Freddie Mac will soon add another automated review on the appraisal reports it receives through the Uniform Collateral Data Portal.
The new appraisal check will be performed using the ClearQC review software developed by Clear Capital, an appraisal management company and collateral valuations technology vendor based in Truckee, Calif. Clear Capital will develop a customized version of its software based on Freddie Mac workflow and business rules to integrate with the UCDP.
“By providing a customizable version of ClearQC in the UCDP, we are working with Freddie Mac to provide a consistent approach to appraisal review and transparency on appraisal requirements,” Clear Capital President Kevin Marshall said in a press release. “The ClearQC rules are meant to both affirm well-supported appraisal reports and provide feedback when conclusions may need further support.”
A Federal Housing Finance Agency Office of Inspector General audit released in February found that the government-sponsored enterprises bought loans despite warnings about their compliance with appraisal requirements and questions about their appraised value.
The audit references a contract that Freddie Mac awarded in September 2013 for services that will address the inspector general’s findings. Specifically, this contract’s goals are to evaluate appraisal data received by the UCDP; provide lenders with prefunding feedback about the quality of appraisal data, property valuation and appraiser compliance; and to score and validate appraisals to improve the quality of information backing funding decisions.
A Freddie Mac spokesperson confirmed via email that the GSE is working with Clear Capital, but could not say whether the Clear Capital’s initiative is the same effort as the contract detailed in the audit.
Currently, when an appraisal is submitted to the UCDP, it undergoes a number of automated checks before it’s accepted. Certain types of errors produce a warning, but the appraisal is still accepted. More serious errors prompt so-called hard stops that prevent delivery of the appraisal.
Since launching the UCDP in December 2011, the GSEs have been lenient during the initial implementation, allowing appraisals to be submitted even if certain warnings are generated during submission. But as the industry and GSEs have become more accustomed to the portal, Fannie Mae and Freddie Mac are working to increase the number of warnings that result in hard stops that must be fixed before appraisals are approved for delivery.