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New Fannie Mae Program Shows Importance of Hiring Qualified Real Estate Appraisers

January 26, 2015 08:00 AM

CHICAGO (Jan. 26, 2015) – A new Fannie Mae program available to mortgage lenders today shows the importance of hiring qualified appraisers, according to the nation’s largest professional association of real estate appraisers.

Fannie Mae’s Collateral Underwriter is an automated quality assurance program that electronically checks appraisal information, scanning for aberrations in data and analysis presented in appraisal reports. While automated quality assurance programs have existed in the mortgage lending market for many years, Collateral Underwriter has a large dataset from which to draw, and the data and analytics come directly from the country’s largest backers of mortgage loans.

“Lenders should hire designated real estate appraisers – not only because they have completed advanced education and maintain their designations with rigorous continuing education and ethical requirements – but because designations, like those conferred by the Appraisal Institute, train appraisers to defend their work,” said Appraisal Institute President M. Lance Coyle, MAI, SRA.

Coyle said the rollout of Collateral Underwriter– which likely will affect all appraisals prepared for loans sold to government sponsored enterprises –highlights the importance of qualified appraisal review staff to assess and navigate CU messages and alerts and identify additional issues not addressed by CU.

The growth of lender “overlays,” or additional, lender- or investor-specific appraisal requirements, has been a point of frustration for many appraisers in recent years because they often result in increased scope of work with no commensurate compensation. The growth of overlays is one of several reasons many highly qualified appraisers have fled the mortgage lending appraisal arena to pursue other, more satisfying and lucrative areas of real estate valuation.

“The Appraisal Institute hopes that introduction of Collateral Underwriter will lead to a reduction of lender or secondary-market investor overlays,” Coyle said. “But only time will tell whether that happens.”

He added that the rollout of CU highlights the importance of qualified appraisal review staff to assess and navigate CU messages and alerts and identify additional issues not addressed by CU.

“A highly trained review appraiser will understand where a bank can save time and money by spotlighting issues of material importance and avoiding more ‘touches’ of the appraisal for trivial or repetitive issues,” Coyle said, noting that essentially means following the Interagency Appraisal and Evaluation Guidelines and the recommended “risk-based” review process.

“In this regard, mortgage loan sellers are at a crossroads relative to appraisal review functions,” Coyle said. “Quality assurance systems like CU are really just the starting point, and such systems should not become a gateway for even less experienced reviewers to become involved in the process.”

Learn more about Fannie Mae’s Collateral Underwriter program at


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The Appraisal Institute is a global professional association of real estate appraisers, with nearly 21,000 professionals in almost 60 countries throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Individuals of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA, SRA, AI-GRS and AI-RRS designations. Learn more at




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