FNC TRAINING · For questions regarding Chase Correspondent appraisal policy, contact Chase Customer Support at: (877) ASK-CHASE, Option 7, then Option 1 [email protected]

FNC TRAINING Chase Correspondent Pre-Delivery Process

J a n u a r y 2 , 2 0 1 3 - © 2 0 1 2 F N C , I n c .

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AGENDA

Introduction and FNC Background

Pre-Delivery Order Process Demo

Generally Accepted Appraisal Rules™ (GAAR®) Overview

Appraisal Score™ Overview

Resources

Q&A

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PRE-DELIVERY ORDER DEMO

Login

Create Review/Pre-Qualification Order

Upload Appraisal

Review GAAR and Appraisal Score Results

Upload Appraisal Revisions

GENERALLY ACCEPTED

APPRAISAL RULES (GAAR)

Kathy Coon

5

GAAR – A TOOL

GAAR is an automated appraisal review and scoring tool.

GAAR does not:

Determine value

Determine the acceptance or rejection of an appraisal

Make any decisions on the resolution of the GAAR “alerts”

Replace underwriters, reviewers, appraisers

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APPRAISAL FORMS SUPPORTED BY GAAR

Uniform Residential Appraisal Report (Fannie Mae 1004/Freddie Mac 70)

Manufactured Home Appraisal Report (Fannie Mae 1004C/Freddie Mac 70B)

Exterior-Only Inspection Residential Appraisal Report (Fannie Mae 2055/Freddie Mac 2055)

Individual Condominium Unit Appraisal Report (Fannie Mae 1073/Freddie Mac 465)

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APPRAISAL FORMS SUPPORTED BY GAAR

Exterior-Only Inspection Individual Condominium Unit Appraisal Report (Fannie Mae 1075/Freddie Mac 466)

Small Residential Income Property Appraisal Report (Fannie Mae 1025/Freddie Mac 72)

Market Conditions Addendum to the Appraisal Report (Fannie Mae 1004MC/Freddie Mac 71)

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APPRAISAL FORMS SUPPORTED BY GAAR UAD FORMATTING*





*UAD-Uniform Appraisal Dataset

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Compliance Rules Series Basic (Fannie Mae, Freddie Mac, USPAP and

Regulatory Compliance)

UAD (The Uniform Appraisal Dataset)

1004 MC (Market Conditions Addendum)

FHA

VA

Risk Rules Series

External Rules Series

GAAR SERIES – INTRODUCTION

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GAAR SERIES – NAMING CONVENTION

The GAAR naming convention was developed to ensure ease and familiarity for the user.

This part of the rule name refers to the specific GAAR Series

C= Compliance Rule

R= Risk Rule

MC= Market Conditions

FHA= FHA Rule

VA= VA Rule

EXT=External Rule

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GAAR SERIES – NAMING CONVENTION

The GAAR naming convention was developed to ensure ease and familiarity for the user.

This part of the rule name refers to the section of the specific appraisal report form:

SUB= Subject

CONT = Contract

N = Neighborhood

S = Site

IMP = Improvements

SCA = Sales Comparison Approach

**examples above relate to the URAR form

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DEFINE: SCREENING, RULE FIRINGS, ALERTS

Screening:

Term used for the automated review of the Rules.

Rule Firings:

Term used when any of the Rules do not clear the automated review.

Alerts:

Term used to describe the Rules that fired.

Just because a Rule fired does not necessarily mean the appraiser did something wrong.

Multiple alerts do not necessarily mean that the appraisal report fails to meet industry guidelines.

Multiple alerts do not necessarily mean the value is not supported.

GAAR – COMPLIANCE SERIES

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Compliance Series: Basic

Screens appraisals for:

Fannie Mae and Freddie Mac guidelines

VA and FHA guidelines

Uniform Standards of Professional Appraisal Practice (USPAP)

Banking and Thrift regulatory compliance

GAAR COMPLIANCE SERIES

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GAAR COMPLIANCE SERIES – UAD & 1004MC

Compliance Series: UAD (The Uniform Appraisal Dataset)


GAAR Compliance

UAD standardized responses

Compliance Series: 1004MC (Market Conditions Addendum to the Appraisal Report)


GAAR Compliance

Consistency of data contained within the appraisal form

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CONTRACT

FNC-C-CONT-003-01

I did (did not) analyze the contract for sale for the

subject purchase transaction:

• The “did not” box is checked,

• And the Assignment Type is noted as:

Purchase Transaction

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NEIGHBORHOOD

FNC-C-N-012-01

NEIGHBORHOOD:

One-Unit Housing Trends: Property Values:

• The "Declining" box is checked

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GAAR COMPLIANCE SERIES – UAD

IMPROVEMENTS

FNC-C-IMP-309-06

Describe the condition of the property (including

needed repairs, deterioration, renovations,

remodeling, etc.):

• The field does not contain one of the following

terms for the subject's overall condition rating:

C1, C2, C3, C4, C5 or C6

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SALES COMPARISON APPROACH

FNC-C-SCA-105-04

Location: Subject:

• The field does not contain one of the following

rating terms: A, B, N

Note: A =Adverse, B= Beneficial, N=Neutral

Fannie Mae and Freddie Mac Uniform Appraisal Dataset Specifications. Field-

Specific Standardization Requirements Document, Version 1.4

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Compliance solely with UAD formatting does

not ensure a compliant appraisal report:

“This document is not intended as a sole quality review

tool for appraisal reports. Compliance with the UAD and

UCDP specifications does not relieve lenders of their

responsibility to meet the GSE’s appraisal related

policies and guidelines.”*

*Fannie Mae and Freddie Mac Uniform Appraisal Dataset Specifications. Field-Specific

Standardization Requirements Document, Version 1.4

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GAAR COMPLIANCE SERIES – 1004MC

Market Conditions Addendum to the Appraisal Report

MARKET RESEARCH and ANALYSIS

(Market Conditions – REO)

FNC-C-MC-REO-001-00

Are foreclosure sales (REO sale) a factor in the

market?

• There is no box checked

GAAR – RISK SERIES

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GAAR RISK SERIES

The GAAR Risk Series was developed to

provide a more in-depth review of the appraisal

reports beyond compliance.

The FNC GAAR team developed a series of

automated rules that could:

Check for inconsistencies and red flags

Simultaneously check multiple fields

Review for “tolerances”

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The Risk Rules alert to the possibility of excessive adjustments, misleading information, and unsupported values.

The Risk Rules are the most advanced and comprehensive guidelines created to assist in screening appraisals beyond basic underwriting criteria.

GAAR Risk Series is unique to the industry, providing in-depth rules not published in industry sources or guidebooks

GAAR RISK SERIES

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SITE

FNC-R-S-048-01

Utilities: Electricity:

• The "Other" box is checked for Electricity,

• And the Site Area is reported in acres,

• And the "Urban" or the "Suburban" box is

checked for Location in the Neighborhood

Characteristics.

GAAR RISK SERIES

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GAAR RISK SERIES

SALES COMPARISON APPROACH

FNC-R-SCA-219-02

Room Count: Bedrooms: Subject:

• The subject has 1 bedroom

• And two of comparables 1-3 have more than 1

bedroom.

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SALES COMPARISON APPROACH – HISTORY

FNC-R-SCAHIS-030-01

Price of Prior Sale/Transfer: Comparables

• The Price of Prior Sale is higher than any comparable’s

Sale Price reported in appraisal.

GAAR RISK SERIES

GAAR – EXTERNAL SERIES

Gwen Magrisso

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Compares information from external data sources to

uncover inaccuracies in the appraisal report

Verifies information contained within the appraisal report

Helps validate the comparables

Is the data in the appraisal report accurate?

Do the physical characteristics for the subject

property and comparables as noted in the

appraisal report differ significantly from information

contained in public records?

GAAR EXTERNAL SERIES

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Provides additional information about the subject

property and its market area

Includes a market-based price trend and

momentum analysis to identify declining trends


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FNC-EXT-PROP-000-03:

• The Subject Property sold within the last 36

months from effective date of appraisal

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FNC-EXT-PROP-000-16:

• Subject Property Sales History:

• The most recent recorded transaction is a

Distressed Sale (11/13/10)

• A Distressed Sale is typically a Lender Sale

or another type of Court-Ordered Sale

APPRAISAL SCORE

Bob Dorsey

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APPRAISAL SCORE

FNC has developed the Appraisal Score based on GAAR:

Appraisal Score – Provides an indication of valuation uncertainty

and/or items requiring follow-up.

“Appraisal Evaluation and Scoring System and Method” – FNC

applied for patent in October 2006. Patent was issued on August 14,

2012, as U.S. Pat. No. 8,244,563.

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APPRAISAL FORMS SUPPORTED BY APPRAISAL SCORE


Manufactured Home Appraisal Report (Fannie Mae 1004C/Freddie Mac 70B)




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APPRAISAL SCORE

Based on GAAR

Statistically derived

weights for the rules

Provides assistance with

automated review and

underwriting of the

appraisal

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DISTRIBUTION OF THE SCORE

0%

2%

4%

6%

8%

10%

12%

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DISTRIBUTION OF THE SCORE (CONT.)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000

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APPRAISAL SCORE Q&A

What does the score measure?

The Appraisal Score provides an indicator of uncertainty

about the value.

Does a low score mean the value is wrong?

Not necessarily. A low score means someone needs to

review the appraisal to confirm the value.

How are compliance issues related to the score?

In general compliance only minimally impacts the score.

A compliance indicator on the report addresses

compliance issues.

RESOURCES

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RESOURCES

For questions concerning access and usage of the FNC site, contact FNC Collateral

Headquarters Support Center at:

(888) 963-7892 (Monday-Friday, 7 a.m.-7 p.m. CST)

[email protected]

For questions regarding Chase Correspondent appraisal policy, contact Chase

Customer Support at:

(877) ASK-CHASE, Option 7, then Option 1

[email protected]

Pre-Delivery Materials- ChaseLoanManager > Resource Center > Online Training >

Pre-Delivery Appraisal Scoring Strategy (FNC Collateral Headquarters) folder:

Collateral Headquarters User Manual

Appraisal Score Report Sample

Appraisal Scoring Strategy FAQs

mailto:[email protected]

mailto:[email protected]

Q & A

Documents

FNC TRAINING · For questions regarding Chase Correspondent appraisal policy, contact Chase Customer Support at: (877) ASK-CHASE, Option 7, then Option 1 [email protected]