GSE Collateral Underwriter - Compliance Tool?

[Mike Kennedy]

APPRAISAL SCOPE - Lender/AMC appraisal UW compliance review before the CU compliance review......

http://www.valuationreview.com/VR/A...ate-appraisal-software-with-eye-on-62669.aspx

 

[Tejus]

Several points stand out:

1. Quote from the article: "This integration provides Appraisal Scope users with the best tool for passing CU’s inspection on the first try."

This confirms the Lenders/Clients view the CU as another GSE accept/reject validation test which the appraisal report must pass.

2. Many (if not all) appraisal sw vendors are creating their own CU clones (and trying to sell them). What they do not disclose is each of the clones will generate different results than the CU. Why is this the case? The CU and clones are hyped as "model-driven tools" based on the available market data. Since the CU and each clone will have access to a different data set, the results will be different even if the algorithms are the same.

3. The PH D's designing the CU and clone utility algorithms are the same PH D's or different PH D's who have taken the same classes to learn how to do this. The CU and clones have similar algorithms, which is why the CU and the clones will generate similar results when given the same market data. Even though the CU and clones may use the same algorithm, this is no indication the CU and clones analysis results are correct. Furthermore, Fannie has already admitted their CU does not work and does not want to make this available to the Appraiser, yet they want to use the CU results to review the Appraiser.

4. The GSEs are hyping their large data base of market data acquired from appraisal reports. The GSEs did not disclose that they could have acquired most of the property data at a much lower cost and in a much simpler manner by contacting the different MLS systems. This would also have the side effect of pushing the Realtor based MLS systems and the desired Appraisal format to be more similar. As long as the data source values are different and the Appraiser is required to subjectively map MLS values to an Appraisal value, there will be issues. The obvious data values with issues are the condition and quality of construction.

4. The simple answer to many of these issues is for the GSEs to make their appraisal report validation tools (includes CU, UCDP, etc) available to the Appraisal User Community Members (includes Appraisers and Appraisal SW Developers) for testing BEFORE submitting appraisal reports to the GSEs / clients. The GSEs should have planned this from the beginning. The GSEs are responsible for this mess and they completely dropped the ball on this.