retired on Dec. 13. Lenders and appraisers can visit Fannie Mae's UCDP page for more details.
You'll find CU risk scores and messages displayed in UCDP on the Fannie Mae tab and the Submission Summary Report, the same way the agency's proprietary messages are provided. Any UCDP user who submits an appraisal to Fannie Mae will have access to the CU risk scores, flags and messages.
However, for in-depth appraisal analysis, the CU application will only be available to lenders or approved Fannie Mae sellers, via a Web-based application. Correspondents will also have access to the Web-based user interface in 2015, but on a different timeline from approved seller availability.
Other UCDP users that are not Fannie Mae sellers or correspondents – including appraisal management companies (AMCs) that have UCDP access as lender agents – will be able to view the CU risk scores and messages, but will not have access to the Web-based application.
Appraisers will not have access to CU. The system will review an appraisal only after it is submitted to UCDP, which then triggers the model that includes appraisal data to perform an analysis. CU does not function as an independent property database that allows users to enter an address and receive associated data.
What Should Lenders Do Now?
What follows are some best practices lenders should consider, in response to these recent changes:
- Ensure you have a good process in place for UCDP submission and make adjustments as needed.
- Ask vendors – including AMCs – about their readiness. Lenders who access UCDP through a vendor service may wish to ask their vendor to confirm plans for updating the UCDP integration. Fannie Mae is working with solution vendors to help them prepare for CU implementation.
- Understand that starting in Jan. 26, 2015, different submission statuses will be seen from Freddie Mac and Fannie Mae. Once changes are fully implemented in January, Fannie Mae submission status will start to differ from Freddie Mac submission status, meaning lenders and vendors must be prepared to address differing business processes. Ensure you have an effective process in place to check and store UCDP success status and associated messages separately for both GSEs.
- Focus on implementation of CU. A phased rollout of the CU Web-based tool will occur from late January until April. Training will be available from Fannie Mae.
Fannie Mae is encouraging appraisers to review the information available on its CU Web page and to view the recorded on-demand trainings.
One of the questions many appraisers have is whether the use of CU as an appraisal review tool by Fannie Mae lenders will result in more work for appraisers, who may be asked to make changes based on the CU feedback. The agency's ‘current requirements and expectations for lenders are not fundamentally changing,’ Fannie Mae states.
‘Appraisers that make a good faith effort to use the most similar comparables, provide accurate and consistent data, and support their adjustments with market data and analysis can generally expect a minimum of CU feedback that would cause a follow-up request from the reviewer,’ according to Fannie Mae.
Understandably, not everyone in the appraisal community is happy about Fannie Mae's new tool. In fact, the Illinois Coalition of Appraisal Professionals has started an online appraiser petition asking for disclosure to appraisers of data relating to the ‘risk scores’ and other information pertaining to submitted appraisals.
Sam Heskel is president of Nadlan Valuations, a national AMC geared for small to midsize banks and credit unions.
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