What You Need to Know About Collateral Underwriter

Fannie Mae will launch its new appraisal risk-assessment tool to lenders on Jan. 26, called Collateral Underwriter (CU). There has been quite a bit of buzz in the industry about the impact this could potentially have on the market, so Key Mortgage has put together a quick cheat sheet to give you more information.

What is CU?

CU is a proprietary home valuation database that lenders can use to assess the accuracy and risks posed by reports submitted by appraisers. The data will flag possible errors in the appraiser’s work before the lender commits to funding the loan and assign a numerical risk score. Lenders will then evaluate the risks and ask the appraiser to either correct or justify their work.

Where does this database come from?

Fannie Mae has been collecting data from appraisals for every loan purchased for the past two years. This information is what current appraisals will be compared against.

Why is this happening?

Fannie Mae wants lenders to make informed decisions before approving a buyer for a specific loan amount.

Why are brokers concerned about this?

Some real estate professionals are worried that if appraisers feel they are constantly being second-guessed, they could in turn become more conservative in their assessments, which could potentially impact home values, slow down the closing process and stunt market growth.

What can I do to help my client and my business?

This new system will slow things down for many people. However, whom you do business with can have an even bigger impact on the outcome of your deals.

Through Key Mortgage’s ValuePro program, you’ll be paired with an appraiser who works exclusively in your community. By being the local valuation expert, their appraisals carry more weight with the lender and inspire more confidence. Key Mortgage stays in direct contact with every independent appraiser they work with, and any challenges are addressed promptly and resolved quickly to keep the deal moving.

If you’d like more information about CU or the ValuePro program, please speak with a Key Mortgage loan officer.