Appraisers will be following new procedures for gathering and reporting property data starting Thursday, as Fannie Mae and Freddie Mac move forward with the appraisal requirements of their Uniform Mortgage Data Program.
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Beginning Sept. 1, the valuation reports appraisers create for properties that are collateral for mortgages intended for sale to either government-sponsored enterprises must be generated in compliance with the Uniform Appraisal Dataset.
The UAD is an XML file format for the four standard appraisal reports currently required by the GSEs. It also sets a standard for the responses that appraisers can input in the appraisal forms. Together, the UAD sets standards for both the structure of the electronic appraisal forms, as well as the acceptable answers for many points in the appraisal report, like property condition and quality.
Appraisers have typically been given leeway to complete appraisal forms however they chose. But that leads to inconsistency from one appraisal to another—an appraiser who describes a property’s condition as “average” may mean the same thing as an appraiser who puts “fair” or “good” on a form, but there’s no way to differentiate between the terms.
The UAD specification sets standard definitions for the data appraisers to put on the forms. In the example of property condition, appraisers must choose an alphanumeric rating between C1 and C6 and each rating has a specific corresponding definition.
Vendors that provide appraisal form generation software have been working this year to create the technology that allows appraisers to create the new reports. Appraisers will now be required to complete the report with that software and submit it to their lender client for all valuations with an effective, or inspection, date of Sept. 1 or later.
The earliest steps of the GSE initiative to collect appraisal reports began in 2009. But those efforts, along with the loan data delivery components of UMDP, have been marred by delays and setbacks. When the GSEs set their latest timeline in December 2010, many mortgage industry participants criticized the delay and expressed concern about whether the latest deadlines would change—and more importantly, whether lenders would take the new timeline seriously.
But since the timeline’s December reset, the UMDP has stayed on track and concern over further delays has subsided.
In the short-term, lenders will retain the UAD-compliant appraisal forms in the loan file just as they have done in the past. But for loans with application dates on or after Dec. 1 and delivered to the GSEs on or after March 19, lenders and their appraisal management company agents will be required to electronically submit the UAD appraisal forms to Fannie and Freddie via the Uniform Collateral Data Portal.
The UCDP soft-launched for trial use in June ahead of its mandatory use. Appraisal technology vendors are busy deploying direct integrations with the UCDP to enable lenders and AMCs to more easily submit batches of appraisal reports and other functions.
Once delivery of full, electronic, UAD-compliant appraisal reports to the UCDP is mandatory, it will mark the first time that Fannie and Freddie will require appraisals to accompany every mortgage they purchase.
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