Collateral Underwriting Appraisal Messages

[KenAZ]

Unfortunately FNMA is not very transparent and does not release much of this data to appraisers.

 

[timd354]

Thank you Tim,

Considering what you posted, does it then follow that if the lender sucks at doing their job with the CU, some appraisers who have "done it right" will still suffer negative rating from Fannie, as it's the appraiser who is reliant upon the lender to do their part?

No, I don't think so as Fannie's internal analytics and appraisal review process is independent from what the lenders do

 

[KenAZ]

No, I don't think so as Fannie's internal analytics and appraisal review process is independent from what the lenders do

Yes, they are independent, but are very similar. If you get 5 rating on CU, you will most likely get the same rating with FNMA.

 

[kevco]

Does anyone remember who it was that worked at FNMA, I think they were a reviewer or something, that said that if FNMA could get rid of appraisers they would?

 

[KenAZ]

It was posted a few weeks ago. An appraiser heard it at a seminar about 15 years ago. I have not found anyone else that went to that seminar. I don't remember who posted it.

 

[timd354]

Yes, they are independent, but are very similar. If you get 5 rating on CU, you will most likely get the same rating with FNMA.

Huh? The lenders have nothing to do with the CU rating....that is a Fannie Mae CU rating. Additionally, Fannie Mae is well aware that the CU ratings are not perfect and that there are false positives on the higher risk ratings. That is why Fannie Mae will still purchase loans with CU ratings of 4 and 5. Contrary to what a lot of people seem to think, Fannie Mae does not require lenders to clear red flags or do anything with CU in order for the loan to be sold to Fannie Mae. In fact, lenders are not even required to use CU (although they would be stupid not to do so in my opinion). Here are some of the relevant Fannie Mae FAQ's on these topics:

Q5. Is use of CU mandatory for Fannie Mae sellers?
Fannie Mae strongly encourages lenders to utilize the CU risk scores, flags, and messages provided upon submission of an appraisal to UCDP, and to access the web-based application for in-depth analysis, but use of CU is not required. Review the available training and other resources for more information about the benefits of the CU feedback.

Q13. The CU risk scores, flags, and messages will be added to the Fannie Mae tab and included on the Submission Summary Report (SSR). Unlike some UCDP and Fannie Mae Proprietary Messages that require action, CU messages do not need to be cleared – they simply highlight aspects of the appraisal that may require further attention. Will the CU risk score impact the “Successful” submission status of the appraisal in UCDP?
Except for the 21 hard stop messages (see Q10), the CU risk scores, flags, and messages will provide independent feedback on the appraisal for the submitter’s consideration, and will not impact the submission status in UCDP.

Q22. Will Fannie Mae purchase loans that receive high CU risk scores and/or risk flags?
Yes. High CU risk scores can be considered warnings, but do not preclude lender delivery of the loan to Fannie Mae. It is highly recommended, however, that lenders perform appropriate due diligence on appraisals with high CU risk scores and/or risk flags prior to loan delivery.

 

[KenAZ]

Both programs are FNMA created and there are no differences between the two as far as the operator is concerned. The AQM program (Not the real name) that FNMA runs after the submission looks and feels the same as the CU program that is provided to the Underwriters.

When I say "Cleared" I meant to say "Explained." The terminology is a bit confusing. They can submit a 5 rating, but if they want to avoid buybacks or FNMA inquisitions they better explain or clear the warnings. Kind of like when you run a review program in your appraisal software. You acknowledged that you got the warnings and it is up to you to make the changes or explain them. Sure, it is optional, but the underwriter will be in big hot water when they are asked why they submitted a corrupt appraisal that was flagged in the FNMA software and the underwriter did not see it or fix it.

It is highly recommended, however, that lenders perform appropriate due diligence on appraisals with high CU risk scores and/or risk flags prior to loan delivery.

 

[Terrel L. Shields]

The AMC will be the first line of enforcing the CU. Then the bank lender's UWs will take a look and run it thru CU. Then when it gets the kick backs it goes back to the lender to the AMC and then to the Appraiser, or the Lender bypasses the AMC and provides same to the appraiser direct. Either way, it can't be good.

 

[djd09]

Q 20 Will appraisers have access to CU?
No, appraisers will not have access to CU. CU was developed as an appraisal review tool for
internal analysis and is now being made available to Fannie Mae lenders for review of
appraisals they have submitted through UCDP. CU 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.
Appraisers are welcome to use the resources on the CU web page, including viewing the
recorded on-demand trainings:
 Introduction to Collateral Underwriter provides basic information about CU’s features,
including screenshots.
 Understanding the CU Risk Score, Flags, and Messages provides information to help lenders
use the CU feedback in their appraisal review process.
Additional training and a CU User Guide will be posted beginning in January 2015.

Review? i thought it was a risk assessment tool?

 

[timd354]

Both programs are FNMA created and there are no differences between the two as far as the operator is concerned. The AQM program (Not the real name) that FNMA runs after the submission looks and feels the same as the CU program that is provided to the Underwriters.

When I say "Cleared" I meant to say "Explained." The terminology is a bit confusing. They can submit a 5 rating, but if they want to avoid buybacks or FNMA inquisitions they better explain or clear the warnings. Kind of like when you run a review program in your appraisal software. You acknowledged that you got the warnings and it is up to you to make the changes or explain them. Sure, it is optional, but the underwriter will be in big hot water when they are asked why they submitted a corrupt appraisal that was flagged in the FNMA software and the underwriter did not see it or fix it.

Fannie Mae now runs the Collateral Underwriter program both before and after the loan is purchased by Fannie. I forget the name of the tool that they used to run behind the scenes post-purchase, but Fannie Mae took that tool and modified and then renamed it Collateral Underwriter. I know for a fact that CU is a big driver of which loans are selected for QA on a post close basis although it should be noted that not all loans with a CU score of 4 or 5 will be selected for QA and some loans with a 1, 2 or 3 will be selected for QA.

Both programs are FNMA created and there are no differences between the two as far as the operator is concerned. The AQM program (Not the real name) that FNMA runs after the submission looks and feels the same as the CU program that is provided to the Underwriters.

When I say "Cleared" I meant to say "Explained." The terminology is a bit confusing. They can submit a 5 rating, but if they want to avoid buybacks or FNMA inquisitions they better explain or clear the warnings. Kind of like when you run a review program in your appraisal software. You acknowledged that you got the warnings and it is up to you to make the changes or explain them. Sure, it is optional, but the underwriter will be in big hot water when they are asked why they submitted a corrupt appraisal that was flagged in the FNMA software and the underwriter did not see it or fix it.

Any lender that did not exercise additional due diligence on appraisals that receive a 4 or 5 rating would be foolish