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 Appraisal Analysis
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, said 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.
Credit Unions Are Adopting CU
Reflecting their historical focus on quality, credit unions are quickly adopting CU and seeing its benefits for risk management. CU is a great tool for us, said Helen Rompa, underwriting manager for DuPage Credit Union in Naperville, IL, which recently began using the CU user interface. CU helps us look harder at an appraisal if there is a red flag, Rompa said.
Rompa added that she and her team appreciate the information that CU provides related to appraisals and properties. We don’t know what we don’t know, she noted, adding that the data in CU not only is helping DuPage to underwrite appraisals, but can even be a source to research factors impacting the value of a property when a member questions the appraised value.
Leveraging CU Findings And Analysis
CU feedback is provided in three ways:
- 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 (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.
- For in-depth appraisal analysis of what is driving the CU risk score, flags, and messages, the full CU application is available to Fannie Mae sellers through a web-based user interface. The user interface is available only to Fannie Mae sellers, and (starting in April 2015) to non-seller correspondent lenders.
- 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 said. 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.
More Information, Resources, And Updates
To learn more about what Collateral Underwriter can offer and for FAQs, trainings, and other tools to help you prepare, please visit the CU web page at www.fanniemae.com/singlefamily/collateral-underwriter.