Fannie Mae’s Collateral Underwriter Helps Lenders Manage Risk, Review Rural Appraisals
Collateral Underwriter™ (CU™) is the latest offering in Fannie Mae’s comprehensive suite of risk management tools available to lenders. CU is a proprietary appraisal risk assessment application developed by Fannie Mae to support proactive management of appraisal quality. Fannie Mae is providing additional transparency and certainty to our lenders by giving them access to the same appraisal analytics used in our own quality control process.
CU is being offered free of charge so lenders can take full advantage of this powerful tool to help identify appraisals with heightened risk of property eligibility, policy compliance violations, overvaluation and appraisal quality issues. Lenders may use the CU risk score to segment appraisals by risk profile, resulting in more efficient resource allocation, workflow management and collateral risk management processes.
Powerful, Real-Time, Data-Driven Analysis of Appraisals at Your Fingertips. CU leverages an extensive database of property records, market data and proprietary analytical models to analyze key components of the appraisal, including data integrity, comparable selection, adjustments and reconciliation. Lenders have access to CU’s automated appraisal analysis results that include:
- A CU risk score on a scale of 1.0 (lowest risk) to 5.0 (highest risk)
- Risk flags to identify factors contributing to high risk scores
- Detailed messaging to highlight specific aspects of the appraisal that may warrant further attention by a human reviewer
“Only a few short years ago, there was no standardized appraisal data and thus very little way to analyze appraisal quality on a large scale,” commented Zachary Dawson, Fannie Mae’s director of collateral strategy. “Making Collateral Underwriter’s in-depth appraisal analytics broadly available to mortgage originators is another step that Fannie Mae is taking to help improve the accuracy of appraisals and decrease collateral risk. The CU feedback is intended to help lenders address potential appraisal issues prior to delivery of the loan to Fannie Mae.”
Supporting Rural and Small-Town Lending For lenders serving rural areas, CU helps fill a gap when information to support appraisal reviews may be limited. Several lenders have reported that leveraging CU’s wealth of data is helping to support their appraisal
reviews and mitigate risk. CU is able to score approximately 97 percent of all appraisals submitted from the 50 U.S. states and the District of Columbia. Properties in the U.S.
territories cannot be analyzed. Many of the unscored appraisals are due to geocoding limitations.
Leveraging CU Findings and Analysis CU feedback is provided in three ways:
1) A CU risk score, flags and messages are provided in real time after an appraisal is submitted to Fannie Mae through the Uniform Collateral Data Portal®, or UCDP®. The CU risk score, flags and messages are provided on the Fannie Mae tab and the
UCDP Submission Summary Report. Any UCDP user that submits an appraisal to Fannie Mae has access to the CU risk score, flags and messages. This includes Fannie Mae sellers, non-seller correspondent lenders, and their AMC lender agents submitting to UCDP on their behalf.
2) For in-depth appraisal analysis of what is driving the CU risk score, flags and messages, the full CU application, or web-based user interface, is available to Fannie Mae sellers via a web-based user interface (registration required). The user interface is available only to Fannie Mae sellers, and (starting in April 2015) to non-seller correspondent lenders.
3) The CU risk score, flags and messages may be displayed in Desktop Underwriter® (DU®) and EarlyCheck™ (after an update the weekend of April 18, 2015). “Appraisal review tools are not new in the mortgage industry, but CU adds a powerful new option that can help take appraisal review to the next level,” Dawson commented. “Sharing
CU’s data and analytics with our lender customers is expected to help them efficiently reduce appraisal defects and potentially make fewer, but more informed requests of their appraisers.”
To learn more about what Collateral Underwriter can offer and for FAQs, training and other tools to help you use CU effectively please visit www.fanniemae.com/