Collateral Representation and Warranty (R&W) Relief

Updated 2026-05-17

Collateral Representation and Warranty (R&W) Relief refers to a benefit offered by Freddie Mac to Sellers, where Freddie Mac waives certain obligations related to the accuracy of collateral representations and warranties made by the Seller. This relief reduces the Seller's risk of repurchase demands from Freddie Mac due to collateral defects.

Eligibility for collateral R&W relief is assessed for loans that qualify for Automated Collateral Evaluation Plus Property Data Report (ACE+ PDR). Once a completed Property Data Report (PDR) is submitted to the Beyond ACE (bACE) API, Freddie Mac evaluates the loan for this relief.

The Loan Product Advisor (LPA) system notifies users of a loan's eligibility for ACE+ PDR via a banner, indicating that R&W relief assessment will follow. This process was implemented effective October 6, 2025, as announced in the Freddie Mac Loan Product Advisor Release Notes, November 2025.

Collateral Underwriter® (CU®)

Collateral Underwriter® (CU®) is a proprietary web-based tool developed by Fannie Mae that provides an automated appraisal risk assessment. It is designed to help lenders identify potential risks and deficiencies in appraisal reports submitted for loans that Fannie Mae may purchase.

CU Risk Score

A core output of the CU tool is the CU Risk Score, a numerical score ranging from 1.0 to 5.0. This score indicates the level of risk associated with an appraisal report, with a lower score signifying lower risk and a higher score indicating higher risk.

For a Government Sponsored Enterprise (GSE) to be considered complete according to Fannie Mae's Selling Guide (A2-2-06), the appraisal must receive a CU Risk Score of 2.5 or below. This threshold is a key component of the Government Sponsored Enterprise (GSE). Lenders use this score, along with other validation steps, to determine the accuracy and completeness of appraisal reports and ensure compliance with Fannie Mae's requirements.

Functionality and Analysis

CU analyzes appraisal data against a vast database of property records, market data, and Fannie Mae's proprietary algorithms. In addition to the CU Risk Score, it generates various messages, including flags, data discrepancy messages, comparable selection messages, adjustment messages, and reconciliation messages. These outputs highlight areas where the appraisal may deviate from market norms or Fannie Mae's guidelines, prompting reviewers to conduct further due diligence.

Fannie Mae recommends using CU, or equivalent functionality from third-party data and tools, for performing both pre-funding and post-closing appraisal reviews. The tool's functionalities, such as the Property Records section, Ranking and model adjusted values, and Satellite View, are specifically mentioned in Fannie Mae Form 1033 as aids in validating appraisal data, property condition, neighborhood data, and comparable sales analysis.