Loan Collateral Advisor FAQ
What is Loan Collateral Advisor?
Loan Collateral Advisor, a part of Freddie Mac Loan Advisor®, is a web-based tool that analyzes appraisal reports and provides a view of valuation risk at no cost to our customers.
How does Loan Collateral Advisor work?
Appraisals submitted to Freddie Mac through the Uniform Collateral Data Portal (UCDP®) automatically flow to Loan Collateral Advisor for assessment. Loan Collateral Advisor performs assessments of the submitted data, leveraging multiple sources to assess the overall valuation risk of the appraisal. All results are returned within the tool, including a score that represents a view of valuation risk, and evaluation for collateral representation and warranty relief.
The tool gives you robust search capabilities and the ability to export data to view your appraisal submissions, trends and other information.
How will I benefit from using Loan Collateral Advisor?
Loan Collateral Advisor can help you increase your operational efficiencies and reduce the risk of repurchases related to faulty appraisals. It provides real-time assessment feedback to help you manage and remediate appraisal issues. The clear and actionable feedback will help you identify potential issues earlier in the process, so you can determine the level of review required; thereby increasing your operational efficiency by allowing you to focus your resources on potential appraisal issues.
Will Loan Collateral Advisor help me reduce repurchases?
Loan Collateral Advisor is designed to help reduce risk of repurchases by providing you with information that can help you identify and address appraisal deficiencies before you deliver a loan to Freddie Mac.
Will an appraisal that scores poorly be selected for quality control review?
Loan Collateral Advisor results are one of the many factors considered in our targeted sampling methodology.
Will Freddie Mac issue repurchases based solely on a poor score?
No. Repurchase actions are the result of significant defects identified during a quality control underwriting review of the loan file.
Will the scores be used to evaluate specific appraisers?
Freddie Mac is not currently using Loan Collateral Advisor results to measure appraiser performance.
Can lenders share scores with appraisers?
No. Loan Collateral Advisor was developed to support the lender's appraisal underwriting and quality control functions. The results are to be used in conjunction with human due diligence and can be used to inform discussions with appraisers. Lenders may not ask appraisers to revise reports based solely on the Loan Collateral Advisor score and may not provide appraisers with messages directly from the system.
If I currently use UCDP, will I automatically have access to Loan Collateral Advisor?
No. Loan Collateral Advisor is separate from the UCDP. Loan Collateral Advisor is a part of Freddie Mac Loan Advisor® and is available through the Loan Advisor portal.
Will I receive additional proprietary feedback messages in Loan Collateral Advisor?
Yes. Today, Loan Collateral Advisor integrates with the UCDP so that appraisals submitted to Freddie Mac via the UCDP automatically flow to Loan Collateral Advisor for assessment. Following a few seconds of assessment, Loan Collateral Advisor will then provide clear, actionable proprietary messages on its view of the appraisal.
And since Loan Collateral Advisor and the UCDP integrate seamlessly to allow for two-way transmission of Loan Collateral Advisor messages, proprietary messages are shared between both systems.
Will appraisal management companies have access to Loan Collateral Advisor?
Appraisal management companies do not have access to Loan Collateral Advisor at this time, but we are considering a future offering.
Can natural disasters impact Loan Collateral Advisor risk scores?
Yes. After some natural disasters, it may become necessary to temporarily remove certain properties, that are located within zip codes identified as eligible disaster areas by the Federal Emergency Management Agency (FEMA), from receiving LCA Risk Scores. Visit our Natural Disaster Relief web page to learn more about Freddie Mac disaster relief policy.
What is collateral rep and warranty relief?
Collateral rep and warranty relief provides the lender with information about eligibility for relief from reps and warranties related to property value, thereby reducing a lender’s risk of repurchase due to collateral-related defects. Appraisals submitted to the Uniform Collateral Data Portal® (UCDP®) are assessed by Loan Collateral Advisor® and the lender receives notification of the loan’s eligibility for collateral rep and warranty relief related to value.
What do I have to do to ensure that my loans will be assessed for collateral rep and warranty relief eligibility?
Simply submit your appraisal to Freddie Mac through the UCDP and use Loan Selling Advisor® to deliver the loan to Freddie Mac. All appraisals submitted to Freddie Mac through the UCDP are automatically assessed for collateral rep and warranty relief eligibility by Loan Collateral Advisor®.
Is there a fee associated with mortgages that receive collateral rep and warranty relief?
No. There is no additional fee for mortgages that receive collateral rep and warranty relief.
How will I know if an appraisal has received collateral rep and warranty relief?
When you submit an appraisal to the UCDP, the appraisal automatically flows to Loan Collateral Advisor for assessment of eligibility for collateral rep and warranty relief. You will receive a feedback message in the UCDP and an indicator in Loan Collateral Advisor noting whether the appraisal is eligible for rep and warranty relief. Your final confirmation is at delivery of the loan in Loan Selling Advisor. You will also be able to pull reports and view loan details through Loan Coverage Advisor® showing the relief was granted at delivery.
Are there any exclusions for mortgage or property types that will not be eligible for collateral rep and warranty relief?
Yes. These exclusions are detailed in Single-Family Seller/Servicer Guide (Guide) Section 5601.9: Seller representations and warranties regarding the Mortgaged Premises.
Are Home Possible® loans eligible for collateral rep and warranty relief?
Home Possible mortgages may be eligible for collateral rep and warranty relief, but only if they meet all the eligibility requirements (refer to Guide Section 5601.9).
If an appraisal that did not initially receive collateral rep and warranty relief is revised and resubmitted, can it then receive eligibility for rep and warranty relief?
Yes. Each appraisal submission to the UCDP will be separately assessed by Loan Collateral Advisor for rep and warranty relief eligibility.
How does receiving collateral rep and warranty relief impact quality control requirements?
A mortgage receiving rep and warranty relief should not be excluded from your quality control program. Quality control may help identify underwriting deficiencies and can highlight appraiser-specific trends.
Is there a maximum LTV/TLTV/HTLTV limit for a loan to be eligible for collateral rep and warranty relief?
Yes. For a loan to be eligible for collateral rep and warranty relief, the LTV/TLTV/HTLTV must be 95% or less.
Am I required to use Loan Product Advisor to receive collateral rep and warranty relief?
No, Loan Product Advisor is not required. However, Sellers are reminded that without the use of Loan Product Advisor, they will need to manually apply the 95% LTV/TLTV/HTLTV requirement.
Does Loan Collateral Advisor provide feedback messaging that tells me if the appraisal is eligible for collateral rep and warranty relief?
Yes. Appraisals submitted to the UCDP will be assessed by Loan Collateral Advisor for rep and warranty relief eligibility. In Loan Collateral Advisor, an eligibility indicator will show either eligible or not eligible and feedback messages will be provided to explain why an appraisal is not eligible for rep and warranty relief.
Since the feedback messages received in the UCDP are generated by Loan Collateral Advisor, am I required to be a Loan Collateral Advisor user to get collateral rep and warranty relief?
No. Each appraisal submitted to the UCDP is assessed for rep and warranty relief eligibility by Loan Collateral Advisor regardless of whether you have access to the tool. However, you are encouraged to get access to, and use, Loan Collateral Advisor not just because it assesses appraisals for rep and warranty relief, but also because it provides you with a view of valuation risk and offers insights that can be beneficial in your quality control process.
What do the green and orange indicators in the Loan Collateral Advisor Report mean?
These indicate the eligibility status for collateral rep and warranty relief:
- Eligible: a green indicator with a checkmark tells you the appraisal is eligible for collateral rep and warranty relief related to property value.
- Not eligible: an orange indicator with an exclamation point tells you the appraisal is not eligible for collateral rep and warranty relief relate to property value. You are encouraged to review the feedback messages for this appraisal and if correctable issues are identified and fixed, to resubmit the appraisal for assessment of eligibility.
NOTE: Even if an appraisal is “Not Eligible” for collateral rep and warranty relief, if the UCDP Status Indicator indicates the loan is “Successful” and it otherwise meets our Guide requirements, it is still be eligible for sale to Freddie Mac.