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New: Collateral Underwriter Blog: Find answers, offer solutions.
Collateral Underwriter: First Feedback
by Richard Hagar, SRA
Here is a snippet from a Collateral Underwriter report sent to a lender (not the appraiser). Take a good look at it. Few appraisers EVER see a report like this. They just receive the request for more data or corrections.
Look at the graphic. Note that the computer indicates 19 possible comparables, each is ranked 1-19. Here’s what’s good for the appraiser in question: all of the five comparables the appraiser selected are in the list of 19 (three sales + two listings). The appraiser’s comp #2 is at the top of the list – again, a good thing.
It would be bad if the appraiser selected comparables that are NOT in the top 19. If all are out of the top 19 list, something is VERY wrong. But of course, it could be that the house has been massively remodeled, or is in really bad condition, or…there’s a million stories in the naked city.
Even better for the appraiser is if all of the comparables they selected are ranked at the top of the list. Since they are not, is it possible that the appraiser missed something? Is it possible that the appraiser knows something that the computer model does not? Is it possible that the appraiser is trying to hide something or reach a predetermined value that the lender would like?
Did the appraiser explain why his comparables are really superior to others or did he just pick some, throw them against the wall and hope nobody catches sloppy work?
The fact that something or someone is questioning appraisals is a GOOD THING. We tried the path of banks not questioning appraisals and look where it got us…$7.2 trillion in economic harm. If your are confident in your work product, there is no reason to worry.
Fannie Mae knows they can’t trust banks and history proves they must question appraisal quality. This AQM/CU system, perfect or not, is at least some type of Quality Control for banks and Fannie Mae. If the system works, it will be of benefit to all.
Jury of your Peers
Note that the CU is telling the appraiser that their data is different from others, so supply us with your proof that you are right. In other words, appraisers are being challenged to prove that they are right, or prove that the other guy is wrong. Provide the proof and move on.
Does this mean more time and cost for you? Unfortunately, yes it does, as anticipated. So appraisers should improve their quality through education, back up their statements with proof and increase their fees. Learn how to make supportable adjustments and consistent condition ratings.
Learn and Grow with these On-Demand and Live Webinars
(Webinars recorded in case of scheduling conflicts.)
Do you struggle knowing whether client requests are proper or even legal? Whether they are putting your license at risk? See the most efficient way to help clients, evaluate and reduce callbacks and avoid making mistakes that can derail your career. This class provides you with the right way to handle these common and sometimes tough questions. The right answers can help protect you and make your business life easier and more profitable. Includes tips for understanding and navigating Fannie Mae’s new Collateral Underwriter.
Don’t Miss Our February Series – Part 1 is this Thursday!
Part 1: Keeping Off Fannie Mae’s New Appraiser “Blacklist”
February 5th, 10 – 11:30 a.m. PST
Part 2: Fannie Mae’s AQM and How to Stay Out of Trouble
February 10th, 10 – 11:30 a.m. PST
Hagar covers Fannie Mae’s new requirements showing you how to appraise better and avoid trouble. Hagar unravels Fannie Mae’s new AQM system and the new Collateral Underwriter requirements. The two classes will explain the 18 “deadly sins” you must avoid plus issues related to Quality and Condition classifications. The classes are designed to help appraisers avoid being blacklisted by lenders and Fannie Mae, while supplying superior appraisals for a higher fee. These are the hot topics impacting all residential appraisers.
How to Support and Prove Your Adjustments
Part 1: March 5th, 10 – 12 p.m. PST
Part 2: March 12th, 10 – 12 p.m. PST
Updated and expanded, Hagar shows you how to properly support your adjustments- the foundation of good appraising! Regulations state that appraisal adjustments cannot be based upon an appraiser’s opinion. Failure to provide proper proof and analysis to support your adjustments means a rough road ahead: state board complaints, panel removal, lawsuits, even license revocation. Fannie Mae cites “the use of adjustments that do not reflect market reaction” as the number one reason an appraiser can be “blacklisted.” This training is critical in helping appraisers avoid catastrophic appraisal failures.
Enjoy Subscription Pricing: January, February, and March Webinars for just $149! (5 webinars listed above)
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