Appraisal Changes: Collateral Underwriting

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702-379-3401 www.DaveRadcliffeVegas.com–

Appraisal Changes: Collateral Underwriting

Dave Radcliffe of The Radcliffe Group at Keller Williams Realty Southwest discusses what the recent appraisal changes mean with Kelly T Wade, SRA of Wade Valuation Services. Kelly is a provider of real estate appraisal, appraisal review, and consultation. At Wade Valuation Services, Quality, Integrity, and Respect are more than rhetorical statements; with 30+ years of professional appraisal industry experience and proven results, Kelly is someone that Dave trusts and recommends. Today’s discussion:

FNMA/Freddie Mac Appraisal Update & Changes

Prior to the January 26th 2015 roll out, the Fannie Mae Proprietary Message System measured the appraisal risk on compliance rules and property eligibility.

On January 26th FNMA rolled-out Collateral Underwriter (CU). In layman’s terms, CU is (a model-based) appraisal risk assessment tool. Model-based simply means FNMA measures each appraisal against other appraisals and even the same appraiser’s appraisals along with public record. The CU analysis of the appraisal will be more comprehensive as it will analyze appraisal data, comparable selection, and adjustments.

How it Affects You, the Consumer

The intent of the CU system is to improve the underwriting process, without added fees to the users. This is not the first time we have seen changes in the industry. Anytime we have changes, there will be some degree of learning required. Appraisers and Underwriters will have to learn how to use the new system. (This could cause slow-downs in process times. An example of possible slowdowns is CU could cause more revisions of the appraisal. However, after the users get up to speed, the end result should be an increase in efficiency.) Although it is highly likely that everyone will use the new system, it is not required by FNMA.

How it Affects Agents

Agents should ask their lenders if they are using CU and what they are doing to ensure the process is as seamless as possible. Aside from any initial slow-downs, the appraisers and lenders will provide the feedback to the agents on what the issues (stops) are going to be. Based on the information available, the 21 “stops” with the CU system should not impact the agent (as the “stops” are not changes from prior appraisal requirements.)

For example, the new system “stops” include several that have to do with condo-hotels and highest and best use. These appraisal report requirements have always been there.

If you have questions the best advice is to go to https://www.fanniemae.com/singlefamily/collateral-underwriter. Fannie Mae has been very helpful about the changes and wants the new system to be transparent.

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What to Watch For

No need to panic; the intent is to improve the appraisal underwriting process. According to FNMA, even properties that have a high risk score (1-5) will qualify.

Long Term View

FNMA’s intent is to improve the appraisal underwriting process, this “stop” will likely turn out to be a game changer for those appraisers who are not competent (that’s good news for the industry.) 4 of the 21 stops require the appraiser to have 100% of their work reviewed and it can get worse, it can indicate FNMA will not accept the appraisers work at all. The believe is, appraisers who are not providing credible appraisals today, likely will not be providing appraisals at all in the future. We expect improvements in the appraisal industry.

Thank you so much for watching. If you need more information go to my website or give me call. As always, we always love to talk to you about all of your Las Vegas, Centennial Hills, Summerlin, and North Las Vegas real estate needs. Thank you for your trust. The Radcliffe group looks forward to hearing from you and servicing your real estate needs. 702-379-3401 www.DaveRadcliffeVegas.com–

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Appraisal Changes: Collateral Underwriting