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32 Jacob Williamson is responsible for oversight and management of all end-to-end collateral capabilities, loan quality, and operational risk management for Fannie Mae's Single-Family business. ese duties include front-end collateral policy design, loan quality control activities for both credit and collateral, condo standards, property valuations and valuation modernization, real estate liquidation options, and operational risk oversight. In the real estate space, Williamson is responsible for various foreclosure and REO functions, including short sales, foreclosure sale strategy, eviction/ redemption oversight, mortgage release/rental operations, property preservation/inspections, repairs, closing/title, HOA/tax management, REO sales, REO auctions, and vendor management. He is also a member of the Five Star Editorial Advisory Board, helping consult regarding content direction for DS News and MReport magazines. Where is the housing finance industry headed with valuation modernization? How is Fannie Mae helping support this effort? Although the industry has been on a journey to modernize the valuation process over the past few years, the risk and ongoing discussion of appraisal bias has injected renewed energy into this important work. In the past, determining a property's value at origination was really limited to two options—a full traditional appraisal or an appraisal waiver informed by data and modeling—with no in- between choices. New technological capabilities and process innovation have emerged, allowing the industry to manage collateral risks with more dynamic and targeted solutions, similar to how other mortgage risks are managed. Each valuation option is tailored to match the risk of the collateral and loan transaction, and these newer options have an emphasis on decreasing the risk of appraisal bias. As one key step toward implementing a more modern valuation spectrum, Fannie Mae has been testing two alternatives, inspection- based appraisal waivers and hybrid appraisals, since 2018. is Appraisal Modernization Pilot anchors on a Property Data Collection (PDC) process that leverages emerging technologies during a full interior and exterior inspection to capture property information, a floor plan, and images. e collection process is performed by a trained and vetted third party in a single visit and supports an inspection-based appraisal waiver or a hybrid appraisal. In some cases, this approach has shortened the appraisal process by five to 10 business days and, based on internal risk reviews and analytics, demonstrates similar valuation quality to that of a traditional appraisal. As part of the pilot process, we have developed a supporting infrastructure including a property data standard and API (application programming interface) to collect data and images consistently. We have heard anecdotes of a shortage of appraisers in some markets, resulting in longer wait times and higher costs for borrowers. Where an appraisal product is needed, hybrid appraisals and desktop appraisals enabled by technology allow appraisers to be more productive—they do not have to schedule appointments or visit properties but can still access comprehensive property information to confidently fulfill valuation requests, helping to alleviate capacity constraints. ese approaches also reduce interactions between the appraiser and the homeowner or buyer, in turn, reducing the likelihood of valuations being affected by personal or unconscious biases. We understand that Fannie Mae recently launched an undervaluation risk flag in Collateral Underwriter® (CU®)? Can you talk about how this works and what you hope it will accomplish? We added the undervaluation risk flag to complement the existing overvaluation risk flag and give lenders an additional tool to help them identify and investigate potential misvaluation. is helps to address findings in our appraisal bias working paper, "Appraising the Appraisal." e undervaluation risk flag uses statistical modeling to identify appraisals with a higher probability of undervaluation, much the way an overvaluation flag identifies risk of overvaluation. is risk flag builds on existing safeguards to detect valuation errors, and CU provides a statistically based reason for the undervaluation so the lender can pinpoint the root cause of the undervaluation risk. is risk flag is another step in our continuous improvement journey to ensure the integrity of collateral valuation in the housing finance market and fulfill our commitment to implement solutions toward a more effective and fair home valuation process. What feedback has Fannie Mae gotten from the industry when it comes to desktop appraisals that went into your Selling Guide earlier this year? e valuation procurement process at origination is a complicated ecosystem supported by several layers of technology. To deliver a seamless experience for the homeowner, lenders need certainty around the valuation fulfillment process, so they can more effectively build capabilities to manage the ordering and tracking of desktop appraisals. Some of their biggest challenges shared has been the integration of the desktop appraisal orders into existing loan origination systems as well as sourcing the information and exhibits such as photos and floor plans needed by The Exchange Jacob Williamson SVP, Single-Family, Head of Collateral Risk Management, Fannie Mae