Tuesday , 26 January 2021
Letter to the Director

A Letter to the Director

Network of State Appraisal Organization’s letter to FHFA Director Watt on Fannie Mae Collateral Underwriter Program

For the past couple of months, members of 18  State Appraiser Coalitions have been working on drafting an unified response to Fannie Mae’s Collateral Underwriter Program. Our letter to FHFA Director Watt briefly outlines our concerns, offers recommended solutions, as well as asking for a meeting to discuss the issue for the benefit of all vested parties

The Network of State Appraiser Organizations

The Honorable Melvin L. Watt
Director
Federal Housing Finance Agency
400 7th Street SW
Washington, DC 20024

Re: FannieMae Collateral Underwriter Program

Dear Director Watt:

On behalf of the independent state professional appraiser organizations signing below, I invite your attention to concerns expressed by the majority of real estate appraisers regarding FannieMae’s announcement making their Collateral Underwriter (CU) program available to lenders and their third party affiliates (but not to appraisers). We understand and appreciate the intent – to reduce the rejection rate of appraisal reports by FNMA through improved screening at the lender level.

Our concern is that lenders and their appraisal management companies will take an overly conservative misunderstanding of the CU’s output and continue to implement processes that result in a degradation of the quality as well as the timeliness of residential appraisals. These misunderstandings contribute to actions such as FNMA’s recent elimination of some of their appraisal guidelines regarding net and gross adjustments. It can be difficult to convince lenders that these guidelines are not hard limits. The same is almost certain to occur with lenders’ employment of CU. The program’s identification of alternative property sales as possible better comparables for analysis will likely result in the rejection of reports and the requirement for appraisers to spend considerable additional time responding to questions as to why those other sales were not used – hence extending loan processing time and increasing fees. Since those alternative sales come from a database with information not presently accessible by appraisers, this is not a self-correcting situation.

The solution that we recommend is to make the Collateral Underwriter program available to individual appraisers, including sales data, local market trends, imagery and other public records, that is being made available to lenders and their affiliates. The originating appraisers could then be alerted to the identification of the alternative sales as superior, and either utilize them or add appropriate explanatory commentary as to why they are not being included. This would improve the overall quality of appraisals by making selected property information from the FNMA database available to appraisers during initial appraisal development. It would also dramatically speed up loan processing time by eliminating delays caused by continuously growing requests for appraisers to reconsider the facts and conclusions in their reports. It is only logical for appraisers to have access to all the data possible. There is no apparent reason why this would not be possible, nor any potential downside or detriment to the process.

Not providing FNMA’s Collateral Underwriter data to appraisers at the beginning of the valuation process not only disregards Appraiser Independence Requirements but also FNMA’s own guidance as noted in: FNMA Selling Guide (4/15/2014) B4-1.1-05 “Disclosure of Information: “Any and all information about the Subject property that the lender is aware of must be disclosed to the appraiser. The appraiser must determine if the information could affect either the marketability of the property or the opinion of the market value of the property.” Additionally, there is contradiction within the actual FNMA Uniform Residential Appraisal Report; as Appraiser’s Certification 12. “I am aware of, and have access to, the necessary and appropriate public and private data sources, such as multiple listing services, tax assessment records, public land records and other such data sources for the area in which the property is located.” Appraisers must have access to the data. Otherwise, it is not possible to certify what is unknown to be known.

Providing the Collateral Underwriter to appraisers would significantly improve the residential mortgage process and further the satisfaction of FNMA’s own requirements of an appraiser.

We would like to meet with a member of your staff to discuss this in greater detail. I am serving as the contact person for the state organizations signing below. Please advise me as to a proposed date and time for such a meeting. I can be reached at (704)752-6252 x101, or at peterg@homesightllc.com. Thank you for your consideration.

Sincerely yours,

Peter Gallo

Appraiser’s Coalition of Washington
Arizona Association of Real Estate Appraisers
California Coalition of Appraisal Professionals
Delaware Association of Appraisers
Georgia Coalition of Appraisal Professionals
Idaho Coalition of Appraisal Professionals
Illinois Coalition of Appraisal Professionals
Louisiana Real Estate Appraisers Coalition
Maryland Association of Appraisers
Mississippi Coalition of Appraisers
North Carolina Real Estate Appraiser Association
Ohio Coalition of Appraisal Professionals
Oklahoma Professional Appraisers’ Coalition
Real Estate Appraisers Association (CA)
South Carolina Professional Appraisers Coalition
Tennessee Appraiser Coalition
United Appraisers of Utah
Virginia Coalition of Appraisal Professionals
West Virginia Council of Appraiser Professionals

This letter was originally posted by the Virginia Coalition of Appraisers. VaCAP works to promote the appraisal profession and its image to elected and appointed public officials in the Commonwealth of Virginia, the users of appraisal services, and the general public. VaCAP initiates discussion and analysis of issues affecting professional appraisers and monitors the actions of State governmental bodies with the intent to influence legislation, regulation and public opinion favorable to the appraisal profession and in the best interest of the public.

Have any comments or would you like to submit content of your own? Email comments@appraisalbuzz.com

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10 comments

  1. Avatar

    Thank you for posting our letter to FHFA. MONTHS of work went into the Network of State Appraiser Organizations. Peter Gallo, of the NCREAA / North Carolina Real Estate Appraiser Association has been instrumental in getting us organized so that we can speak with a unified strong voice as appraisers. Thank you Peter!

    If your state appraiser association / coalition is not listed above as a signer of the letter, contact them and provide them with Peter Gallo’s information ; (704)752-6252 x101, or at peterg@homesightllc.com We need as many states as possible to join us to unify our efforts to strengthen our voice as appraisers.

    • Avatar

      Tammie, Thanks for all the hard work you put into this. Let us know if you need anything we want to help you spread the word and get as many people on board as possible!

      • Avatar

        Thanks Jim! Feel free to copy and paste the letter to any and all websites and blogs related to this issue. Spread the word! 🙂

  2. Avatar

    Perfect Letter. You stated our concerns in a nutshell and recitation of the FNMA guideline and The Appraiser Certification proves that someone was not thinking when they decided NOT to allow appraiser to have access to their own compilation of data that they are using in CU. Thank you very much, keep us posted.

  3. Avatar

    Only 19 out of all the appraiser coalitions signed?
    Not even one out of all 50 states signed on?
    They are going to laugh at this.
    Untied we stand. Independent and divided we fall. We will surely fall.
    We are our own worst enemies. We have seen the enemy and it is us.

    • Avatar

      jd1958….As you know, appraisers are very independent minded people. We have to be in order to do our job effectively. However, that can make it difficult to come together in support of issues related to our profession. That is why the Network of State Appraiser Organizations was started. It is a brand new effort began just last year and has come a long way in a short amount of time, all through the efforts of like minded appraisers and leaders of state appraiser organizations. Peter Gallo began the effort by contacting other state appraiser organizations…one by one… in order to try to get an organized effort on behalf of appraisers. That is a tremendous feet it itself! Standing ovation for Pete!

      All 50 states can not sign on, because not all 50 states have a state appraiser organization. (New York state comes to mind…) If your state does not have one, you can make a difference. Contact other appraisers in your state and get a coalition started. It will be work, but it’s worth it. The NCREAA began just over 2 years ago…with the efforts of just 2 appraisers who are our founders; Dave Cozzarelli and Peter Gallo. We have been instrumental in helping get state legislation passed regarding regulating AMC’s in our state and are now in process of working with our legislature to be involved in drafting some needed changes to appraiser record keeping rules. (among other appraiser related issues)

      We believe our work and efforts are paying off. And we must all start somewhere. No one is laughing at us, especially appraisers who are helping to spread the word and are joining our efforts. Won’t you join us as well? If your state has an appraiser organization/association/coalition and it is not listed as a signer of the letter, please contact them and provide them with Peter Gallo’s information ; (704)752-6252 x101, or at peterg@homesightllc.com He is the organizer of the network.

      We ARE making a difference on behalf of all appraisers. We need your voice! 🙂

  4. Avatar

    I know it frustrating but please keep trying to educate our lawmakers about our profession.
    I hope and pray that all appraisers feel the same one day!

  5. Avatar

    Great letter. I think most all appraisers share these concerns. Keep up the good work!

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