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CU Warnings (i.e. Fnm0614 )

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JAM

Sophomore Member
Joined
Apr 8, 2016
Professional Status
Certified Residential Appraiser
State
Florida
Hello Appraiser Forum members,

I received a message today from my client regarding the lender inquiring about: FNM0614 (The condition adjustment is smaller than peer and model adjustments.) with three of my comps that had a condition adjustment. Does anyone have any good knowledge on this? I am to comment and address. I noticed that the subject had shabby carpet that was discolored which was what the condition adjustment warranted. I am unsure how to address this CU "The condition adjustment is smaller than peer and model adjustments" verbiage. Is there anyone who knows about how to handle this CU software that is tagging my conditions adjustment as a high risk when I am being honest about the subject's carpet condition (3 comps were identified with this CU message)?

Looking forward to hearing what I can do to let the lender know in a professional way that the condition adjustments are warranted regardless of their CU automatic risk detector.

Thank you!

JAM
 

JAM

Sophomore Member
Joined
Apr 8, 2016
Professional Status
Certified Residential Appraiser
State
Florida
Hello again All,

Update: Feel free to disregard. I think I have it now. Thank you everyone. I will provide another comp that is very similar to the subject to support (first page of the grid had a negative adjustment for condition which created a straight line adjustment). I had comp 4 bracketing the subject's condition, but it was not supportive of the final value. I found another one and explain that the condition had to do with the subject's flooring only which is why it was "smaller than peer and model adjustments." Anyways, I always appreciate your support on here!

Best,

JAM
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Hello again All,

Update: Feel free to disregard. I think I have it now. Thank you everyone. I will provide another comp that is very similar to the subject to support (first page of the grid had a negative adjustment for condition which created a straight line adjustment). I had comp 4 bracketing the subject's condition, but it was not supportive of the final value. I found another one and explain that the condition had to do with the subject's flooring only which is why it was "smaller than peer and model adjustments." Anyways, I always appreciate your support on here!

Best,

JAM
I highlighted what the source of the problem was for the lender. If you provide a comp in similar condition as the subject property that supports the appraised value, then the problem will most likely will go away
 

JAM

Sophomore Member
Joined
Apr 8, 2016
Professional Status
Certified Residential Appraiser
State
Florida
I highlighted what the source of the problem was for the lender. If you provide a comp in similar condition as the subject property that supports the appraised value, then the problem will most likely will go away

Thanks Tim, I appreciate your reply! I am still getting used to this CU talk that the lender requests, so you are right, easier to just provide another comp to support the value (even though this one is older, but luckily still under a year) than explain my life away for the problem to go away!
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Thanks Tim, I appreciate your reply! I am still getting used to this CU talk that the lender requests, so you are right, easier to just provide another comp to support the value (even though this one is older, but luckily still under a year) than explain my life away for the problem to go away!
By the way, the lender's condition was not proper in my opinion. They are supposed to use CU to help inform the underwriter about potential appraisal issues and not forward the CU message to the appraiser for comment. How in the heck would you know why the your adjustments do not agree with peer and model adjustments? The proper way to condition this file would have been to ask you to provide an additional comp that is similar in condition to the subject property that supports value and/or to provide additional support for your condition adjustments
 
Last edited:

JAM

Sophomore Member
Joined
Apr 8, 2016
Professional Status
Certified Residential Appraiser
State
Florida
By the way, the lender's condition was not proper in my opinion. They are supposed to use CU to help inform the underwriter about potential appraisal issues and not forward the CU message to the appraiser for comment. How the heck would you know why the your adjustments do not agree with peer and model adjustments. The proper way to condition this file would have been to ask you to provide an additional comp that is similar in condition to the subject property that supports value and/or to provide additional support for your condition adjustments

Exactly! I felt as if I had to decipher a secret underwriting code. I also felt this was beating around the bush (so to speak) to explain at great lengths about the discoloration of the carpet and nominal updates / upgrades the subject had. It definitely needed to be communicated differently which is what I sensed, so I decided to go ahead and provide another comparable to further support the final value estimate. Thanks again for validating this for me.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Exactly! I felt as if I had to decipher a secret underwriting code. I also felt this was beating around the bush (so to speak) to explain at great lengths about the discoloration of the carpet and nominal updates / upgrades the subject had. It definitely needed to be communicated differently which is what I sensed, so I decided to go ahead and provide another comparable to further support the final value estimate. Thanks again for validating this for me.
No problem....best of luck putting this one to bed
 

TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
always wondered about that CU message (and similar ones referring to model/peer adjustments being different). unless all my peers are appraising the same subject on the same day using the same comps of course the adjustments are going to be different, and even if all three of those conditions were met the adjustments would most likely still be different for multiple appraisers.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
always wondered about that CU message (and similar ones referring to model/peer adjustments being different). unless all my peers are appraising the same subject on the same day using the same comps of course the adjustments are going to be different, and even if all three of those conditions were met the adjustments would most likely still be different for multiple appraisers.
That CU message is actually useful to smart underwriters. In this case, all of the comps that support the appraised value are in superior condition compared to the subject property. Thus, a smart underwriter should have been concerned about weather the associated condition adjustment accurately reflects market reaction or is smaller than the actual market reaction, especially because the comps that brackets condition does not support the appraised value. The CU message in this case indicates that the condition adjustment may be too small, thus it makes sense that the lender would condition this file, however the issued condition was improper as I stated in my earlier posts in this thread. The proper way to condition this this file would have been to request the appraiser to provide an additional comp in similar condition to the subject property that supports value and/or to provide additional support for the condition adjustments
 
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