ADDP or “Add-Pee” is the new pre-funding quality control (QC) “buzz” process for appraisals that will reduce loan defects and repurchases related to collateral. ADDP will revolutionize pre-funding QC as the 4506-T and tax transcripts revolutionized pre-funding QC in regards to income, employment history, identity, residency history and Social Security Number re-verification.
ADDP is an acronym for Appraisal Defect Detection & Prevention (ADDP). ADDP is defined as the systems or technologies used to test appraisal data and integrity in order to detect and prevent appraisal defects that improve loan quality. MARI reports mortgage fraud involving false appraisals jumped 50 percent between 2008 and 2009. The cost of loan repurchases can devastate a company and now that LQI is becoming an industry standard, lenders are defining what the pre-funding models should look like and ADDP is that standard for collateral.
Lenders or appraisal management companies (AMCs) may require the appraiser to provide a data printout or a certificate from a technology engine that scrubs the appraisal for defects when submitting appraisals. Many take the position that appraisers should provide a certification of work and integrity. Some lenders or AMCs may take the appraisal through another vetting process prior to decision for funding as a validation process.
Not all lenders require or perform ADDP and the ones who do not, have a higher risk of repurchases based on collateral. Repurchase claims are becoming more sophisticated, and investors are using all the guns in their arsenal to include technology systems that were not available just one year ago. Even appraisers risk liability if they are not certifying their work with some type of technology tool supporting their valuations.
ADDP is now. If your pre-funding QC does not include ADDP, then you have failed in LQI.
Tommy A. Duncan is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528, ext. 124 or e-mail [email protected]
You may also visit Quality Mortgage Services LLC on the Web at www.qualitymortgageservices.com.