Collateral Underwriter White Paper
Fannie Mae’s Collateral Underwriter – Industry Update White Paper
I just found this document (PDF attached) written primarily from a ‘lender’ perspective about the upcoming Collateral Underwriter (CU), which applies only to 1004 and 1073 form reports effective Jan. 26, 2015, but probably will be carried over to the 2055 and 1075 form reports after the initial shake out cruise.
13 pages – will help you understand what FNMA will be looking for in terms of appraisal report QC functions performed by AMC’s, and the lender’s appraisal review departments. Knowing what they will be checking will help you avoid those errors.
Your first level of defense is to run your un-signed report through your appraisal software’s on-board UAD checker and fix the items that are flagged. Then sign and deliver the report.
But unfortunately, the Collateral Underwriter process will do a procto exam on your report far beyond the UAD required items. So you may be asked for further clarifications, additions or corrections.
This entire process has been instituted due to the worldwide financial meltdown that started in 2008 – much of that blamed on appraisers because we are an easy target due to being collectively unorganized, and the layer upon layer of regulations by various entities mandated since then.
Continuing its focus on appraisal quality assurance, Fannie Mae™ has announced Collateral Underwriter™, a proprietary application that provides appraisal risk assessments to support proactive management of appraisal quality. Collateral Underwriter, or CU™, will be run against all appraisals submitted to UCDP™.
“Why you need a QC system at all”
You’ve already read the scary headlines about the penalties for inadequate quality control, and now Fannie Mae will be checking appraisal quality at UCDP. Investors will be armed for buy backs, and regulatory compliance violations range based on the violation, but they’re all calculated on a per-violation, per-day basis, and punitive and civil damages are added to the top. It’s not a pretty picture.