A classic Christmas song has a line in it about "Making a list, checking it twice; gonna’ find out who’s naughty and nice." In today’s blog we’ll discuss a list that includes appraisers who have been naughty, and Santa Claus is not the one making up the list. This list is being compiled by Fannie Mae and finding yourself on this list will be much worse than not getting the gift you wanted for Christmas.
In our last blog, we discussed a recent Lender Letter from Fannie Mae that informed lenders the agency was monitoring appraisal reports for inaccuracies, inconsistencies and contradictory information. Unsaid in the Lender Letter, but publicly stated in the past and repeated in a prior blog by us ("The GSE Portal and Your Data"), is that the agency already has the capability to detect things like an appraiser who signed off as "did inspect" on 14 reports with the same effective date and subject properties that were scattered over 200 miles.
So what does Fannie Mae intend to do when they identify appraisers who are challenged with issues of ethics or competency? That appears to depend on the severity of the issues involved and the repetitive nature of the issues.
The first level of Appraiser Monitoring is the least severe and involves appraisers "whose appraisal reports exhibit a pattern of minor inconsistencies, inaccuracies, or data anomalies." Note the use of the word "pattern" in the preceding sentence. This means you are not likely to land on "The List" for an occasional mistake. Fannie Mae does not expect perfection, but they are looking for repeat offenders and do expect appraisers to explain discrepancies between reports. This level of Appraiser Monitoring will involve only the appraiser and Fannie Mae, and will be for "educational and training purposes," although Fannie Mae will monitor future reports from this group of appraisers.
The next two levels of Appraiser Monitoring involve "appraisers whose appraisal reports exhibit more egregious issues." These appraisers and the lenders who submitted reports from these appraisers will be contacted by Fannie Mae and notified that "either 100% of the loans submitted with appraisals from the identified appraiser will be reviewed in the post-purchase file review process or that Fannie Mae will no longer accept loans with appraisals completed by the specific appraiser."
Lenders who do business with Fannie Mae "will receive access to the list of appraisers whose appraisals are subject to 100% review or whose appraisals are no longer accepted by Fannie Mae." The list will be available on or before January 6, 2014 and will be "protected content" on the Fannie Mae website.
So how does an appraiser ensure he or she is never adversely affected by Appraiser Monitoring? Here are some suggested tips:
- Recognize/accept that under the UAD, ratings for condition, quality, view and location are absolute, NOT relative and do NOT change from one assignment to another.
- Use the comps database feature in your ACI software or develop and maintain an alternate system that ensures consistency when using the same data in multiple reports.
- If you are not totally comfortable with the UAD ratings system, additional education is available. View the UAD Compliance page on ACIweb.com for more information and helpful links.
- Run weekly Web Updates on your ACI Report™ software and faithfully run the UAD Validation PAR® Logic rules on each report prior to file delivery. (These rules are specifically designed to help you maintain UAD compliance. For more informaiton view a short video on Running ReviewMaster.)
- Don’t stress. Do not listen to fear mongers on this topic – Fannie is NOT pitting one appraiser’s rating against another and they do NOT expect perfection. They are looking for patterns, so an occasional and minor mistake or inconsistency is not likely to land you on "The List."
- Finally, don’t inspect 14 properties on the same day that are 200 miles apart!