RC_LP_U_200.5 Collateral Review in Residential Underwriting

In mortgage lending, an appraisal plays a critical role in helping the underwriter determine whether a property provides adequate collateral for the loan being requested. If a borrower defaults, the lender or investor may foreclose and sell the property to recover the funds. However, if that happens and the property’s value is lower than the outstanding loan balance, the lender or investor would incur a loss. While future market conditions cannot be predicted, a comprehensive appraisal of the property, its neighborhood, and the broader market at the time of origination allows the lender to better evaluate the risk tied to the loan.

Underwriting and reviewing appraisals thoroughly is a detailed and often complex procedure. Collateral Review in Residential Underwriting provides a foundation that will help a new underwriter begin to understand the intricacies of appraisal review. The course begins with a look at the use of appraisals in mortgage lending. Next, lender responsibilities related to appraisals are described. Appraisal documentation, including required forms and exhibits, are then addressed. The course then explains the methods of determining value. Toward the end of the course, underwriting considerations for various areas of the appraisal are presented.

This is a single-family/residential course.