As mortgage experts struggle to manage risk and meet regulatory compliance, manual appraisal reviews have resulted in excess expense and a drain on company resources. Since 2005, Collateral DNA’s GAAR_® (Generally Accepted Appraisal Rules™) has helped the nation’s top mortgage lenders manage risk and meet regulatory standards faster and more consistently than a manual appraisal review, saving both time and money while increasing accuracy and decreasing fraud.

GAAR automates appraisal analysis with an innovative, rules-based engine, providing a first-level comprehensive review of each appraisal. While other industry tools may check for completeness, GAAR checks for both compliance and risk.

GAAR Compliance Series

The Compliance Rule Series screens appraisals to ensure they comply with regulatory standards, such as Fannie Mae, Freddie Mac, USPAP, FIRREA, and more.

To develop the compliance rules, the USPAP regulations, the Fannie Mae and Freddie Mac guidelines, and the rules of various regulatory agencies were formatted to ensure that appraisals passing the compliance rules would be in conformance with the guidelines and regulatory requirements.

GAAR Risk Series

The Risk Rule Series goes beyond regulatory compliance, identifying potentially overvalued properties, inconsistent appraisals, or simply risky lending scenarios. GAAR Risk automatically flags properties that deviate from the neighborhood norm.

The risk rules were derived from industry best practices for appraisal review and from the extensive experience of master appraisers, including the former Appraisal Institute chair of education. The intent was to develop a comprehensive set of rules which thoroughly identifies risk issues. The rules are continually updated based on reviews by clients and FNC subject matter experts and as the result of testing thousands of appraisal reports.

Why Use GAAR?

GAAR makes screening residential real estate appraisals for risk mitigation and regulatory compliance faster, simpler, and more reliable. GAAR balances two competing pressures for underwriters. The industry standard calls for a quick appraisal review, but as collateral value becomes more important, you also need a painstaking review. GAAR provides both, flagging potentially overvalued or fraudulent appraisals for thorough review.

Exception Management

FNC’s Collateral Management System_® (CMS_®) and GAAR eliminate virtually every human touch point, allowing only exceptions to be handled by your knowledgeable appraisers and underwriters. With GAAR, you never have to touch the appraisal report unless the rules identify a potential problem—you’ll manage only the exceptions, which are flagged as possible violations.

Fraud Mitigation

GAAR also includes an external rules component which applies real market and property information to help decrease appraisal fraud. The purpose of this rule set is to verify information within the appraisal, validate comparables, and provide additional market information about the subject property and its neighborhood. Additionally, price trend and momentum analyses help identify declining property values.

GAAR’s External Rules Module addresses potential red flags such as:

• Is the data in the appraisal report accurate? Do the physical characteristics for the subject property and comparables differ significantly from information contained in FNC’s National Collateral Database™ (NCD)?
• Is the subject property above normal risk? Is the subject property non-conforming to its neighborhood?

GAAR® Viewer

Review faster and more accurately with a clear view of the appraisal report—instantly see possible violations and cross-referenced compliance and risk rules. Designed to save time for reviewers while cutting costs for banks, GAAR Viewer presents an on-screen view of the appraisal report and highlights any rule firings and related fields. Users can then hover their cursor over the highlights to reveal the rule reference number and description of the potential violation.