The Federal Housing Administration will begin collecting full, electronic appraisal reports for the mortgages that it insures.
The objective was first revealed in a scorecard published by the Federal Housing Finance Agency that sets objectives for Fannie Mae and Freddie Mac and guides executive compensation at the government-sponsored enterprises.
The scorecard requires the GSEs to “cooperate with FHA implementation of portal to accept electronic appraisals,” but does not include a deadline or timeframe for implementation. Fannie and Freddie jointly developed the Uniform Collateral Data Portal, which enables lenders to submit appraisal files and provides the GSEs the ability to database and analyze the data.
The UCDP is a component of the FHFA-mandated Uniform Mortgage Data Program, an initiative to update and streamline the loan and appraisal data that the GSEs collect. Fannie and Freddie began requiring lenders submit full electronic appraisals to the UCDP on March 19, marking the first fully implemented objective since the earliest UMDP efforts began in 2009.
In order to get to that point, Fannie and Freddie updated the commonly used appraisal forms with standardized responses for entry fields. The new file format, called the Uniform Appraisal Dataset, is what lenders or their appraisal management company representatives submit to the UCDP.
Since FHA requires appraisals be completed in the Fannie Mae approved form, an August 2011 Mortgagee Letter notified lenders that the FHA would begin requiring the UAD-compliant appraisals starting on January 1, 2012. But the letter also advises that “FHA is not adopting or requiring the use of the UCDP.”
Currently, the FHA doesn’t have the technology to collect electronic appraisals and database the information from the forms. Similar to the GSEs’ practice before UCDP implementation, the FHA only requires lenders to submit appraisals for mortgages that are selected for Post Endorsement Technical Review and the FHA’s Appraiser Review Process.
But that will change once FHA begins using the UCDP. A Department of Housing and Urban Development spokesperson would not make FHA officials available for comment on the matter, citing that the ongoing negotiations between the FHA and FHFA are still a “closed-door” matter.
What remains unclear is if the FHA intends to use the existing UCDP, or license its own version of the portal from Veros, the company that developed the technology for the GSEs. It’s also possible that the FHA could use another third-party technology vendor to develop its own appraisal delivery portal.
If FHA uses the existing portal, it’s also unclear what if any enhancements would need to be made for the UCDP to handle the additional volume of appraisals.
Likewise, the FHA could choose to continue to require the GSEs’ UAD file, or create its own proprietary version of the appraisal form.
In addition to the UAD form and UCDP, the UMDP includes a loan data file called the Uniform Loan Delivery Dataset and a recently announced new file, called the Uniform Mortgage Servicing Dataset.
The ULDD file replaces the proprietary file formats that Fannie and Freddie currently receive from lenders and becomes mandatory on July 23. Implementation has been set back by a series of delays, most recently in December.
While the FHA’s August Mortgagee Letter said it wouldn’t begin collecting the ULDD file “at this time,” previous statements by Ginnie Mae indicate that ULDD adoption is a future objective.
In December 2010, Ginnie Mae announced its plans to adopt the ULDD file, but set no timelines for implementation. To begin accepting the ULDD file, the GSEs had to update their individual loan data portals—Freddie’s Selling System and Fannie’s Loan Delivery—and before Ginnie Mae could begin accepting the file, it would likely have to do the same for its GinnieNET portal.