Collateral Underwriter Crumbles

CU Robot Keep Scores on Appraisers

CU Robot Keeps Score on Appraisers


No, this is not about “cuukie” crumbles. It’s about what the Fannie Mae Collateral Underwriter (CU) process is finding in far too many appraisal reports.

A few days ago, I had an opportunity to speak with someone on the ‘inside’ of Fannie Mae. The discussion evolved to “what are the most serious items the CU process is finding in appraisals?”

The CU process, which became effective January 26, 2015, is a giant electronic robot collecting tons of specific data from submitted appraisals to FNMA. This data can then be tied directly to the individual appraiser. Every appraiser in this country who has reports submitted to FNMA has a unique CU ‘ID number’ assigned to them. The latter becomes part of the data collection stream. So, if a researcher wants to examine a series of reports from appraiser #12345 during a specific period, their giant CU robot can capture and spit out the info in milliseconds. They are doing just that.

Because data in reports is mostly numerical info, the reported info can be easily compared. They have been doing lots of comparisons for reports done by singular appraisers. The two most serious issues are these:

    Changing the Q & C rating

  1. Appraisers are changing the Q & C rating numbers for the same property in later appraisals. This is happening with sold subject properties in a current report later being used as a comp in a successive report, and with the other comps used. Appraisers are changing the rating number either up or down in successive reports. As FNMA explained a year and a half ago, the rating numbers are ABSOLUTE from the first time used. They are not meant to be changed unless there have been significant changes to the property between the report use dates. Even then, this needs a careful process and explanation (see below). Far too many appraisers believe that the rating numbers are RELATIVE to the subject. This is incorrect. The ratings are meant to be firmly fixed to that individual property the first time used in a report, rating it to itself in terms of the CU rating definitions. If you are changing rating numbers for the same property in different reports, you’re a prime candidate to receive a questioning letter from FNMA.

    “One number and done”?!

  3. Appraisers are using inappropriate, and the “same” GLA adjustment for different property types, and even similar ones. According to the ‘person on the inside’, many appraisers use ‘one’ GLA adjustment figure for SFRs, Condos, and Manufactured Homes. And maybe even 2-4 Multi Family properties. FNMA has found that the age, condition, quality and other aspects of those properties make no difference to the appraiser. ”One number and done” is how far too many appraisers are making the GLA adjustment. Makes absolutely no sense at all! The giant CU robot is able to compare different property types appraised by the same appraiser. So, if you do your reports this way, expect to get a letter from FNMA asking for explanation. The same thing is happening for similar type properties, i.e. SFRs, but of different GLA sizes, ages, etc. Appraisers are using exactly the SAME adjustment number for the GLA across multiple reports. Makes no difference if the subject is 900 sf or 3000 sf. The GLA adjustment amount is exactly the same. Again, makes absolutely no sense at all! If you are doing this, you will be discovered. And you will probably have a ‘robot representative’ ask for further explanation.

In a separate post, I’ll give you a simple, supportable way to make the GLA adjustment. I have to get another report finished first!

Use the exact original Q or C rating number

In regard to item #1 above, many good appraisers who understand the CU process highly recommend that regardless of changes to the property, the exact original Q or C rating number be kept and re-used for every successive appraisal, on the Quality and Condition line. This is because the giant CU robot sees and compares your reports to one another.

If there have been significant changes to the property over the time period, and you decide that a rating number change is necessary, use one of the ‘spare’ lines below Porch/Patio/Deck to make a separate “Additional Quality/Condition Adjustment.” Use which ever word applies. Doing it this way will keep you from getting knuckles wacked by the CU robot. Be sure to provide commentary in the report about why this separate adjustment is made. This will help a reviewer working with the robot, or anyone else, understand your opinion and method.

Remember, the CU robot is looking over your shoulder for every report you do submitted to FNMA.

Dave Towne
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on

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51 Responses

  1. Cynthia Lianna on Facebook Cynthia Lianna on Facebook says:

    I’m so glad I’m no longer appraising.

  2. Avatar JC says:

    Yet another example of Big Brother in action. And they wonder why appraisers are leaving the profession.

    • Avatar Raymond says:

      hmmm….whatever happen to impartial, objective, unbais appraisal reports prepared without outside influence or pressure.

  3. Avatar Raymond says:

    hmmm….whatever happen to the goal of objective, impartial and unbais appraisal reports prepared without outside influence or pressure??????

  4. Shirdell Pritchett Nunn on Facebook Shirdell Pritchett Nunn on Facebook says:

    Basically what they are saying is rate it the same always and do condition/quality adjustments on another line. That defeats the purpose and is ridiculous!

  5. Avatar chris says:

    If you close your eyes and have someone read the 1st lines of C3 and C4, They are almost exactly the same.

    Then have them read lines 2.

    Then lines 3.

    The C ratings are a joke !

  6. Avatar Koma says:

    The condition rating has to stay the same forever? WTF! This is so ridiculous! You know what Chuck Upchuck bring it on. I’m sticking with MY opinion. If a property sold as an REO with a C5 condition 6 months ago when I originally used it then renovated it still has to be a C5 when going to use it after it sells again? Idiots! I can go back to my previous career in a heart beat if I had to. So like I said BRING IT ON! And for those “many good appraisers” that say you gotta do it because CU is watching you are spineless. Yea you heard me.

    Thanks for letting me vent.

    • Avatar Elaine says:

      What they are looking for is a condition change on the same sale. If it was C5 the first time you used it, which is reporting THAT sale you can’t change the condition it was for that sale. If it sells again and it has changed then you are good to go. If you find more info about that same sale you just have to explain yourself.

      • Avatar Koma says:

        Elaine, That’s not what the bottom of this article is implying. It also states this CU can not read your comments so it’s safer to leave it C5 then change it on one of the open boxes at the bottom of the grid even if it’s been completely renovated and a new sale. That’s what I’m saying is crazy.

      • Avatar Bill Johnson says:

        Elaine, that is only part of what they are looking for. I have reviewed a hundred+ of my reports and the corresponding score that gets attached to each one. Per there own indications, a sold property is used on average 6 times by all appraisers, so if they say my opinion is materially different as compared to my peers, what does that mean? If 4 appraisers have called a property a C3 while 2 others have indicated it as a C4, if I call it a C3, will my report indicate my opinion is in error? Is equal weight given to each appraiser regardless of license level or designation? Is more weight given to the appraiser who performed the original appraisal? What if my opinion falls in line with the original appraiser who did the interior inspection (C4)? Is one rating a part considered materially different? Should there be a minimal sample size to draw such conclusions? Are their codes triggered based on some percentage? The scoring system is flawed with no appeal process while my latest’s potential client seems to want to hire or fire appraisers based on ones score performance.

  7. Retired Appraiser Retired Appraiser says:

    Meanwhile the appraisers who were smart enough to walk away from this INSANE “PROFESSION”  are howling with laughter and yelling  “Suck My Fat Wiener FNMA & FHA”.

  8. Avatar John Moonitz says:

    This is insanity! We are supposed to become robots ourselves . . . in order to keep this Big Brother robot from getting angry at us?!?!?!?

    I refuse to keep the same C rating for a C6 fixer that, six months later, has undergone a full gut and remodel! What is the point of having an appraiser inspect the property if we can’t recognize an improvement like this without the God damned government breathing down our necks?!? I really thought we had bottomed out in the shameful and pathetic position this industry had been crushed to by Dodd-Frank and other horrible federal actions . . . but here we are . . . yet another staggering blow to what USED to be a proud profession.

    This is why the best appraisers are leaving this profession . . . and I’m not far behind.
    I’m ending this comment now, because if I were to continue, there would be more expletives than family friendly words.

    Go to hell Fannie Mae

    • Avatar Jeff says:

      I have also had this discussion where Q’s and C’s are not absolute and to think they are is ridiculous. We have properties that are sold as a disposable property that is completely updated and placed back on the market. Anyone that has any common sense can see that Q’s and C’s are not absolute.

  9. Avatar Joshua Walitt says:

    The CU process expects the SALE (specific date and address) to remain its same C-code and C-code from report to report. If it sells and resells (like a flip), then those are two different sales (different dates) and the codes wouldn’t automatically be expected to be the same.

    • Avatar raymond says:

      joshua, i repeat…………whatever happen to the goal of objective, impartial and unbais appraisal reports prepared without outside influence or pressure????? The CU, like the AMC business model, was conceived and designed for and by lenders and lender interest groups.

    • Avatar Koma says:

      In a normal world, but they have us in a bizzaro world now. CRAZY! Courtesy DC Universe Picture of Chuck Upchuck.

    • Baggins Baggins says:

      You’ll never get through to these guys with obvious simple logic like that.  Ha!

      I find this all very entertaining. FNMA is so large that one hand is not talking to the other. The CU system was meant to shore up risk and improve review efficiency, and the unintended consequence has been to identify all the lenders favorite discount appraisers whom provide them the most appraisal fee kickback profit, as being the main offenders. Haha, karma strikes again! Now they don’t know what to do, because when it comes to risk vs reward, obviously the lenders want to cut straight to the reward first. How on earth will they continue to skirt CR fee rules and engage in profit sharing with their amc’s, if they allow the UCDP system to remove the appraisers who flip the most volume?  And then watch out because they made great efficiency headway by reducing review costs to idiots whom simply regurgitate CU system warnings as ‘revision stips’. Good for those guys for finding a way to double the efficiency of reviewers, but unfortunately that time savings has a direct relationship to increased requirements for the appraiser. These guys don’t even read pdf’s anymore. Now nobody can figure out the correct bearing because each segment of this industry has their own special interest they advocate for. The CU creators can’t turn back and lose these gigantic tech servicing contracts. The underwriters and processors just got a raise through automation, they don’t want to take longer like the ‘old days’ of reading pdf’s. The distributors advocate for leniency because they know damned well the worst scoring appraisers are their largest profit points. The appraisers whom don’t see the big picture are stepping down instead of stepping up, which stresses all levels of this system further. Just desserts for the technocrats. They should have left well enough alone.

      Welcome to the age of never ending tech changes, and you can all thank yourselves for financially voting for these systems, with stupid made in china iphones, infinite ‘app purchases’, and love of Corelogic monopoly style companies and such. Just wait till Corelogic makes a play to run the FNMA CU system if FNMA fails to deliver. Appraisers got exactly what they asked for, more tech. Cheers. I still don’t have a cell phone. Over term, an objective observer can clearly understand why. Hard to be objective when you’re in the tech mix like that. Step back I say to these appraisers struggling with the tech systems.  It’s just tech, the value of the human appraiser is logic, not tech. The value of liberty and privacy clearly override the convenience mobile tech items bring in most regards. Do they have the handheld or mobile CU XML score reviewer app for reviewers yet? You know, for those corny processors and day 1 amc newbs who work from starschumcks and effectively review 50 reports a day and issue a hundred stips within an hour based on XML automation? Coming soon.

  10. Avatar Bill Johnson says:

    The below paragraph is from a potential direct lender client that I have been soliciting for months, and after what we have all seen in this industry, should not be a shock to anyone. A % of lenders (?) apparently use our scores as a form of a report card to monitor “their issues” and potentially are attempting to use it to add (or potentially remove) appraisers to there panel. With an assigned number similar to a social security card, can lenders access an overall score for an appraiser and use that as a hiring metric? I have commented long form on the CU platform and the pitfalls, but in short we should all be worried of such ongoing or potential future practices. The system does not have the ability to read our comments, the typical comp is used on average only 6 times (their findings), there is no transparency to what is being reported on us, and THERE IS NO APPEAL PROCESS IF WE THE APPRAISER DISAGREE the few times when we do have access to the report/score. This is big brother at its worst.

    “We are actually having a meeting in the next couple weeks to look at new appraisers so good timing on your part to remind us. Do you happen to have anything that shows what your UCDP scores have been? We have had some issues with appraisers who consistently have high UCDP scores so we are looking closely at that now more than ever.”

    • Baggins Baggins says:

      Hey Bill. Yours is obviously the most constructive post here. Thank you.

      Questions, questions that need answered. There is a 1000 point score system many of them use these days in relationship to XML data. High is too many instances, etc. I’ve wondered if I have a great low score consistently and that’s why my phone never stops ringing. My specific question I’d like answered is can lenders sift through appraisers by score, in order to purposefully work with appraisers whom score lower in the FNMA CU UCDP systems?

      I think appraisers here are missing the point. Appraisal fraud is real and it happens. The point of Q & C ratings being absolute is not to hold the home rating static in time, but rather to identify when the appraiser is being an advocate for the deal, and subjectively rating properties on a whim or a dime. aka the wags wild ass guess methods. Look guys, let me give you a quick run down on a solution; Develop a personal standard for Q rating. I only rate mcmansions and such Q2 or better. Homes must be amazing semi custom or very high end tract to get Q3, and then Q4 for most everything mid to mid high, even well improved low. Q5 for economy tract, some condo, trailers, etc. That’s static, easy to remember. Then C1 new only. C2 new construct or total studs out renovations. C3 is nearly everything else, if reasonably improved to thorough remods, all C3. C4 is for dated. C5 do not use unless dealing with short, reo or deficient as C5 sparks an auto score alert with UCDP and is subsequently prohibitive to the lenders necessary compliance process (yes, even if C5 is just for a comp.). C6 is only used on scraper trash. 

      So that’s it, and you can always be able to rate with consistency and avoid these issues. It’s when the appraisers try to bounce the row of comps with varied CQ ratings that the warning alerts happen. If your subject is Q3C3, your goal is to comp Q3C3 across the board, and apply adjusts if not. In all but the rarest cases my Q ratings match, because I’m pulling from similar housing stock. And most homes in the pipeline are C3, so that’s also the most common.  And I use the line item below to justify why I still have a materials difference rating applied in C3 vs C3, quickie notes like; more hrdwds, inferior updtng, etc, etc. But you still apply that adjust in the C line to satisfy the robot minds. Skynet is your new overlord, but he’s not that bright just yet. Walk right past this nonsense with a consistent method and empower yourself. Also I use the alert tool in wintotal aurora which tells me of previous reports within a mile. Then I print out 1004 pages if I’ve got similar or same neighborhood appraisals within 2 years. I simply track my previous Q ratings and voila, compliance achieved. If you’re able to pull comps from 90 day stock more often than not, you also avoid the comps reuse UCDP scrutiny issue. It’s the 2 a day appraisers who churn same comps to infinity and automate their own logical processes whom this system vexes the most, and rightfully so, those cheaters. Cheers!

      • Avatar Koma says:

        Guess what that’s your opinion not mine and I will be using my own opinion until they kick me out. If that ever happens I’ll be walking away with both middle fingers pointed in their faces. You can be but I’m not going to worry what some computer program is going to like or not to like.

        Had a client come back to me on what I said was a Q5 rancher sitting on a slab 0.25 ac in s/d with no hoa and said one of my “peers” had it 8 months ago at a Q4. I stated that’s his opinion not mine and if you want his opinion give the job to him. They accepted the report with my opinion.

      • Avatar Bill Johnson says:

        A portion of my clients within seconds/minutes of submittal include within their document section the FNMA score sheet (1 to 2 pages) on that individual report. I have reviewed hundreds of theses reports and overall each is scored with a rating of between 1 to 5 where 5 indicates highest potential collateral risk. In speaking with lenders, corporate heads, and the local appraisal department managers who select appraisers for their panel, there is NO understanding of how the system works. I approach this score like a traditional credit report score, however there is no indication on how much weight is given to each category, and as previously mentioned, there is no dispute/resolution department to address our concerns if we would want to challenge their findings.

      • Baggins Baggins says:

        Koma, get over it. It is what it is and there is no point in getting angry. Always provide this link and point to page 2, bulletpoint2, if ever challenged like that. Collateral Underwriter FAQs 

        If you could approach UAD rating rules with a better consistency, it would not even be an issue to think about. I consider it a simple hijacking of what was previously a line where I could provide unique content. The FNMA persons obvious intention was to promote automation and the obvious unintended consequence is they have caused their own favorite boys to take the heat rather than the manually focused appraisers.

        Johnson, I’ve heard there is a 1000 point XML scoring system and it’s much more intricate than the CU 5 scale rating system. Some clients know all about how this works, and it seems to be something only processors deal with.

        • Avatar Koma says:


          I’m not angry I’m resolute. “If I can approach UAD rating rules with better consistency” how is it you say I’m not consistant when they say my “peer” rated it something else?? My clients give me plenty of work and I’ve raised my fees three time in the last year. Even received compliments that my reports read like a good book. If they are going to let a computer say I’m no good so be it. Like you say it is what it is. I’ll just say peace baby I’m out. They can replace me with the hundreds of appraisers joining the ranks..oh wait a min that ain’t

          Just a heads up your link is no good, it states page not found.

  11. Bubba Jay / Retired Appraiser II Bubba Jay / Retired Appraiser II says:

    there will always be a percentage of people who can tolerate this kind of BS. if you are happy surrounded by this nonsense, congrats to you. but there will also always be a percentage who cant.

    for those that cant, i leave you with this. i watch it about every other day.

    i jumped. it wasnt easy after almost 20 years of doing appraising, but i did it. and it was well worth it. for those that are tired of all the BS, i encourage you to do the same. it wont be easy, and it might take awhile, but you will be glad you did. ask yourself this – where will you be in 5 years? where do you want to be in 5 years? where do you think residential appraising will be in 5 years? if you are sick of it now, do you think it will get any better?

    there are ALOT of good opportunities out there if you take the time to look, and all of them that i found are totally free of all this nonsense. oh and BTW, things are much worse than you know. TRUST ME.

    the nonsense continues . . .

    • Retired Appraiser Retired Appraiser says:

      Excellent video. Few Americans are fortunate enough to ever discover their gift. I have read that over 80% of them hate their jobs (I suspect that it’s closer to 90%). The problem with most appraisers is that were fortunate enough to discover that appraising WAS their gift. Two now stand between appraisers using and enjoying their gift.

      1. Bank Greed

      2. Governmental Incompetence

      After 2009 appraisers had 3 choices:

      1. Pray for change

      2. Unite as a group and force change

      3. Walk away and pray that you can find something else that you are passionate about

      4. Cling to appraising, hate your job, and try to make ends meet.

      It’s pretty obvious that 1 & 2 never took place. The vast majority chose path number 4 and find themselves (temporarily) ecstatic because AMCs are paying them what they made TEN YEARS AGO. They conveniently ignore the fact that they are doing at least twice the work per order for 2006 wages are that they’ve been forced into becoming FHA home inspectors for no extra pay. They refuse to acknowledge that they’re liability is now at least ten times greater than it was prior to 2009.

      Many of you fell in this line of work by default (family appraisers) and many more stumbled upon it pure chance. I personally spent years trying to find something that I was passionate about. I routinely put in 60 to 80 hour work weeks while appraising because to me it wasn’t even work.

      Should you ever decide that option 3 is the intelligent choice you’ve likely made a great decision. The problem is that discovering your gift (something that you are passionate about and therefore very good at) is incredibly hard work. That my friends is why you still find so many appraisers clinging to a “career” that was transformed into a poor paying JOB in 2009.

      If you’re willing to put in the work (hundreds of hours of soul searching) I assure you that you will be rewarded for the effort. Few are willing to put in such an effort.

  12. Avatar Raymond says:

    hmmm….interesting ALL this rating and/or scoring of appraisers and appraisal reports. I don’t hear much about “how accurate or reliable is the final value estimate is”? I guess in the new appraisal world, more importance is placed on rating, scoring and box checking than the reliability of the final value estimate.

  13. Baggins Baggins says:

    Koma, per your comment to elaine. Wrong. If you ran a c5 static, upon being compared in a renovation state, it would now comp against c3’s and you’d have the same problem only worse. If the home changes, the rating changes. Other appraisers would comp it at C3 now they know it’s renovated, and only that one appraiser whom handled it at C5 would know any different. This is the point of mass data, lots of people use the same data point. All that we need to do to stay current, is stay current.

    • Avatar Koma says:

      Baggins it’s not me stating that it’s the above article. Did you read it or just the comments??I was responding to what the above article was stating and that is what I’m saying is crazy. It (not me) is stating you need to leave the Q & C ratings the same period.

  14. Baggins Baggins says:

    The problem specifically is appraisers are altering ratings of comps as relevant to the subject. Stacking all of them as matching Q&C probably, to make the report read good against the subject rating. The problem is the appraisers reuse comps and then rate them subjectively again when compared to a different subject. The solution of course, be more consistent. This is not an issue of required absolute for altered property character like renovation. You do need to leave QC ratings the same, if the property has not changed. You guys are making too big a deal about this.

  15. Avatar Art G says:

    The government wants us to be more accurate and become perfect analytical robots. We are getting so great and perfect and ethical, that every time we go into a home we should be carrying a Gideon Bible to give it to the homeowner whose house we are praising because we have become so perfect. Thanks to the examples of the federal government groups like FHA, Fannie Mae and Freddie Mac.

    There is only one problem in this system view as to how we are supposed to become so ethical and perfect in every appraisal, we do. We are part of a system that is made up of government agencies, underwriters, lenders, real estate agents, etc. etc. This system that we are part of has not increased 1 nickel in accuracy or ethically. We are still part of the same old crummy system called politics and government that we were before forces on us appraisers try to make us super ethical and accurate. We are still part of a system that stinks and is always going to stink, and will probably lead to another real estate downturn or depression like what was caused in 2008 by the lack of the federal government overlooking what was going on in Wall Street. So why do we have to deal with all this super accurate baloney created by the same people that they themselves are still acting just like they did in 2005 through 2008, 1986 through 1992 – – the last times the federal government’s activities cost trillion dollars loss in the real estate industry. My summary statement is – – the system is never going to get better so why can’t we just knew were thing and be as good as we have been for the last 30 years and working a system that has never increased the last 30 years in efficiency or ethical standards

  16. Avatar Mike Miller says:

    I believe a class action lawsuit is in order. If possible, any lender who threatens to take action or does take action against any appraiser over this ridiculous CU cr*p is immediately added to the list of those being sued. We are not a bunch of unnecessary crooks they hire to appraise property. All of us know, there can be a fine, fine line between a C3 and a C4 rating, for example, or a Q3 and Q4. The big worry is the C4 versus a C5. There are other ways to flush out a bad appraiser rather than having CU hang over every Appraiser’s head, good or bad. Let’s be honest…Lenders use Appraisers and their one specific point for value to keep them from having to tell borrowers or their agents that they don’t want to make a loan. How about a reasonable range of value given and the Lender decide to lend based on the credit rating or history, etc.?  CU needs to take a hike. It is one of the dumbest things I have seen in 30+ years in the business.

  17. Avatar TOM D says:

    are half of yous missing what the article said. the same appraiser is changing the ratings on different appraisals that he/she has done. that means only one thing, they are making the comps fit the value. the other issue is not cu, but the lender’s tolerance of variances between appraisers. i have 1 client that doesn’t ask a question if your cu rating is below 2.5. the cu system is easy to figure out. my other comment is that some of you are writing to many words. i’m phasing out on some of your wordy comments.

  18. Avatar clint says:

    They messed everything up with UAD quality and condition ratings. There should only be three different levels of quality and three different levels of condition…above average, average and below average.

    I do compare properties relative to the subject because that is what other buyers are doing. So Fannie wants us to rate a property based upon their subjective definitions, and then when we compare it to the subject, if the condition rating doesn’t match, nine times out of ten we will get a call as to why there wasn’t an adjustment; despite it being explained in the addendum.

    Quality and condition between q3 and q4 and c3 and c4 are probably the most inconsistent because they are closest to average. As far as condition and quality goes, it is and always will be subjective. There is no definition long enough to explain difference in condition or quality of construction.

    We have 3 appraisers in our office, so when one uses a comp and applies a quality or condition rating the others may not agree with it. Then the appraisal software doesn’t tell us which appraiser used it so we end up wasting time, and second guessing which quality or condition rating was used for which appraiser. This basically proves how flawed a system this UAD rating really is. When 3 appraisers can’t agree with each other on condition or quality ratings how are all appraisers supposed to? Tell me how this helps build any confidence with consumers.

    My ratings are better: C1 = new construction that hasn’t been lived in. C2 = like new condition that has been lived in or built 1 to 5 years ago. C3 = mostly updated or built 5 to 20 years ago. C4 = few or no updates and built over 20 years ago. C5 = in need of repair. C6 = tear down…more value in the vacant land. Quality on the other hand is much more difficult to decide.  It sometimes comes down to neighborhoods and value comparisons. Often homes over 600,000 will be q2 unless they are extremely well appointed and often over 1 million warranting a q1. I haven’t figured out why I rate some homes a q3 and others a q4 though. I will give a home a q3 rating just for being all brick/stone or because of crown molding in most rooms. I will give a q4 rating for having vinyl floors, laminate countertops, or hollow core doors. I don’t have any q5s or 6s in my market. So I pretty much consider q4 to be average, q3 to be above average, but without some of the items of q2. q2 to be must have solid counters, solid doors, real wood floors, 9 foot ceilings, built in hood, custom tiled shower, custom built-ins and cabinetry, and smart siding, eifs, stone or brick exterior.

    Every market is different, but I recommend you come up with a system to help decide for yourself. It may save you from defending your work.

    • Cynthia Lianna on Facebook Cynthia Lianna on Facebook says:

      I’m so freaking glad I’m no longer appraising.

      • Bubba Jay / Retired Appraiser II Bubba Jay / Retired Appraiser II says:

        isnt it amazing how utterly stupid and absurd the profession looks after you have finally managed to get yourself off of the roundabout?

        not the first time i have heard that.

        congrats to you Cynthia!

  19. Avatar Bill Johnson says:

    Tell me Mr. CU robot, why did I just receive a 3 out of 5 rating for my latest appraisal? (1) “There is a heightened risk of appraisal quality issues”. (2) “The reported total living area for the subject is materially different than what has been reported in another appraisal of the same subject”. (3) The appraiser provided comparables that are materially different than the model-selected comparables”.

    As a pending sale with no former purchases or refinances in the past 10 years, please tell me Mr. CU robot how my carefully measured sketch (rounded to the nearest inch) materially differs from other appraisers who HAVE NEVER MEASURED THE PROPERTY? My 1,607 measured GLA is in line with the building brochures (my personal file / 15 years old) indication of 1,603 and absolutely discredits what has been pulled directly from public record files by the listing agent (1,881 sf).

    Please explain Mr. CU robot how when the condo complex has only 2 like closed sales in the past 3 months (the only 2 for the entire complex) (my comps #1 and #2) and 2 active or pending sales (my comps #5 and #6), how are my comps materially different than the model selected comparables?

    The system is severely flawed and my report does not warrant a 3 out of 5 risk rating, nor should my file that is kept by the powers that be reflect” There is a heightened risk of appraisal quality issues.

    Although we are to assume “all parties are knowledgeable” when making there buying and selling decisions, this is a classical example where the system has failed. The only true independent and knowledgeable voice in this transaction has been me, however I’m the one being flagged with appraisal quality issues. Based on what the subject actually is (2 Br not 3, 1,607 sf not 1,881, etc.) the market value is $608,000 and no where near the contract price of $650,000.

  20. Baggins Baggins says:

    Bill, you killed the deal. Automatic 2 point deduction. By the lenders, for the lenders, meant to facilitate more closings. Plain and simple.

  21. If you’re interested in hearing Dave Towne’s thoughts about Collateral Underwriter, tune into Voice of Appraisal podcast #114.

    “Phil Crawford and I had an interesting discussion about what he calls “Chuck Upchuck.”  I have previously written that, to me, CU is “a giant electronic robot collecting tons of specific data from submitted appraisals.”

    We recorded the podcast last Thursday (7/21/16), so it’s ‘fresh.’” ~ Dave Towne

  22. Avatar BJC says:

    Quality and condition ratings are nothing but inputs in insurance risk modeling and in order for a model output to be reliable its has to have consistent reliable input with a one size fits all approach to properly assess risk for credit enhancement and reinsurance guaranty pricing. Consistency in appraisers ratings has absolutely nothing to do with absolute or relative other than the absolute return for investors in the secondary, insurance and securities markets. The more controlled inputs observable vs unobservable along with absolute defined parameters such as using census blocks and census block groups, etc., provides a more reliable output in assessing fair value of collateral and the risk related in investing in the pool of mortgages or the reinsurance guarantees on the MI in place. FHFA’s report to congress describes this as a pilot program in Fannie n Freddie initiative in developing a single security platform of which a new venture has already been created by the two entities called Common Securitization Solutions, LLC. The Lender Letters are targeted propaganda implemented throughout the industry in waves over time to create confusion by lack of transparency through the testing phases of these pilot programs as stated in the report to congress. Freddie Mac has had an exclusionary list for many many years and the uniform mortgage data program  is a joint venture between the two to include UAD , UCDP, etc., so the AQM List in essence has always been there by Freddie Mac as well as the technology to effectively monitor all aspects from origination thru life of the loan. I do not believe it is coincidence that the AQM List originated at the same time as Arch Holdings acquisition of CMG Mortgage Insurance and guaranty insurance as was approved by Fannie Mae in January of 2014 and so has new credit risk Sharing and credit transfers  been occurring as designed between Arch n the entities modeled off of unauthorized use of appraisers assignment results that they were not the intended users of those results stealing them from appraisers by minimizing it thru relabeling it as data and reap the financial benefits from our hard work intended for a specific purpose for a client intended user not for Fannie Mae to use for other future uses in CU and risk assessment.

    The UCDP drives CU and the CU drives the AQM List and those appraisers who provide consistent data instead of reliable appraisals have nothing to worry about but those who provide reliable appraisals will ultimately be out of business and there is a difference in that. Not one appraiser on the AQM List has been reported to any state board by Fannie Mae because inconsistent opinionated data between appraisers is not a uspap violation however if your opinion doesn’t fit the status quo which Fannie labels as a peer then the CU will place you on the AQM List and out of a career because your reliable appraisals over time isn’t consistent with reliable consistent data needed to generate reliable output. There are approximately 900 appraisers on average each year in the U.S. who are disciplined for uspap violations and there are appraisers on the AQM List who have never been disciplined or had any complaints to their respective state of licensure so in other words Fannie Mae condones appraisers to violate uspap as Long as they produce consistent reliable data and not Reliable appraisals.

  23. Avatar Bill Johnson says:

    In the real world BJC appraisers are being evaluated based on their risk indicators they produce (1 to 5), with lenders most likely making decisions off this data (get work or no work). The score is produced within minutes of submittal, there is little to no human involvement, there is no real time reading of the report, there is no weighted average (comp used 3 times versus 100 times), there is no mandated communication back to the appraiser, and there is no formal appeal available to the appraisers who disagree. The system is severely flawed.

  24. Here we are nine months and one week after CU became effective.

    I can report confidently that virtually ALL the fears by appraisers that lenders /AMCs would routinely violate the terms of their license agreements with FNMA by shot-gunning alternate comps proved to be 100% warranted.

    OUR professional work product has now not only been usurped for other unintended purposes some AMCs are now dictating that THEY OWN THE APPRAISAL!

    Meaningful solutions will take time. In the meanwhile lets ALL start copyrighting our appraisal reports! Immediately! It may take awhile but FNMA, Corelogic and others that are data mining OUR work product without our express permission will eventually be successfully sued for doing it sometime down the road.

    I wonder if consumers know THEY are paying for data compilation by FNMA in addition to appraisal coordination/ management by lenders under the guise of an “appraisal”?

  25. Avatar E Morgan says:

    How would you go about copyrighting your work?

  26. Avatar BJC says:

    Fannie Mae’s abuse of power needs to be stopped!!!!! Each CU report that is generated at all levels is basically a form of a desk review that we are not getting paid for so not only are they unlawfully using assignment results of ours that they are not authorized to use for subsequent transactions beyond the intended use of the report that appraisers are engaged in they are also creating an unfair business advantage taking away from our livelihoods and how we provides for our families as each CU report is a desk review an appraiser should be getting hired for at the lender level if the lender has concerns for the quality of the appraisal and therefore should hire an appraiser to perform not utilize stolen assignment results, as technology changes so does USPAP and it is covered in USPAP that assignment results such as quality and condition ratings are ours those rating opinions are our intellectual rights and it is an opinion that is not public and would not be known unless one were paid to do an inspection. Since when did Fannie Mae ever become the intended user of an appraisal report originated in the primary market for a specific intended use, I know I have never listed Fannie Mae as an intended user of my assignment results.

  27. “In regard to item #1 above, many good appraisers who understand the CU process highly recommend that regardless of changes to the property, the exact original Q or C rating number be kept and re-used for every successive appraisal, on the Quality and Condition line”

    Nothing ‘misleading’ about THAT practice, is there? Remember that state regulators will look at your report line by line as if looking through a straw. ALL they will see on the C line is the single entry. Either it is right or it is wrong.

    I disagree with the recommendation from these purported “good appraisers” that understand CU. I have NO INTENTION of permitting an incompetent organization such as FNMA to dictate bad appraisal practices to me…directly or indirectly.

    CU is flawed at its very core. It was designed and implemented with a database including appraisal reports up through 2014. Then in its February 2015 Lender Letter FNMA decided that in the past appraisers had been ‘appraising to artificial guidelines’ rather than to market…so they eliminated the guidelines.

    …but they kept the database built out of those flawed appraisals.

    Talk about circular thinking.

    • Avatar Jeff says:

      As well I have seen many times where a property was purchased as an REO and completely updated and changed from a C4 to a C3 condition rating. Extensive updating changes the Q rating as well. You can never expect or demand an appraiser to report a property the same every time if the characteristics of that property change. That’s just common sense

      • Mike Ford AGA, SCREA, GAA, RAA Mike Ford AGA, SCREA, GAA, RAA says:

        100% correct.

        In my market area (and I assume many other older areas) what are termed 90% rebuilds are common. Essentially portions of an original foundation are retained (and added to) with one original wall (studs) also being retained. Everything else is new. A new Certificate of Occupancy is issued.

        The property that may have started life as a 950 sf bungalow or ranch ends up being a 4,000 to 6,000 sf custom Mediterranean when its all done. What started as average quality is now raised to good to excellent. Its easy enough to understand and explain using generally accepted sound appraisal practices.

        Its much less clear trying to force it to fit into UAD and FNMA artificial absolutes that they think never change.

        I’ve had it with FNMA and similar idiots. Im doing real appraisals for people that hire me for professional services…not as a form filler.

  28. Avatar Mike Miller says:

    I only have 30+ years in the appraisal business and 40+ in all of real estate business. Can someone tell me exactly where the very bottom of a range stops and the very top of the next range begins? It is really urgent, because I have to use about 1,000 comps from my area’s MLS in the next 12 months and it could matter. And it is so easy once I know because at least 55% of them have one to 5 pictures of the interior and no pictures of the rear decks, patios, porches and detached garages. And maybe 25% will tell if the homes have tile, wood, carpet on the floors or just floors that look like those coverings. And the great thing about it is, all appraisers, agents and public officials measure and judge houses EXACTLY the same. Not to mention, the ones who did it before you were 100% correct and you probably are not. Isn’t this business just like falling off a log? PLEASE call me to testify if there is another hearing on CU. I will nail CU’s a** to the wall because I hate it….Not really the reason for it, but it is not accurate or practical. You just can’t have 100% confidence in results of any data, when the data used for the input is, at best, only 50% accurate, and that is giving a liberal estimate.

  29. Great response Mike!

    You’re going to absolutely love VaCAPs recent post about Phil Crawford’s podcast and CU.

    As if CU by itself was not bad enough…NOW FNMA has given inducement to users (lenders and commissioned brokers) of CU to keep going back to the appraiser and trying to force them to manipulate it until it produces a desired result lower than 2.5%!

  30. Avatar realrose says:

    I refused to do residential form work when HVAC came out in 2006 and didn’t join an AMC until 2015 after moving to another state and needing to get business back up and running. I was astonished when I realized they split the home into floors, treating the home like it is valued by buyers differently, according to a FNMA formula developed by a nerdy quant. Just use common sense people, no buyer or seller splits the utility and value of one house into parts to be analyzed, unless you are a robot; I argue with former appraisers who develop regression analyses programs for residential real estate because I know they are not appraisers, but do math fine. I say when robots start buying homes, I will recommend zillow as their appraiser! The ignorance of quants is evident in the 2008 world financial markets crash, and their AMC model to avoid the next crash is the result of the banks spending huge amounts to lobby congress and write law that governs our profession. Meanwhile, it has gotten so perverse and it is influence to use CU to exclude appraisers. All their experiments on our profession will eventually reveal that there’s nothing like real facts, doing your own work, verifying all your sales and using logic and correct methodology to develop your opinion; machines don’t buy real estate, but they do manipulate the stock market! Appraisers should not recycle all their cardboard boxes just yet! They may come in handy when you need to write a sign to hold at the boulevard or freeway off-ramp that says “WILL APPRAISE FOR FOOD”. Good luck out there and don’t touch a hybrid appraisal! And when the republican president and congress repeal Dodd-Frank, and get rid of us altogether, remember I told you they were deconstructing the administrative state like bannon instructed trump. Erase a whole profession and the people who get in the way of a bank’s free will to screw their borrowers. Next chapter will be “How to survive in appraiser’s debtor prison”, or “How to remove a $10 upload fee unpaid to an AMC when it shows up on your credit report”.


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Collateral Underwriter Crumbles

by Dave Towne time to read: 3 min