There is a Major Misconception with new “Collateral Underwriter” Policy
I just got off the phone with Michael Crane, Assistant Vice President and Sr. Mortgage Banker with Fidelity Mortgage Bank, and he had a GREAT perspective on the changes coming next week with residential real estate appraisals! Here is his take on the new policy regarding appraisals:
As I’m sure you’ve probably heard by now, Fannie Mae is releasing an appraisal evaluation tool called “Collateral Underwriter” this coming Monday January 26th. There has been a lot of speculation, rumor, internet opinions, and everything in between regarding this, and I want to share several points that we as a management team have learned from several webinars and conversations with Fannie Mae (FNMA) – the leading source of residential mortgage credit in the U.S. secondary market.
Collateral Underwriter is like Desktop Underwriter for appraisals.
It will evaluate the report and note any potential issues via messages on a report that is generated when the appraiser uploads the appraisal to LenderX/Mercury. This will be somewhat like a road-map for the underwriter, one that should result in a more efficient review. The Collateral Underwriter report will be delivered to the loan officers and processors automatically with no request to the appraisal desk being needed, as the Collateral Underwriter report will be integrated with and be a part of the UCDP report.
Fannie Mae has been using Collateral Underwriter for quite a while now
Fannie Mae has been using Collateral Underwriter for quite a while now in their post-purchase appraisal reviews. It is not new or untested. Fannie has simply given us the opportunity to tap into the platform to give us the chance to polish the report pre-closing rather than post-closing.
I have spoken to many of our appraisers and you have spoken to many of your realtors, and there is a major misconception regarding what Collateral Underwriter will do regarding alternative comps. Some think that it will automatically pull 20 additional sales that the appraiser will have to respond to. This is not the case. We presently look at an AVM (automated valuation model) when we underwrite an appraisal, and it may reveal possible additional sales that may or may not be relevant to our house. Collateral Underwriter will do the same, and it eventually may do away with the need for us to pull our own AVM, i.e. that is one less step that the underwriter will have to take to complete an appraisal review. Of course, it may not reveal ANY additional comps which is the best possible scenario.
Who is Affected?
Collateral Underwriter applies ONLY to conventional transactions, not FHA, USDA, VA, or Jumbo loans.
I have seen several blogs and websites say things such as “Fannie Mae wants appraisers to come in low” and wants to “force appraisers to use low quality comps”. This is simply not the case. Collateral underwriter is designed to make sure that A) The data integrity of the appraisal is sound, B) The comps are the most appropriate ones, and C) The comps are adjusted properly in relation to the subject property. Fannie Mae has no vested interest in depressing property values. They only have an interest in ensuring that the appraised value is supported and that the integrity of the report is sound.
Thanks for the overview Michael!
If you want to reach out to Michael for more information, here’s how:
Asst. Vice President/ Sr. Mortgage Banker
Office 770-649-4911 | Cell 678-414-0259 | Fax 866-422-4027
1000 Mansell Exchange West, Ste. 360
Alpharetta, GA 30022
**Multi-year Top Producer Gold Award recipient from Mortgage Banker’s Assoc of GA.
**30 years Mortgage Banking experience in Atlanta!