A change in appraisal data requirements and collection is causing appraisal management companies (AMCs) to adapt their reporting systems and also will lead lenders and underwriters to learn the new processes accordingly.
The upcoming Uniform Collateral Data Portal (UCDP) and Uniform Appraisal Dataset (UAD) requirements that to go into effect under the Federal Housing Administration will cause appraisal management companies to not only learn and teach a new way of documenting appraisals, but will also change the technology they use to submit that data to the Department of Housing and Urban Development.
The UAD, which will be required as of September 1, 2011, should serve to streamline the appraisal process and make appraisals more uniform. The UCDP requires all report forms for conventional mortgages delivered to the GSEs on or after March 19, 2012 must be submitted to the UCDP prior to the delivery date of the mortgage if the loan application is dated on or after December 1, 2011, and an appraisal report is required. The UCDP serves as a single portal, that per Fannie Mae, will require lenders to use the UCDP to submit electronic appraisal data files that conform to all GSE requirements, including the UAD, before they are delivered to Fannie Mae.
While the changes are taking time to implement, the new way of doing things will ultimately benefit the lenders and borrowers, AMCs say.
“It is rebuilding how appraisals are put together,” says Erik Richard, CEO of Landmark Network, Inc., based in Sherman Oaks, Calif., of the UAD. “It takes away a lot of the gray area, and makes an appraisal almost multiple choice.”
Richard says Landmark is currently working with lenders to get them up to speed on the process, and that the adjustment will be beneficial.
“There have always been different interpretations with appraisers and underwriters about how to fill fields,” he says, citing for example the distinction between “fair” condition versus “average” condition. The UAD requirements will paint a better picture for the underwriter, he says, by closely defining property conditions without denying appraisers the full ability to write commentary or explain what they’re seeing. Ultimately, he says, it will make the assessment clearer.
The new process, however, is not without a learning curve.
“Underwriters have to make sure all abbreviations match exactly,” says Brian Coester, CEO of Rockville, Md.-based Coester Appraisal Group. With the slightest discrepancy, a lender could face rejection from Fannie Mae, he says.
“Just because the date isn’t formatted or currency isn’t in the right format,” Coester says, the loan could end up as a rejection. “A comma could literally require the appraiser to change something,” he says.
In addition to this new language of appraisals, the technology for submitting appraisal information and data is changing through the Uniform Collateral Data Portal. Fannie Mae has a tutorial on the technology changes, and AMCs say the implementation, while potential time consuming, is not something they are terribly concerned with.
“This is basically where the appraisal is going to go ‘super tech,'” Coester says.
While it may be time consuming in the beginning in getting lenders on board with the new technology and appraisers to learn the new lingo, the outcome should benefit the industry greatly, the AMCs say.
“It’s going to be great,” Coester says. “[Previously] Fannie Mae has only had the loan amount, appraised value, appraisal date and nothing else. Now, he says, “It’s almost like having a ‘property profile.'”
Written by Elizabeth Ecker