”CU” is Fannie Mae’s in-house tool for examining credit risk. They are rolling it out to Lenders and, indirectly, to their AMC partners in January 2015. Their objective is to distribute CU to support more proactive management of appraisal quality by empowering lenders to address potential appraisal issues prior to loan delivery.
- Starting in January 2015, the CU risk score, risk flags and messages will be available to all lenders and their lender agents.
- Collateral Underwriter is a proprietary appraisal review application developed by Fannie Mae that performs an automated analysis of appraisals.
- CU’s purpose is to identify appraisals with heightened risk of property eligibility or policy compliance violations, overvaluation, and appraisal quality issues.
Here are a two key slides from a November, 2014 Fannie Mae Collateral Underwriting training that outline the Considerations For Use and an Overview Recap.
Fannie Mae’s aim is to provide additional transparency and certainty to lenders by giving them access to the same appraisal data and analytics that they use in their own internal quality control framework, including their post-acquisition loan review process and their Appraiser Quality Monitoring initiative.
Fannie Mae has been working for several years on the development of more advanced appraisal analytics, which led to the creation of Collateral Underwriter. Now, they are able to perform a more comprehensive analysis of the appraisal, focusing on things like data integrity, comparable selection, adjustments, and value reconciliation, by leveraging an expansive database of market data collected through UCDP and proprietary analytical models. Rather than rely on generic, rules-based guidelines, CU produces model-derived, market-specific results that treat each subject property and each market differently.
CU does not provide an estimate of value. CU is intended to be an appraisal review utility and is not an automated valuation model, or AVM. Lenders will be alerted to appraisals with potential overvaluation, but will not receive a value or a range of values.
Starting in January 2015, the CU risk score, risk flags, and messages will be available to all lenders and their lender agents. In summary, Fannie Mae’s objective is to distribute CU to support more proactive management of appraisal quality by empowering lenders to address potential appraisal issues prior to loan delivery.
What do you think? How will this affect the loan process? Will it ‘clean up’ bad appraisals or will it kill deals? Will this affect your income or is this just something that only lenders and appraisers need to worry about? Are there any ‘unintended consequences’, such as delayed loan closing, that you see?Social tagging: Collateral Underwriter > Fannie Mae > Los Angeles Appraiser > Northridge Appraiser > Real Estate Appraisal > Realtors