Correspondent Lending

Don’t Let Appraisal Errors Plague Your Customers

Don’t Let Appraisal Errors Plague Your Customers

Appraisal errors are a headache: They can slow down the mortgage lending process and delay final loan approval for customers.

And yet, they’re surprisingly common: Inaccuracies, such as incorrect information about comps and missing photos of the property, are among the top errors seen during the loan validation process.

But many errors, and the subsequent requests to fix them, can be avoided through awareness and early fact checking.

Catch errors early

There are a number of common errors that are frequently found with appraisals:

  • The address and details of the subject property
  • Details for the comparables
  • Owner and borrower information
  • Pictures. For example: Are all the necessary photos in the file? If the home has four bathrooms, but only three photos, why is the fourth one missing? Are all the required exterior and interior photos there?

Perhaps the easiest way to reduce errors is simply by running the appraisal data files through Fannie Mae and Freddie Mac’s Uniform Collateral Data Portal (UCDP)—which ensures consistent data and quality control on all appraised properties—and paying careful attention to the results.

“[The UCDP] is probably one of the best tools to use out there, as it gives you access to collateral tools such as Fannie Mae’s Collateral Underwriter,” says Dwight Nesbitt, Vice President, Collateral Production Manager at SunTrust Mortgage. “It essentially tells you, ‘Hey, here are some red flags,’ and if you have those, that's something that really does need to be addressed.”

This simple step can catch a number of potential errors, and lenders can then easily address those errors and ask the appraiser the right questions early on.

Taking care of any obvious address discrepancies upfront with the appraiser improves the integrity of the loan file. “It may improve the client experience because the loan will not be subject to back-and-forths with the investor, lender and appraiser. The lender can stay in control and control the closing date without any delays or fire drills,” says Blayne Harvey, SVP at SunTrust Mortgage Correspondent Non-Delegated Division. “It really helps keep a customer loyal and happy, because the experience is so good.”

When red flags do appear, communicating them to the appraiser is key, but because of the Appraisal Independence Requirement, lenders have to be careful about how they speak with appraisers.

“Communicating effectively with appraisers and asking the right questions really helps ensure that the process is clean,” Nesbitt says.

Tip 1: If you note that the appraiser’s report has three bedrooms in a comp, but other records indicate it has four bedrooms, raise the discrepancy and simply ask the appraiser to address it.

Tip 2: When these issues come up, make sure the appraiser is addressing them specifically and not using generalized statements about the market.

For instance: “If something comes back where there is a square footage discrepancy in the subject property and there may be public information stating the property has a garage, but now it doesn't and instead it has more square footage,” Nesbitt says, “we want to know, was that converted to living space? Has the appraiser properly addressed that information?”

Tip 3: For new construction properties, it’s important to ensure the appraisal accurately reflects the property that’s built, not just the initial plans that were drawn up. When change requests, upgrades and sales contracts addendums happen, the appraiser needs to be involved.

“The buyer decides that they want to maybe change the plans a little bit, do this, do that,” Nesbitt says. “That appraiser has to be kept in the loop with updated addendums and change requests as soon as possible so that they can make sure the appraisal they're delivering is truly representative of that property.”

Everyone reaps the benefits of due diligence

Properly addressing all of these discrepancies and errors is just as important as finding them in the first place. It also immensely helps the process to address these with the appraiser quickly.

“If it's a case where the market is very busy, the appraisers are busy. When the appraiser has just submitted this appraisal to you and you review it and you have questions, it is important to get it back to them while it's still fresh,” Nesbitt says.

Some markets are even reporting appraiser shortages (which can extend closing times), so if an appraiser has to revisit the property, scheduling this extra visit can immensely delay the process. Not verifying information upfront can have real consequences.

“It’s really a minimum of 48 hours each way, when you have to go back and forth and it can cause delays on multiple transactions,” Harvey says. “There are families and moving vans, there’s electricity to schedule. There are so many components of moving and so many properties and time frames tied to that. So it’s important that we meet them and minimize the delays for the borrowers and their families.”

Ready to learn more?

Find out how SunTrust’s Correspondent Lending team can help you connect with your clients.

This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.


Investment and Insurance Products:

Are Not FDIC or any other Government Agency Insured   Are Not Bank Guaranteed  May Lose Value 

© 2018 SunTrust Banks, Inc

equal housing logoSunTrust Bank is an Equal Housing Lender. Member FDIC

equal housing logoEqual Housing Lender. SunTrust Mortgage, Inc

SunTrust, SunTrust Mortgage, SunTrust PortfolioView, SunTrust Robinson Humphrey, SunTrust Premier Program, AMC Pinnacle, AMC Premier, Access 3, Signature Advantage Brokerage, Custom Choice Loan and SunTrust SummitView are federally registered service marks of SunTrust Banks, Inc. All other trademarks are the property of their respective owners.

Services provided by the following affiliates of SunTrust Banks, Inc.: Banking products and services are provided by SunTrust Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank, SunTrust Delaware Trust Company and SunTrust Banks Trust Company (Cayman) Limited. Securities, brokerage accounts and insurance (including annuities) are offered by SunTrust Investment Services, Inc., a SEC registered broker-dealer, member FINRA, SIPC, and a licensed insurance agency. Investment advisory services are offered by SunTrust Advisory Services, Inc., a SEC registered adviser. GFO Advisory Services, LLC is a SEC registered investment adviser that provides investment advisory services to a group of private investment funds and other non-investment advisory services to affiliates. Mortgage products and services are provided by SunTrust Mortgage, Inc.

SunTrust Mortgage, Inc. - NMLS #2915, 901 Semmes Avenue, Richmond, VA 23224, 1-800-634-7928. CA: licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, IL: Illinois Residential Mortgage Licensee #MB-989, Department of Financial and Professional Regulation, 100 W. Randolph, Suite 900, Chicago, IL 60601, 1-888-473-4858, MA: Mortgage Lender license #-ML-2915, NJ: Mortgage Banker License - New Jersey Department of Banking and Insurance, NY: Licensed Mortgage Banker—NYS Department of Financial Services, and RI: Rhode Island Licensed Lender.

"SunTrust Advisors" may be officers and/or associated persons of the following affiliates of SunTrust Banks, Inc.: SunTrust Bank, our commercial bank, which provides banking, trust and asset management services; SunTrust Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; SunTrust Advisory Services, Inc., a SEC registered investment adviser which provides Investment Advisory services.

SunTrust Private Wealth Management, International Wealth Management, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups and GenSpring are marketing names used by SunTrust Bank, SunTrust Banks Trust Company (Cayman) Limited, SunTrust Delaware Trust Company, SunTrust Investment Services, Inc., and SunTrust Advisory Services, Inc.

SunTrust Bank and its affiliates do not accept fiduciary responsibility for all banking and investment account types offered. Please consult with your SunTrust representative to determine whether SunTrust and its affiliates have agreed to accept fiduciary responsibility for your account(s) and if you have completed the documentation necessary to establish a fiduciary relationship with SunTrust Bank or an affiliate. Additional information regarding account types and important disclosures may be found at

SunTrust Robinson Humphrey is the trade name for the corporate and investment banking services of SunTrust Banks, Inc. and its subsidiaries, including SunTrust Robinson Humphrey, Inc., member FINRA and SIPC.