A new technology being implemented on conventional agency loans is expected to have a major impact on the underwriting of appraisal reports.
Current practices have underwriters utilizing much speculation and bright line rules when analyzing the quality of comparable properties.
But Fannie Mae’s Collateral Underwriter, which provides an automated appraisal risk assessment, is expected to change that.
That prediction came from Alice Alvey, a senior vice president at Indecomm Mortgage U — a company she co-founded as Mortgage U Inc. in 1996 and sold to Indecomm Global Services in 2013.
She gave her assessment on the weekly online radio and podcast show, Lykken on Lending. The show is hosted by David Lykken.
Beginning on Jan. 26, 2015, the Uniform Collateral Data Portal will begin providing appraisal risk scores, flags and new messages from Collateral Underwriter.
“What you’re going to find is an absolute dramatic shift in how appraisals are underwritten,” she said.
Alvey explained that while an appraisal might have three comparable properties within a mile of the subject property, Collateral Underwriter might still find that they are not the best comparables.
The new technology could also determine that since other reports indicate that other appraisers used different data, the appraiser’s data on the subject property is incorrect.
“You’re going to have to reconcile these every single time you submit an appraisal,” Alvey said. “So, gone is the day of speculative working with some very gray rules.”
She noted that some community lenders still have to get on board with the
UCDP, or their valuation reports won’t be in line with the industry.
Alvey said the collateral portal is going to be “one of the biggest game changers” and will have a great impact on the difference between how Realtors value properties versus how lenders value properties.
