High “CU Scores” are causing appraisal issues more than ever, and creating a lot of confusion.
Fannie Mae now requires a “Collateral Underwriting” (CU) Score on every appraisal. This score reflects an automated risk assessment of the appraisal based on county records, comparable sales in the area, and appreciation of the subject property.
If the CU score comes in too high (appraisal is too “risky”), we are required to verify value with a field review or second appraisal. On a scale of 1-5, both “4” and “5” are deemed “too high.”
When a score comes back high, we immediately order a “rush” second appraisal (instead of a field review) b/c full appraisals tend to be more accurate. We also remind borrowers and realtors not to release the appraisal contingency until we have the 2nd appraisal in hand.
Why don’t we order the second appraisal upfront?
We simply cannot predict which appraisals will come back with a high CU score.
Some loans do require two appraisals from the start (i.e. flips, or price points over $1 million with LTV over 75%). For these deals, we order both appraisals on Day 1. When it comes to high CU Scores, however, we just don’t have a crystal ball.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646