What Does the CU Collateral Underwriter Really Do

I’m not going to claim that I am an expert when it comes to residential appraisal reports, even though I have completed thousands, or that I am an expert on the new FNMA CU tool, because I am not.  I do however follow the comments of appraisers on several blogs, the comments of “appraisal industry leaders” and given the fact that I don’t really care if anyone agrees with my opinions, I offer the following:

My opinion is that regardless of what appraiser opinions are of FNMA's CU (Collateral Underwriter), the process is in point of fact a way for the government to take away an appraiser's right to conclude his or her own appraisal opinion.  When someone is second guessing your appraisal process or your final appraised value they are second guessing your judgment. 

Do all appraisers use the same comparable sales?  No.  Should they all use the same comparable sales?  No.  Solving an appraisal problem has always been like solving any problem, you form your opinion based on the best data that is available to you.  If you are using the local multiple listing service then you may miss a sale that was transacted between two private parties.  Does that lack of perfect data degrade the appraisal’s accuracy?  No appraiser can consider everything, because they simply cannot know everything that has happened and is happening in a real estate market. 

The use of this CU tool is not in my opinion all about whether an appraiser used the "best" comparable sales, or if the sales an appraiser selected are the same as those his "peers" selected.  The fact is that you could use old sales that are located much farther from the subject property than those that you did use for any appraisal and you would probably conclude a similar market value.  The most similar sales are not always they ones that provide the best indication of value.

What this "tool" is about is controlling appraisers and controlling their opinions.  As much as many in the "appraisal industry" would like to say otherwise, this government process opens the door to questioning an appraiser's opinion.  Appraisals are supposed to be the opinions of individual appraisers they are not and never were supposed to be uniform.  When you call into question one appraiser's opinion you are suggesting that all appraisers should come to the same value opinion if they have the same data available.  That is a ridiculous notion!

Appraising is not, as some would like to imply, a scientific method used to test a property and conclude an exact value result.  The fact of the matter is that if you give any 5 appraisers an assignment you will likely get a range of values.  If you give them the same sales data, including "suggested" comparable sales, you will still get a range of values. 

Telling appraisers that they used an unacceptable sale, or that their "peers' had a different opinion of its quality or its view are appraisal minutia.  They FNMA tool appears to focus on trifling matters that are minor as they relate to the overall appraisal analysis.

To a party vested in the outcome of an appraisal opinion, and don't tell me that the government like the banks is not vested in the outcome, questioning an appraiser's conformity with others is a great way to bend a present or a future analytic result.  If you can get appraisers to produce a product that looks as if it was produced by a group of robots it’s that much easier to replace them with robots.

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email at grigdon@cox.net or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/4527-What-Does-the-CU-Collateral-Underwriter-Really-Do.html