Collateral Underwriter is Fannie Mae’s new proprietary ‘risk management’ software tool they are releasing to lenders and their business partners (AMCs) on January 26, 2015. They claim it is NOT an AVM (Automated Valuation Model) because it does not produce a proscribed value.
This just keeps getting better and better. According to a national AMC (Appraisal Management Company) much of the information produced by Collateral Underwriter’s proprietary “risk rank” algorithm will be available to lenders but not their agents (AMCs).
Here is a clip taken from a broadcast email sent by the national AMC 12/30/2014:
What does this mean? The AMC will demand the appraiser respond to something akin to: “You did something wrong, we have only limited information and have no idea if CU is correct or not, but you need to fix it immediately”
Here is an example of what a Lender will see (this ‘landing page’ clip is taken from the CU training):
However, AMCs and appraisers will only get a subset of this data. See the “Message Center” box on the slide above? It appears that only these messages will get passed along to the AMC, then to the appraiser, with a demand for a response. They have no way to determine if the request is appropriate or not because the underlying data will not be made available to them. CU, which is potentially based on a flawed data set, (see my previous blog on neighborhood boundaries vs. “CBGs”) will be spitting out up to 20 comparables and who knows how many “Message Center” requests.
What do you think? Am I “Chicken Little” or is this new process worth a little public scrutiny?