Collateral Underwriter Preview and Implementation Information 2015 Fannie Mae. Trademarks of Fannie Mae. UCDP and CU Release Overview I January 2015
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An Important Note about the Seminar Content While every effort has been made to ensure the reliability of the session content, Fannie Mae s Selling and Servicing Guides and their updates, including Guide Announcements and Release Notes, are the official statements of Fannie Mae s policies and procedures and control in the event of discrepancies between the information in this seminar and the Guides. 3
UCDP Release Overview On January 26, 2015, Fannie Mae will implement changes to the proprietary messages in the Uniform Collateral Data Portal (UCDP ) New Collateral Underwriter TM (CU TM ) appraisal risk score, flags, and messages Fannie Mae proprietary messages reduced to 35 on December 13, 2014, that focus on property eligibility and compliance messages Of these, 21 Fannie Mae proprietary messages are changing from warnings to hard stops Relate to the most critical eligibility violations Hard stops require lender action New reason codes available for manual overrides or upload of a corrected appraisal to obtain a Successful submission status in UCDP What is CU? Collateral Underwriter is a new proprietary appraisal risk assessment application developed by Fannie Mae to support proactive management of appraisal quality. 4
Changes to Fannie Mae Proprietary Messages 5
Proprietary Messages Moving to Hard Stops 21 eligibility and compliance messages will convert from warning messages that are automatically overridden to hard stops Lenders will be required to review these message(s) to verify if the information is correct as submitted or if a new or corrected appraisal is required If the information is verified to be correct as submitted and there is no impact to loan eligibility, lenders may request a manual override and provide a reason code to change the submission status to a Successful status in UCDP If the original information is incorrect or cannot be verified, or there is impact to loan eligibility, the lender should obtain and upload a new or corrected appraisal Note that this release introduces the possibility that a UCDP Submission Status may differ between Fannie Mae and Freddie Mac (successful vs not successful) 6
Hard Stop Proprietary Messages Message ID Message Text Severity FNM0083 The sales contract was not analyzed. Overridable FNM0084 There was no comment on market conditions, even though one or more negative housing trends were indicated (declining, over supply, over 6 months). Overridable Applicable Forms 1004/2055, 1073/1075 1004/2055, 1073/1075 FNM0085 Less than three settled sales were used as comparables. Overridable 1004/2055, 1073/1075 FNM0086 Research of prior sale was not performed. Overridable 1004/2055 FNM0087 Research of prior sale was not performed. Overridable 1073/1075 FNM0092 State certificate is not provided on transaction amount over $1 1004/2055, Overridable million. 1073/1075 FNM0093 Appraiser license state does not match subject property state. Overridable 1004/2055, 1073/1075 FNM0094 Supervisor license state does not match subject property state. Overridable 1004/2055, 1073/1075 FNM0096 Illegal zoning compliance has been indicated in appraisal. Review description to verify if the property may be eligible per the Selling Overridable 1004/2055 Guide. FNM0097 Illegal zoning compliance has been indicated in appraisal. Review description to verify if the property may be eligible per the Selling Overridable 1073/1075 Guide. FNM0098 Present use is indicated as not highest and best use. Overridable 1004/2055 FNM0099 Present use is indicated as not highest and best use. Overridable 1073/1075 FNM0101 The subject property may be a hotel/motel or condo hotel. Overridable 1004/2055, FNM0102 The subject property is in a condominium project that may be ineligible for delivery to Fannie Mae. Overridable 1073/1075 1004/2055, 1073/1075 7
Hard Stop Proprietary Messages (cont d) Message ID Message Text Severity FNM0174 The project name suggests that the property may be a condo hotel. Verify the subject is located in a project that meets Fannie Mae s Selling Guide requirements. Applicable Forms Overridable 1073/1075 FNM0176 The appraisal indicates that the subject property has legal nonconforming zoning and cannot be rebuilt to the current density. This data indicates that the property is ineligible for delivery to Fannie Mae. Overridable 1073/1075 FNM0179 The appraisal indicates the subject property has a C6 condition rating. If the loan is not a DU Refi Plus or Refi Plus loan, the property is not eligible for delivery to Fannie Mae. Overridable 1004/2055, 1073/1075 FNM0193 Based on the overall quality of this appraiser's work, Fannie Mae has decided to review 100% of the appraisals prepared by this appraiser for any loans delivered to Fannie Mae. Overridable 1004/2055, 1073/1075 FNM0194 Based on the overall quality of this supervisory appraiser's work, Fannie Mae has decided to review 100% of the appraisals prepared by this appraiser for any loans delivered to Fannie Mae. Overridable 1004/2055, 1073/1075 FNM0195 FNM0196 Fannie Mae will not accept appraisals from this appraiser. Fannie Mae will not accept appraisals from this supervisory appraiser. Overridable Overridable 1004/2055, 1073/1075 1004/2055, 1073/1075 8
Manual Request in UCDP Reason Code Must Be Selected Reason Code Description Lender has a variance from Fannie Mae. Lender confirmed that the appraisal meets Fannie Mae requirements. Lender confirmed that the property meets Fannie Mae requirements. Lender validated that the message fired in error. Other (see comments) Comment Request N N N N Y 9
Submission Summary Report UCDP Submission Summary Report (SSR) Doc File ID 110001907G Report Date/Time 12/15/2014 12:15:30 Document File Status (FNM) Not Successful Seller/Servicer Number 123450000 Lender Name ABC Mortgage Lender Loan Number 12345678 Appraisal 1 Original Submitted Date/Time 12/15/2014 12:15:10 Document Status Not Successful Number of Resubmissions 0 Form Type FNM 1004/FRE 70 Last Submission Date/Time 12/15/2014 12:19:02 Appraised Value $475,000 Subject Address 123 North Main Street NE, 101, Any Town, MD 20653 Date of Appraisal 12/11/2014 Supervisory Appraiser Jane Jones MD / 00001 Appraiser John Jones MD/ 00002 Borrower Name Tom Smith Comps Comp Address Adjusted Sales Price Comp 1 456 Maple Street, Any Town, MD 20853 $425,000 Comp 2 234 South Main Street, Any Town, MD 20653 $450,000 Comp 3 456 Vine Street, Any Town, MD 20853 $485,000 Message ID Form Section UCDP Basic Edit Checks Form Field Name Property Affected Full Message Description Severity 202 N/A N/A N/A Unverified appraiser license information Warning 402 N/A N/A N/A UAD compliance check failure (warnings only) Warning UAD Compliance Findings 5154 Sales Comparison Prior Sale Date Subject A prior sale was indicated within the past 3 years; therefore, the Date of Prior Sale/Transfer must be provided in mm/dd/yyyy format. Request Reason Automated Request Automated Request Decision Reason Automatically Approved Automatically Approved Warning N/A N/A N/A Decision Date/Time 12/15/2014 12:15:15 12/15/2014 12:15:15 There will be no changes to the summary information or UCDP/UAD sections of the SSR. 10
Submission Summary Report (cont.) Fannie Mae Proprietary Edit Findings Message ID Form Section Form Field Name Property Affected Full Message Description Severity Request Reason Decision Reason Decision Date/Time FNM0092 Appraiser Certification Appraiser State Certification # Subject State certification is not provided on transaction amount over $1 million. Overridable Lender confirmed that the appraisal meets Fannie Mae requirements. Automatically Approved 12/15/2014 12:20:15 FNM0096 FNM0175 Site Subject Zoning Compliance Illegal Property Rights Appraised Subject Subject FNM0797 N/A N/A Appraisal Illegal zoning compliance has been indicated in appraisal. Review description to verify if the property may be eligible per the selling guide. Proprietary Messages converted to Hardstop will show Overridable in the severity column The appraisal indicates that the property rights appraised are Other. If the property rights are leasehold or fee simple, ensure that the appraiser corrects the data. In all other cases, the property is ineligible for delivery. Request Reason field is populated The appraiser-provided comparables are materially different when than the override model-selected is provided. comparables. Overridable Warning Warning Automated Request Automated Request Automatically Approved Automatically Approved 12/15/2014 12:15:15 12/15/2014 12:15:15 FNM1000 N/A N/A Appraisal The Collateral Underwriter Risk Score is 4 on a scale of 1 to 5 where 5 indicates highest potential collateral risk. A score of 999 indicates no CU Risk Score is available. Fields remain blank and appraisal remains in Not Successful status until override is entered Warning FNM1002 N/A N/A Appraisal There is a heightened risk of appraisal quality issues/ Warning Automated Request Automated Request Automatically Approved Automatically Approved 12/15/2014 12:15:15 12/15/2014 12:15:15 FNM1004 N/A N/A Appraisal There is a heightened risk of overvaluation. Warning Automated Request Automatically Approved 12/15/2014 12:15:15 FNM1006 N/A N/A Appraisal There is a heightened risk of Property Eligibility and/or Policy Compliance violations on this appraisal. Warning Automated Request Automatically Approved 12/15/2014 12:15:15 All Fannie Mae Proprietary Messages and CU Score, Flags, & Messages will appear in the Fannie Mae Proprietary Edit Findings section Fannie Mae Proprietary Messages are contained in the FNM 001 199 message range CU Score, Flags, & Messages are contained in the FNM 400 1100 message range Fannie Mae Proprietary Messages drive the CU eligibility flags 11
Implementation Considerations UCDP Fannie Mae Proprietary Messages Converting to Hard Stops Understand your UCDP Submission Status Review Process and Adjust as Needed As the severity level of 21 Fannie Mae Proprietary Messages will change to hard stop and require manual override or appraisal resubmission, the UCDP submission status may vary between Fannie Mae and Freddie Mac (the GSEs) Ensure your process checks UCDP submission status and associated messages from each GSE Confirm your systems are configured to capture submission status from each GSE Inform your appraisal review staff and lender agents how to document manual overrides Review UCDP reports in Message Manager to assess how frequently the current critical Fannie Mae Proprietary messages fire Enhance your UCDP Integration (if applicable) The manual override codes will be available to be returned through direct integration Contact your lender agents and/or vendors for additional information on their implementation plans and availability to add the manual override codes to their UCDP integration Contact your IT staff regarding bringing the override codes back into your loan origination system 12
CU Risk Score, Flags, and Messages 13
CU Overview Collateral Underwriter is a proprietary appraisal risk assessment application developed by Fannie Mae that performs an automated analysis of appraisals submitted to the Uniform Collateral Data Portal. The purpose of Collateral Underwriter is to identify appraisals with heightened risk of property eligibility or policy compliance violations, overvaluation, and appraisal quality issues. CU provides lenders with additional transparency and certainty by providing them access to the same appraisal data and analytics used in Fannie Mae s quality control framework. While the Fannie Mae Proprietary Messages perform basic eligibility, compliance, and reasonableness checks, CU leverages an extensive database of market data and statistical models to perform a more comprehensive analysis of the appraisal. Rather than rely on arbitrary, rules-based guidelines, CU produces model-derived, market-specific results. Starting in January 2015, the CU risk score, risk flags, and messages will be available to all lenders and their lender agents through UCDP just like our Proprietary Messages today. At that time, we will also begin roll-out of the CU web interface to registered lenders. Soon after, CU results will be integrated with Desktop Underwriter to provide lenders a more holistic view of risk. External distribution of CU is intended to support more proactive management of appraisal quality by empowering lenders to address potential issues prior to loan delivery. 14
CU Risk Score, Flags, and Messages The CU risk score, flags and messages will be available on the Fannie Mae Findings tab in UCDP, in the Submission Summary Report (SSR), and via direct integration, along with the remaining 35 Fannie Mae proprietary appraisal messages lenders have been receiving since 2013. CU will perform an automated risk assessment of appraisals submitted to Fannie Mae through UCDP and will return a CU risk score, flags, and messages. Lenders may use the CU risk score to segment appraisals by risk profile, resulting in more efficient resource allocation, workflow management, and collateral risk management processes. The score will be provided in message ID FNM1000 and will be based on CU s automated assessment on a scale of 1.0 (lowest risk) to 5.0 (highest risk). Individual risk flags, if present, identify factors contributing to a high risk score: quality issues, overvaluation, and/or property eligibility or policy compliance violations. Detailed messaging directs reviewers to specific aspects of the appraisal report that may warrant further attention. In addition to property eligibility and compliance, CU analyzes key appraisal components including data integrity, comparable selection, adjustments, and reconciliation (CU messaging begins with message IDs FNM0400 through FNM1100). 15
CU Risk Score and Messages Summary The objective of CU is to assist lenders with assessing property eligibility and appraisal quality. It does not provide approvals or denials, nor may it be used as basis for a credit decision. CU Risk Score The score reflects CU s automated assessment on a scale of 1.0 (lowest risk) to 5.0 (highest risk). Property Eligibility/ Policy Compliance Risk Flag Overvaluation Risk Flag Appraisal Quality Risk Flag A score of 999 indicates a score could not be generated. Risk flags identify factors contributing to high scores. Fatal UAD Edits Data Integrity Messages Proprietary Messages and UAD Edits highlight potential property eligibility or policy compliance violations. Critical Proprietary Messages Comparable Selection Messages Adjustment Messages Reconciliation Messages Statistical modeling estimates probability of material overvaluation. However, no opinion of value is provided. Appraisal Quality messages direct users to specific aspects of the appraisal that may warrant further attention. The Risk Score, Flags, Messaging do not affect the UCDP submission status and are only warnings. Lenders are encouraged to review this feedback, but do not need to clear the CU findings. 16
Key Appraisal Quality Components In addition to Property Eligibility and Policy Compliance, CU analyzes key appraisal components including data integrity, comparable selection, adjustments, and reconciliation. RECONCILIATION Are the most relevant comps given most weight in reconciliation? ADJUSTMENTS Are adjustments based on typical market reaction? COMP SELECTION Are the selected comps representative of the subject property? DATA INTEGRITY Are physical attributes and transaction terms accurately reported? Collateral Underwriter provides detailed messaging aligned with each of these appraisal components to help users identify potential issues leading to high risk scores. 17
Questions Questions? https://www.fanniemae.com/singlefamily/collateral-underwriter 18
Data Integrity Because many comp transactions are observed multiple times (~ 5 times on average), CU is able to identify inconsistency within a single appraiser s body of work and relative to their peers. Compliance with UAD requirements Data reasonableness Proper UAD condition ratings Plausible Data CU flags appraiser-provided data that conflicts with prior observations or is otherwise implausible. When appraisers use the same comp transaction in different appraisals, the description should be consistent. Consistent with Self Consistent with Peers The appraiser s description of any comp transaction should be consistent with the description provided by peers. Appraisals with multiple data discrepancy messages and/or egregious errors get higher scores. Users should confirm the accuracy of reported physical features and transaction terms. 19
Data Integrity Example In this example, there are 4 comps ranging from $264,900 to $325,000 and an appraised value of $285,000. However, CU flags 3 of the 4 reported comp sales prices for potential inconsistencies. Comp 1: [FNM0402] The reported sale price is materially different than what has been reported by other appraisers. 5 other appraisers report a sale price of $300,000. No other records of $325,000. Comp 2: [FNM0401] The appraiser has reported materially different sale price(s) in one or more appraisal reports. Comp 2: [FNM0402] The reported sale price is materially different than what has been reported by other appraisers. 3 other appraisers report a sale price of $240,000. The appraiser has also previously reported $240,000. Comp 3: [FNM0401] The appraiser has reported materially different sale price(s) in one or more appraisal reports. Comp 3: [FNM0402] The reported sale price is materially different than what has been reported by other appraisers. 7 other appraisers report a sale price of $267,000. This appraiser has also previously reported $267,000. SUMMARY: Three of the four comparable sales prices have been potentially misstated by the appraiser. All discrepancies would push the appraised value upward by a significant margin. 20
Comparable Selection CU takes into account Physical Similarity, Time, and Distance when analyzing overall relevance of comparable transactions Significance of each of these factors may vary from market to market. All UAD-standardized features are considered. Significance of each feature is modelderived and market-specific. Physical Similarity CU ranks appraiser-provided comps against a pool of available comps not against arbitrary guidelines. Comparables up to one year are considered by the model. Time Distance Comps in closer proximity are preferred when all else is equal. Date of sale receives more weight in rapidly increasing/declining markets. Model-derived location factors and straight-line distance are considered. CU flags appraisals with material difference between the appraiser-provided and model-selected comps. Users should determine if more relevant comps were available, but not utilized by the appraiser. 21
Comp Selection Example Below are two different appraisals on different properties in CU. On the left, the appraiser s comps are 3 to 6 miles away. On the right, the appraiser s comps are all within 1 mile of the subject. C1 = 6.1 miles C C C2 = 5.5 miles C C C Subject Consistent with Peers C3 = 0.67 mile C2 = 0.83 mile C4 = 0.83 mile Subject C C C C C C C C C C C1 = 0.83 mile C3 = 3.1 miles SUMMARY: Relying on an arbitrary distance guideline, the appraisal on the left appears to be high-risk while the one on the right-appears low-risk. However, CU would suggest the opposite is actually true. 22
Adjustments Collateral Underwriter produces statistically-derived, market-specific adjustments for all UADstandardized physical characteristics, date of sale, location, and sales type. Physical Similarity: Regression analysis produces adjustments for all UAD property features. Different models are used for single family and condo property types. Time: Negative or positive adjustments are applied to comparable sales based on price appreciation or decline in the subject market. Location: CU applies model-derived adjustments at a Census Block Group (CBG) level to account for differences in location. Sale Type: CU applies adjustments to REO, Short Sale, Relocation, and non-armslength transactions based on observed discounts in the subject market. CU does not adhere to the widely recognized and often misinterpreted 15% net and 25% gross adjustment guidelines. CU flags adjustments in the wrong direction or significantly different than peer and model adjustments. Lenders should determine if adjustments are adequately supported and reflective of market reaction. 23
Adjustment Example In this example, the appraiser has provided 4 of the best comparables available. However, most are superior to the subject and potential under-adjustment for several features has been flagged. Comps 1-3: [FNM0607] The GLA adjustment is smaller than peer and model adjustments. Appraiser adjusts only $15/SF for GLA despite the fact comps are selling for $200-$300/SF. Comps 2: [FNM0611] The lot size adjustment is materially different from peer and model adjustment. No adjustment for double lot despite the appraiser s $450,000 estimate of site value for the subject. Comps 1-4: [FNM0640] The appraiser s net adjustments are materially different from the model s net adjustments. Nominal adjustment for extra bathrooms Adjustments of $2-5 per square foot for basement finish Appraiser makes a nominal $3,000 adjustment for a second garage stall to all comparables. SUMMARY: Utilization of materially superior comparables with under-adjustment for differences in physical characteristics can lead to over-valuation even if the comps are among the best available. 24
Reconciliation Collateral Underwriter examines the relationship between the appraiser s opinion of value and the adjusted and unadjusted ranges of comparable sales prices. Unadjusted Values Adjusted Values Appraised Value Appraised values far outside the range of unadjusted comp values. Appraised values outside the range of adjusted comp sales prices. Appraised values with support from a single comparable. Values at the lower and upper ends of the range of comp values are highlighted. CU flags appraised values that are supported by a single comps or unsupported by the appraiserprovided comps. Lenders should confirm that most weight is given to the most relevant sales activity. 25
Reconciliation Example Some reconciliation errors are obvious, such as appraised values outside the range of adjusted comparable values. Other reconciliation errors are more subtle, but equally impactful. [FNM0505] The appraised value is near the maximum adjusted comparable sale value with support from only that comparable sale. The range of comparable sales prices is very wide, extending from $510k to $720k. Even after adjustments, the range still extends from under $550k to over $720k. Comps #1 and #2 are located on the subject street and sold for $510,000 and $550,000 respectively. Comp#3 sold for $720,000, but has the largest Lot Size, largest GLA, and is furthest from the subject. Research suggests sale prices in Comp #3 s neighborhood are dramatically higher than in the subject neighborhood. SUMMARY: The appraiser appears to have overstated the value by giving nearly all weight to the least relevant comparable with inadequate adjustments. 26
CU Data Quality and Model Error Messages Additional messages are provided to highlight suspected data entry errors, out-of-scope property features, and reasons for unscored appraisals ( 999s ). CU Data Quality Messages highlight suspected data entry errors that may lead to unscored appraisals. Examples of Data Quality Messages include: Invalid property addresses, dates, or UAD ratings Implausible sales prices or property features Failure to provide at least three closed sales, multiple uses of the same comp within a single report, net/gross adjustments that don t match sum of line item adjustments, etc. Data Quality Messages are infrequent and can be resolved in most cases Model Error messages provide specific reasons for unscored appraisals ( 999s ) Examples of Model Error Messages include: Multiple data errors (noted by Data Quality Messages above) Unsuccessful geocoding of the subject property or a number of comparables Subject attributes that can not be modeled or areas with extremely little sales activity Geocoding errors are one cause of unscored appraisals. It is rare that subject attributes or locations cannot be modeled. Lenders should review these messages carefully to determine if the errors can be corrected by the appraiser or if they are unable to be resolved. 27
CU Considerations CU is intended to supplement not substitute for lenders appraisal review processes. Human due diligence is still necessary to determine appropriate course of action with your appraisal. Collateral Underwriter results including the risk score are used to inform Fannie Mae s post-acquisition review process, but are not the final word on appraisal quality. CU may produce some false positives and false negatives. A high score does not necessarily mean an appraisal is bad, nor does a low score necessarily mean an appraisal is good. The same is true with individual messages. Lenders may choose to use the CU risk score to triage workflow and allocate resources. However, they must independently establish their own risk tolerance and policies regarding use of the score for this purpose. Risk flags and messages identify factors contributing to high risk scores and aspects of the appraisal that may require further review. However, they do not impact the UCDP submission status and are only warnings. Lenders that use AMCs to submit to UCDP and consume GSE appraisal feedback should work with their business partners to clearly establish policies and procedures around use of the Collateral Underwriter results. The CU user interface will provide additional context to assist with the appraisal review. Lenders and AMCs may use the CU results to inform conversations with their appraisers but should not make demands or provide instructions to the appraiser based solely on this automated feedback. 28
Questions Questions? https://www.fanniemae.com/singlefamily/collateral-underwriter 29
Submission Summary Report UCDP Submission Summary Report (SSR) Doc File ID 110001907G Report Date/Time 12/15/2014 12:15:30 Document File Status (FNM) Not Successful Seller/Servicer Number 123450000 Lender Name ABC Mortgage Lender Loan Number 12345678 Appraisal 1 Original Submitted Date/Time 12/15/2014 12:15:10 Document Status Not Successful Number of Resubmissions 0 Form Type FNM 1004/FRE 70 Last Submission Date/Time 12/15/2014 12:19:02 Appraised Value $475,000 Subject Address 123 North Main Street NE, 101, Any Town, MD 20653 Date of Appraisal 12/11/2014 Supervisory Appraiser Jane Jones MD / 00001 Appraiser John Jones MD/ 00002 Borrower Name Tom Smith Comps Comp Address Adjusted Sales Price Comp 1 456 Maple Street, Any Town, MD 20853 $425,000 Comp 2 234 South Main Street, Any Town, MD 20653 $450,000 Comp 3 456 Vine Street, Any Town, MD 20853 $485,000 Message ID Form Section UCDP Basic Edit Checks Form Field Name Property Affected Full Message Description Severity 202 N/A N/A N/A Unverified appraiser license information Warning 402 N/A N/A N/A UAD compliance check failure (warnings only) Warning UAD Compliance Findings 5154 Sales Comparison Prior Sale Date Subject A prior sale was indicated within the past 3 years; therefore, the Date of Prior Sale/Transfer must be provided in mm/dd/yyyy format. Request Reason Automated Request Automated Request Decision Reason Automatically Approved Automatically Approved Warning N/A N/A N/A Decision Date/Time 12/15/2014 12:15:15 12/15/2014 12:15:15 There will be no changes to the summary information or UCDP/UAD sections of the SSR. 30
Submission Summary Report (cont.) Fannie Mae Proprietary Edit Findings Message ID Form Section Form Field Name Property Affected Full Message Description Severity Request Reason Decision Reason Decision Date/Time FNM0092 FNM0096 FNM0175 Appraiser Certification Site Subject Appraiser State Certification # Subject CU messages will appear along with remaining Zoning Proprietary Messages Compliance in ascending Subject order Illegal by message number. Property Rights Appraised Subject FNM0797 N/A N/A Appraisal FNM1000 N/A N/A Appraisal The CU Risk Score is message 1000 and contains the score in the message text. State certification is not provided on transaction amount over $1 million. Illegal zoning compliance has been indicated in appraisal. Review description to verify if the property may be eligible per the selling guide. The appraisal indicates that the property rights appraised are Other. If the property rights are leasehold or fee simple, ensure that the appraiser corrects the data. In all other cases, the property is ineligible for delivery. The appraiser-provided comparables are materially different than the model-selected comparables. The Collateral Underwriter Risk Score is 4 on a scale of 1 to 5 where 5 indicates highest potential collateral risk. A score of 999 indicates no CU Risk Score is available. Overridable Overridable Warning Warning Warning FNM1002 N/A N/A Appraisal There is a heightened risk of appraisal quality issues/ Warning FNM1004 N/A N/A Appraisal There is a heightened risk of overvaluation. Warning FNM1006 N/A N/A Appraisal There is a heightened risk of Property Eligibility and/or Policy Compliance violations on this appraisal. Warning Lender confirmed that the appraisal meets Fannie Mae requirements. Automated Request Automated Request Automated Request Automated Request Automated Request Automated Request Automatically Approved Automatically Approved Automatically Approved Automatically Approved Automatically Approved Automatically Approved Automatically Approved 12/15/2014 12:20:15 All CU messages are assigned a severity of Warning and are automatically overridden. 12/15/2014 12:15:15 12/15/2014 12:15:15 12/15/2014 12:15:15 12/15/2014 12:15:15 12/15/2014 12:15:15 12/15/2014 12:15:15 The CU Risk Flags correspond with messages FNM1002, 1004, and 1006. 31
Implementation Considerations Collateral Underwriter Risk Score, Flags, and Messages in UCDP Understand your UCDP submission process and adjust as needed The UCDP submission process must take place prior to appraisal review if you wish to incorporate CU score and message feedback into your appraisal review process Implementation considerations to enhance your process Provide guidance to your appraisal review staff and lender agents regarding Your organization s risk tolerance as it relates to the CU risk score and risk flags Actions and documentation for messages received As you gain experience with the CU risk score, consider using CU to more effectively use resources in your appraisal review process for varying levels of deeper appraisal review Management should assess score and message trends for continuous quality improvement Enhance your UCDP & loan origination system integration (if applicable) The CU score & messages will be available to be returned through direct integration Contact your lender agents and/or vendors for additional information on their implementation plans and availability to add the CU risk score and messages to their UCDP integration Contact your IT staff regarding bringing the CU risk score and messages back into your loan origination system 32
Implementation Considerations Correspondent Channel Considerations Prepare your pre-funding QC and non-delegated underwriting processes Identify and communicate guidance and policies for correspondent customer handling of manual overrides, CU Score & Messages, and supporting file documentation Train internal staff & enhance correspondent channel pre-funding QC and non-delegated underwriting processes to review and enforce correspondent customer guidance and policies Ensure your process checks UCDP submission status and messages from each GSE and your systems capture status from each GSE independently Determine if you desire to capture and enter the CU score and any new messages into your correspondent channel systems as part of your data entry process Ensure your correspondent customers understand the changes and prepare their processes and integration Correspondent customers will need to prepare their processes for both the UCDP Fannie Mae Proprietary Message hard stops as well as the new CU risk score, flags, and messages as outlined on slides 12 and 32 Ensure correspondent customers attend Fannie Mae training Ensure correspondent customers attend live webinar training or online elearning classes for Introduction to CU Understanding the CU Risk Score, Flags, and Messages UCDP Release and CU Risk Scores and Messages 33
Coming Soon CU User Interface 34
Coming Soon - Collateral Underwriter User Interface Lenders will have access to the CU user interface which will provide additional content and functionality to assist with deeper appraisal analysis CU s user interface includes comparable sales data, market trends, mapping, aerial photography, public records, and other functionality to assist with manual review of the appraisal. Access to the user interface will be made available via a phased approach over the next few months Lenders will be contacted with more information Sellers and non-seller correspondent lenders will be provided access Rollout to non-sellers will begin in early April AMCs will not have access to the CU application; however they may view the CU risk score, flags, and messages through UCDP Fannie Mae will make CU available at no charge so lenders can take full advantage of the application for quality control and risk management purposes. Bookmark the CU web page and watch for training opportunities and additional resources https://www.fanniemae.com/singlefamily/collateral-underwriter 35
Desktop Underwriter (DU ) Integration CU will be integrated with DU in the second quarter of 2015 to give lenders a more holistic view of risk, which will provide a foundation for future waivers of representations and warranties on value. For lenders to obtain the CU messages in the DU Underwriting Findings report: Actual appraised value information must be in DU The Doc File ID assigned to the appraisal by UCDP must be entered in DU No lender action is required at this time (except for DU integration lenders); detailed data requirements for DU integration lenders are posted the DU Spring 2015 Update Integration Impact Memo: www.fanniemae.com/content/release_notes/du-do-integrationimpact-memo-2015.pdf Look for more information in the coming weeks 36
Resources on Fannie Mae Business Portal Be sure to bookmark the CU & UCDP web pages! Collateral Underwriter: https://www.fanniemae.com/singlefamily/collateral-underwriter UCDP: https://www.fanniemae.com/singlefamily/uniform-collateral-data-portal Collateral Underwriter Page Announcements, Notifications Live and elearning Courses CU CheckPoint CU User Guide CU FAQs UCDP Page Release Notes Live and elearning Courses UCDP User and Admin Guides UCDP and UAD FAQs 37
Questions Questions? https://www.fanniemae.com/singlefamily/collateral-underwriter 38
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