PRINCETON CONFERENCE Residential Appraisal Best Practices FROM THE - PDF document

5/15/2019 Program Overview 2  Program Overview  What tools are available to the Bank Review Appraiser?  a Brief Look Inside Collateral Underwriter and Loan Collateral Advisor PRINCETON CONFERENCE  Residential Appraisal Best Practices FROM THE REVIEW APPRAISER’S DESK:  Program Purpose A LOOK INSIDE COLLATERAL UNDERWRITER  Less Addendum Requests (Revisions, Appeals) AND LOAN COLLATERAL ADVISOR April 5, 2019 1 2 Disclaimer Available Resources 3 4  These opinions shared are my personal opinions and  Interagency Appraisal and Evaluation Guidelines observations; they may not the opinion of Columbia  ALLREGS Bank.  USPAP  While a good faith effort has been made to ensure the reliability of the presentation content, Selling and Servicing Guides, USPAP , and other noted materials are the official statements of the publishing entities. In the event of discrepancies between the information in this presentation , the source documents control. 3 4 1

5/15/2019 1. Interagency Appraisal and 2. ALLREGS Evaluation Guidelines (12/2/2010) 5 6  These Guidelines provide federally regulated  Chapter 5601: Property Eligibility and Appraisal institutions and examiners clarification on the Requirements Agencies’ expectations for prudent appraisal and  This chapter details Fannie and Freddie Mac’s evaluation policies, procedures, and practices. requirements for determining if the collateral is acceptable for the Mortgage transaction.  An excellent resource for the (Review) Appraiser.  Why are they sending me this addendum request? 5 6 AllRegs – The Guide AllREGS – Chapter 5601: Property freddiemac.com/singlefamily/ Eligibility & Appraisal Requirements 7 8 ALLREGS The Guide Subscription Bulletins 7 8 2

5/15/2019 5601.3: General Appraisal 3. USPAP S.R.3-3(a)(iii) Requirements (09/14/17) P. 5601-8 The Work under Review 9 10  Freddie Mac requires Sellers to obtain appraisals in  5 Characteristics of the appraisal development and a manner consistent with the Appraiser reporting process (CAARR): Independence Requirements.  Completeness  Freddie Mac does not require the use of appraisal  Accuracy management companies or any other third-party  Adequacy vendor to order appraisals.  Relevance  The Appraiser Independence Requirements allow  Reasonableness the use of staff (or in-house) appraisers and independent fee appraisers. 9 10 The Review Process Acronyms –Freddie & Fannie 11 12  GSEs – Government-Sponsored Entities  CU – Collateral Underwriter (Fannie Mae)  LCA – Loan Collateral Advisor (Freddie Mac)  UCDP – Uniform Collateral Data Portal  SSR – Submission Summary Report  HVE – Home Value Explorer (AVM)  LCAR-Loan Collateral Advisor Report (Freddie Mac) 11 12 3

5/15/2019 Risk Management Tools Freddie Mac – Loan Collateral Advisor 13 14  CU - Collateral Underwriter – Fannie Mae  What is Loan Collateral Advisor?  LCA - Loan Collateral Advisor – Freddie Mac  It is a web-based tool which is a component of Freddie Mac’s Loan Advisor Suite.  It is comparable to Fannie Mae’s Collateral Underwriter.  It is an appraisal risk management tool to aid lenders in managing and remediating appraisal quality issues earlier in the review process and to help determine the level of attention required. 13 14 What happens to the Appraisal once it Let’s see what is in the Loan Collateral gets to the Bank? Advisor Report (LCAR) 15 16  The Appraisal is uploaded to the UCDP “Portal”  If there are no UAD issues the appraisal will receive a “Successful” status  Appraisals successfully uploaded to UCDP receive a Submission Summary Report (SSR)  Freddie runs its AVM. Home Value Explorer (HVE)  The LCAR is now available 15 16 4

5/15/2019 Loan Collateral Advisor Feedback LCAR - Front Page 17 18  Feedback messages fall into the following categories: 17 18 LCAR – Model Sales Location Map LCAR – Model Sales 1 thru 5 19 20 1 5 19 20 5

5/15/2019 LCAR – Model Sales 6 thru 10 Scatter Plot Illustrates the Ranked Sales 21 22 10 21 21 22 Scatter Plot Top 10 Ranked Sales verse NJMLS Comp Search the Five Supplied Comps 23 24 23 24 6

5/15/2019 Do NOT Fear the Machine! Relax……. 25 26  Scores and “Warnings” are based on Uniform Appraisal Dataset (UAD) data points.  Computers do not yet read or understand text commentary.  Many “warnings” have already been addressed by the appraiser in commentary in the appraisal. The Reviewer is looking for the Perfect Defense against the Appraisal Report Dark Arts/Revision Request 27 28 7