Fannie Mae “CU” Scoring is a Danger for Appraisers
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Many know by now that the GSE’s, primarily Fannie Mae, have instituted a new ‘appraisal scoring’ procedure based on an electronic read of your reports, specifically on a SFR 1004 or the Condo 1073. Those are the only forms currently being analyzed by the CU process.
On Nov. 18, 2014, FNMA released a document named “UCDP Fannie Mae Appraisal Messaging Change Notification” which you can find here.
I encourage all appraisers to actually read this document … all 11 pages.
When you do read this document, you will learn that your reports are being compared to your peer’s reports, and to your other reports, and to some unidentified ‘model’ FNMA uses.
Some of the ‘checks’ being performed by the CU process include these:
- The reported GLA is materially different than what has been reported by other appraisers.
- The reported lot size is materially different than what has been reported by other appraisers.
- The condition rating is significantly different than what has been reported by any other appraiser.
- The quality rating is significantly different than what has been reported by any other appraiser.
Here are a few that can cause real concern among appraisers:
The GLA adjustment is larger than peer and model adjustments.
The GLA adjustment is smaller than peer and model adjustments.
The view adjustment is materially different from peer and model adjustments.
And I just love this one:
The appraiser-provided comparables are materially different than the model-selected comparables.
It’s time for appraisers to get serious about meeting your peers in person, compare notes, and develop a regional adjustment chart for all variables, much like that yellow legal pad paper you were handed when you got in this business…that paper with the ‘required’ adjustment amounts on it for almost all items.
Oh…and when you get that knuckle slapping letter from FNMA saying your adjustments or comparables don’t match the ‘model’ be sure to get the specifics and pass on ‘model info’ to your peers.
Yep, appraising real property and developing an opinion of value is actually a science with absolutely no variability. Bet you didn’t know that!