News from the Knoff Group

Collateral Underwriter is an automated risk assessment software that reviews appraisal reports for FannieMae regulated mortgages.  There has been much discussion that the program (already updated to another version since released at the beginning of the year) is essentially creating a ‘zestimate’ i.e. automatic valuation based on algorithms.  Or it could just speed the process up – the below article is in support of the program…I’d tend to agree that there is both a bit of fear mongering going on…and that there are tweaks that need to be made to the system.

New Appraisal Rules; The Sky Is Not Falling by Mark Greene, Forbes. January 16, 2015

Mortgage people are fear mongering that the sky is falling, that appraisals will now require up to twenty comps and that we are facing widespread undervaluing that will slow real estate market activity and create chaos in the mortgage industry.

Not so fast.

Right there at the top of the page on the FannieMae website it says; Collateral Underwriter (CU) provides an automated risk assessment of an appraisal report.That’s it, CU is a tool, an automated tool, and that’s all it is. Right now as I write this, there are already a number of appraisal review tools currently available and actively in use by mortgage lenders. Appraisers endeavoring to make a good faith effort to use appropriate comps (comparable sales), provide accurate and consistent data and make sound adjustments will not see their work challenged by CU any more than it is challenged now by tools currently employed.

CU is and has been part of the mortgage lending landscape for some time. Fannie Mae has been using CU in the quality control process for appraisals on the back end. Lenders are simply moving this quality control tool to the front end of the process.CU automates the underwriter review of an appraisal. It uses the same formula currently in place for manual review, only now it is enhanced with an expanded algorithm. CU provides for more consistent and reliable appraisal analytics, that’s all, and remember, Fannie Mae has already been using CU and the sky is still in the sky where I live!

Read more at this link New Appraisal Rules; The Sky Is Not Falling – Forbes.