Fannie Mae’s New Appraisal Risk-Assessment Tool: Collateral Underwriter (CU)

At the end of January 2015, Fannie Mae will make Collateral Underwriter (CU), an appraisal risk-assessment tool, available to lenders.  CU is an optional, free tool that lenders can use to assign a risk score to appraisals and identify aspects of the appraisal that may require further attention.  The tool can provide the lender a list of additional comps for possible appraiser review.  NAR members are concerned that this could add time to the appraisal process and force appraisers to use lower-value, lower-quality comps—a tool that appears to encourage lower-value appraisals.  Fannie Mae, however, hopes that the tool will be superior to current lender check-lists and engagement letters and feels it will prevent some of the call-backs appraisers receive from underwriters for additional or lower comps.

NAR is proactively working with Fannie Mae on this issue.  NAR held a conference call with Fannie Mae in November 2014 and NAR’s Real Property Valuation Committee and Conventional Financing and Policy Committee are actively engaged in the policy discussion about CU.  NAR asked Fannie to update its on-line FAQ to address appraiser questions, which is updated and posted on Fannie’s website.  At the end of December 2014, a video circulated that referred to CU as an “appraisal time bomb” and renewed concerns among NAR members about the implementation of CU.  NAR has brought these concerns to Fannie Mae’s attention and will work to dispel myths and communicate facts about CU in 2015.

NAR is watching the roll-out of CU closely and have asked members to give us feedback as soon as the tool is available and used by lenders at the end of January.  CU is a Fannie Mae product and not currently being offered by Freddie Mac.