CU Sooner Rather Than Later

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

CU Sooner Rather Than Later


By now, most of us real estate professionals have become accustomed to the fact that things rarely stay the same for long in the mortgage industry.  Not a month passes, it seems, where guidelines do not shrink or expand at the whims of our regulators, and certainly not a day goes by where rates do not fluctuate with the broader economic markets.  So it should strike us as no surprise that the appraisal world we know will again be shaken up on January 26, 2015, when Fannie Mae’s Collateral Underwriter (CU) is implemented.  Here is what we all need to know:


What is CU?

CU is a proprietary application developed by Fannie Mae to promote and support appraisal quality. The program flags potential errors in the appraiser’s evaluation before the lender commits to fund the loan. It scores the appraisal for overall risk of inaccuracy on a scale of 1-5, 1 being the least risky. The application also provides as many as 20 alternative comps for comparison.

Fannie Mae’s CU appraisal review is not a new concept. Fannie Mae has been using this analytical tool to look for potential issues and compile data about each appraiser based on work submitted. The difference is that now the tool and its all-encompassing data is being made available to lenders during the underwriting process. It will provide detailed messaging that highlights specific aspects of the appraisal that may warrant further attention. The goal is for the lender to be able to address any issues earlier in the process, prior to closing and delivery to Fannie Mae.


Anticipating the Future

The future is here – and we’re ready. At RPM we are fortunate to have an appraisal department that anticipated these changes to the industry standard. Through the use of our own proprietary review tools, we have already implemented procedures similar to CU. “Our appraisal software has already vetted out CU requirements. We are ready to integrate CU into our process to assist appraisers and reduce lag-time for review and response,” explains Gary Vujovich, Senior Vice President and Chief Appraiser at RPM Appraisal Services. “The appraisers on our approved list are the most experienced (appraising for at least 10 years). We keep them within 15 miles in populated areas, they are not on any “watch lists” and all are well-versed in the required procedures.” As a Fannie Mae direct seller, RPM will have immediate access to CU’s online data portal, which will allow for enhanced efficiency.


Why is CU Important?

Accurate appraisals are a critical component to a stable housing marketing. Over- valuation leads to greater risk of a real estate market bubble. Any review other than CU is based on assessor data and MLS data. CU is based on the comps that appraisers have used, which should be better data than what is reported by the assessor. Quality control and risk management must be built into the system to achieve the highest standards that will, in turn, improve investor confidence.


Why the mixed reaction?

Change is hard. No one knows quite what to expect. Some REALTORS® are worried about losing deals due to potentially longer transaction times, higher fees, or revised appraisals. Appraisers have expressed concerns over additional hours spent justifying their evaluations against comps that are delivered directly to lenders. However, Fannie Mae expects that the tool will be superior to current lender check-lists and engagement letters and will prevent some of the call-backs appraisers receive from underwriters for additional comps. The National Association of Realtors recently released a press release to communicate additional facts and dispel some myths surrounding the issue.


For now, CU will be applied to conventional loans, however, I expect that jumbo, FHA and VA will follow suit in the future.  This has been the pattern with appraisals since the implementation of the Home Valuation Code of Conduct (HVCC).  The lending industry retreats behind a “better safe than sorry” ideology and tools like CU support that philosophy.


After all the appraisal changes in the last few years, implementation of CU may come across very much like a “just when you thought it was safe to get back in the water” moment.  But I have every confidence we will find our way to shore, just like we have time and again in the recent past.  What are your thoughts, questions and concerns about Collateral Underwriter?


CU on the beach,



Rob Spinosa
Mortgage Loan Originator
NMLS: 22343 CalBRE: 01297944
Cell: 415-367-5959 Fax: 415-366-1590 
1058 Redwood Highway, Frontage Road, Mill Valley, CA 94941


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RPM Mortgage, Inc. – NMLS#9472 – Licensed by the Department of Business Oversight under the Residential Mortgage Lending Act. Equal Housing Opportunity.





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Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hi Rob -- thanks for heightening our awareness about the coming change. You do an excellent job in being in the forefront, being prepared, and being able to help your clients navigate tricky waters.

Jan 24, 2015 01:58 AM #1
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Rob glad to here you guys at RPM are ready for Fannie Mae's Collateral Underwriting, but many are not so there is bound to be more delays and frustration.  Hopefully everyone will adapt quickly and keep the disruption to a minimum.

Jan 24, 2015 08:07 AM #2
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Rob - I appreciate your positive approach to this issue, and certainly support the concept of more accurate appraisals. I suspect that overall, the industry reaction is similar to that anywhere else when change occurs.

Jan 24, 2015 12:38 PM #3
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
SVP of Mortgage Lending, Marin County

@Lottie Kendall , we can't avoid the inevitable.  We're in an "adapt or die" industry and it's important to be the one making the adjustments...

@George Souto, the delays are frustrating, no doubt.  It's not going to get any better, but I hope all of us, on every side of the transaction, get better at rolling with these realities.  Simply put, our lawmakers have a blatant disregard for "time is of the essence."  To them, more rules, requirements, waiting periods, safety nets and disclosures are the way to go.  They carry out their task in the name of the consumer --- the same consumer that ultimately pays for all this oversight.

@Dick Greenberg, important to stay as positive as possible.  Our jobs are not easy and that's our problem.  It shouldn't be our clients'.

Jan 24, 2015 12:47 PM #4
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Rob Spinosa

SVP of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?

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