PFIs who deliver under the MPF Xtra^® product are required to use Collateral Underwriter (CU) to resolve any findings that appear on their Submission Summary Report (SSR) after an appraisal is uploaded into the UCDP. These messages are generated by CU and alert the PFI to inconsistencies between the information in the appraisal and the wealth of data stored in the UCDP. Using CU, the PFI can identify the source of the problem and either correct the appraisal or refute the finding.

Despite the requirement, not all PFIs take advantage of this resource—perhaps because they are unfamiliar with the software, or because they feel overburdened by the increasing demands of quality control and underwriting in today’s mortgage industry. However, with a small time investment and a little education, CU could become an indispensable tool, improving the accuracy of your appraisals and protecting your institution from unnecessary buy-back risk.

Why the Requirement?

On average, roughly 10% of loans a PFI sells through MPF Xtra will be pulled for quality control review. If any SSR findings have not been addressed, they will be considered exceptions to policy. Also, in the event of a foreclosure or other loss, unaddressed SSR findings will increase the likelihood of a repurchase request from Fannie Mae.

What Makes Collateral Underwriter Indispensable?

Some findings are so straightforward that they can be reconciled without signing in to CU, but most cannot. For example, if the message states that the “appraiser-provided comparables are materially different than the model-selected comparables,” the only way to obtain the addresses of the model-selected comparables and evaluate their appropriateness is to view them in CU. Or if there’s a discrepancy in the purchase price of a comparable, you’ll have to sign in to CU to see that 20 other records show the house sold on the same date for $250,000, not $200,000.

Many PFIs value CU as a tool to weed out sloppy appraisals. For example, if an appraiser mistakenly records the gross living area of a comparable as 2,000 square feet, CU could easily rectify the error by noting that 15 other appraisals listed this comparable at 2,500 square feet. And if there is a pattern of appraisal errors, it’s in the lender’s best interest to know.

Also, while CU is a powerful and useful tool, it isn’t perfect. With a little investigation, you may find that CU’s model-selected comparables are not actually comparable, or that you and your appraiser have knowledge of local market adjustments that CU doesn’t. If that’s the case, you can use data from CU to document your conclusions and refute the SSR finding.

Where to Start?

First, you’ll need a user ID and password to sign in to CU through Technology Manager (see sidebar). Once you access CU, it may be easier to master than you think. Fannie Mae offers brief, complimentary, on-demand e-learning courses at www.fanniemae.com/singlefamily/collateral-underwriter. And don’t be afraid to sign in and explore Collateral Underwriter’s capabilities. If you run into trouble or have questions, just contact the MPF Service Center at 877-FHLB-MPF (877-345-2673) or MPFServiceCenter@fhlbc.com.