FNC platforms ensure lender compliance with GSE guidelines

Mortgage Banking, May, 2008

Oxford, Mississippi-based FNC Inc. announced in March it has industry-proven platforms that will ensure mortgage lenders comply with recently announced Fannie Mae/Freddie Mac rules that spell out how home appraisals can be conducted.

FNC's Collateral Management System[R] (CMS[R]) for enterprise lenders and its Collateral Headquarters[TM] (CHQ) platform designed for regional and community banks are the solutions mortgage lenders will need when the new rules take effect Jan. 1, 2009, according to FNC Chief Executive Officer Bill Rayburn.

As reported last month, New York Attorney General Andrew Cuomo (D) announced an agreement with Fannie Mae, Freddie Mac and the Office of Federal Housing Enterprise Oversight (OFHEO) to establish a Home Valuation Protection Program (see Mortgage Banking, April 2008, p. 8).

The program demands significant changes to the real estate appraisal process for residential mortgage transactions, and includes a code of conduct that mandates appraiser independence, appraisal compliance with regulatory standards and market-trend tracking.

The government-sponsored enterprises (GSEs) agreed not to buy home loans unless lenders prove they order appraisals from independent vendors that will provide objective valuations. The stipulation also applies to mortgage brokers, who have historically selected their own appraisers--a practice linked to appraisal fraud.

"Documentation of the entire loan process is critical, as is evidence of appraiser independence, compliance to USPAP [Uniform Standards of Professional Appraisal Practice] standards and indications of appraisal or appraiser violations," Rayburn said. "We provide clients with solutions for all of these issues."

Regarding appraiser independence, the FNC platforms feature auto-assignment--functionality that ensures appraiser independence, as the system automatically assigns orders randomly yet equally to appraisers on the lender's approved-vendor list.

Likewise, said Rayburn, FNC data and analytics give lenders the tools they need to have confidence in the appraisal at every step of the loan process.

Of particular importance will be FNC's Generally Accepted Appraisal Rules[TM], also known as the GAAR[R] Compliance series. GAAR, available through CMS, CHQ and as a stand-alone Web-based product, ensures USPAP compliance by thoroughly scanning the appraisal and flagging any suspected violations, said Rayburn.

"Months ago, we established this functionality as a standalone Web service, allowing lenders to call up a Web page, load the appraisal and know if the appraisal is compliant or not," Rayburn said.

More than ever, according to Rayburn, FNC's collateral-management platforms, GAAR Compliance series and analytic products are critical to industry participants interested in having access to accurate, up-to-date appraisal information at every phase of the loan cycle throughout the life of the loan.