Monday, June 5, 2023 | The Latest Buzz for the Appraisal Industry

Collateral Risk Education Pilot Program Interview with Cliff Rossi

Collateral Risk Education Pilot Program Commercial from Valuation Expo on Vimeo.

Joan Trice
Joan Trice, Founder and CEO of Clearbox, LLC

Cliff Rossi and I met in the midst of the Mortgage Crisis. We had an instant bond. First and foremost, Cliff has had an amazing storied career in risk with large lenders as well as both Fannie Mae and Freddie Mac. We’ve shared war stories and we both have the scars to show for our journey along the way. He is 100% dedicated to the mission of safety and soundness, as am I. But here is what endeared him to me immediately- he is quite outspoken on the necessity of an independent appraisal, performed by competent ethical appraisers. He is a firm believer in the “man and machine” approach to solving for the future of collateral valuation and risk. Algorithms won’t replace the human skill and local market expertise necessary for a proper valuation. I can’t find anyone so eloquent on the subject within our own ranks. I am proud and excited that we have been able to partner with Cliff and the University of Maryland Smith School of Business on our first short series on Collateral Risk.

Below is my recent interview Cliff Rossi. Dr. Clifford Rossi is an Executive-in-Residence and Professor of the Practice at the Robert H. Smith School of Business, University of Maryland. Prior to entering academia, Rossi had nearly 25 years of experience in banking and government, having held senior executive roles in risk management at several of the largest financial services companies.

Trice: Cliff, please tell our audience what we’ve been working on together for Collateral Risk.

Rossi:  This new program focuses on collateral risk management, an area that is critical to the stability and well-being of the housing industry. This training provides industry practitioners with the background and concepts to recognize risks associated with residential mortgage collateral valuation and how to manage and mitigate those risks. These courses are advanced courses for those professionals who are interested in expanding their knowledge and advancing their careers. This is a groundbreaking series never before offered to risk or valuation professionals.

Trice: Who is our intended audience?

Rossi: We designed the program to appeal to a wide segment of the mortgage industry. We think that appraisers and those directly working in the appraisal industry would be interested in the training, as well as practitioners working in mortgage credit departments at depositories and mortgage companies. Risk practitioners and regulators would also find value in this training.

Trice: Tell our audience why we decided to embark on this path.

Rossi: Put simply, collateral valuation risk processes, controls, and governance practices were generally deficient in the years leading up to the financial crisis of 2008. Appraisal processes in many instances lacked independence from production units, for example, and hence facilitated upward bias in appraisals which significantly underestimated the risk inherent in mortgage products of the time. Collateral valuation plays a central role in the loan manufacturing process and requires an effective risk management process to ensure valuations are conducted properly. The courses selected for the program provide attendees with a comprehensive overview of the collateral risk management process.

We’ve adopted a unique approach. It is time to reengineer the appraisal process and insert risk analysis into the appraisal process. At a point in time, value wasn’t terribly meaningful to a portfolio lender, an investor, a rating agency, or a PMI company. We are quite excited to be leading the path to a fresh new approach to valuation. And that means professional appraisers will have new opportunities in front of them. Education will be the key to paving a new course.

Trice: Tell us about this initial offering.

Rossi: For the initial offering we have four short courses offered September 14, 16, 21, and 23 from 6:00 pm to 9:00 pm ET. We selected four courses, one from each of the four domains. These courses are: Introduction to Collateral Risk; Collateral Policy and Standards; Automated Valuation Models; and Enterprise Risk Frameworks.

Trice: Will there be more courses to come?

Rossi: Yes, the Program will require eight (8) core courses and two (2) electives for a total of 10 courses to successfully complete the Program. Each module is planned for two (2) hours long. Here’s a comprehensive look at the program in its entirety with the initial offerings highlighted:

  • Fundamentals of Collateral Risk Management
    • Introduction to Collateral Risk
    • Types of Collateral Risk
  • Residential Property Valuation Risk Management
    • Collateral Policy and Standards
    • Appraisal Department Governance and Infrastructure
    • Appraisal Review
    • Appraisal Underwriting and Evaluation
    • Disaster Management
    • Risk Transfer
  • Collateral Analytics and Data
    • Automated Valuation Models
    • Collateral Data Security and Privacy
    • Collateral Data and Ethics
    • Collateral Impacts on Risk Models
  • Risk Management & Relationships to Collateral
    • Enterprise Risk Frameworks
    • Appraiser Vendor Management & Third-Party Oversight
    • Compliance & Regulatory Risk
    • Environmental Risk
    • Portfolio Risk Management

Space is limited in these classes. For more information and to register, please click here.

Have any comments or would you like to submit content of your own? Email