Appraisal Scoop

UAD Reporting Consistency - Clarification by FNMA and Steetlinks

The following StreetLinks document is re-posted from the WinTOTAL Users Group

On April 10th, Fannie Mae and Freddie Mac announced the publication of a new UAD Update document and an Updated UAD Specification Appendix D, which details the Field-Specific Standardization Requirements for compliance with UAD appraisal reporting. Additionally, StreetLinks' Executive Management Team has been in recent discussions with UAD experts from Fannie Mae regarding their early stage analysis of appraisals that have been delivered via the Uniform Collateral Data Portal (UCDP). As a result of our discussions, we have a few clarifications, which are also included in the Updated UAD documents, that Fannie Mae asked us to emphasize with our appraisal partners.

Fannie Mae is now able to pinpoint significant differences between reported data for a single comparable property or subject property that has been used across multiple appraisal reports.

In particular, they are concerned about information that changes from report to report when the same subject or comparable transaction is utilized by the same appraiser in two (or more) independent analyses.

For example, instances have been identified where a comparable property has been described in one report to have an Adverse View, while in a later report, completed by the same appraiser, the same comparable property transaction is described to have a Neutral View or Beneficial View. Similarly, Fannie has found that Quality Ratings or Condition Ratings assigned by the appraiser have changed for the same comparable property transaction from report to report. Finally, Fannie Mae has identified comparable property characteristics such as GLA, room count and other basic features that have changed significantly from report to report.

With the understanding that this information is now being closely monitored, it is important for appraisers to be very consistent in their reporting of property information or explicitly document the reason for changes to reported data when the same subject or comparable transaction is used in multiple analyses. Since the property characteristics for the subject should be described and rated as they existed on the appraisal's effective date, (or for a "subject to" report, as if the improvements/repairs had already been completed on the appraisal's effective date), and property characteristics for a comparable property should be described and rated as they existed at their time of sale; there are very few instances where the data should actually change from report to report. Only if the appraiser has discovered new information about the property as it existed on the relevant date, or if the property has been involved in a subsequent transaction would a change to how the property characteristics are reported be appropriate. In these rare situations, the appraiser should clearly document the new information which led to the reporting change.

As it relates to this issue, the UAD Update April 2012 document includes the following additional instructions:

Appraiser Selection of Condition and Quality Ratings In other documentation, the GSEs have previously communicated that the appraiser's selection of the Condition and Quality ratings must be based on a holistic view of the property and any improvements.

When selecting the Condition and Quality ratings, an appraiser must:

• Consider all improvements to determine an overall Condition and Quality rating. The appraiser should then select the rating that best reflects the property as a whole and in its entirety.
• Describe the subject property as of the effective date of the appraisal on an absolute basis, meaning the property must be rated on its own merits. This requirement also applies to any other rating or description, including the View and Location. The rating should not be selected on a relative basis, meaning it is not selected on how the property relates or compares to other properties in the neighborhood. Additionally, the Condition and Quality ratings for comparable properties must also be made on an absolute basis (again, each comparative property on its own merits), not on a relative basis, and reflect the property as of the date of sale of that comparable property.

When an appraiser selects a rating and/or description of the subject property for a sales transaction, the selected rating and/or description must:

• Remain the same when reflecting that specific transaction. For example, if a C4 rating is selected for the sale of the subject property, then that property remains a C4 when using that specific sale as a comparable in future reports. The same expectation holds true for ratings and descriptions of comparable sales; when a comparable is used in a subsequent appraisal, the ratings and descriptions of that property should not change from one appraisal to the next when it reflects the same sale transaction.

It is also important to note, however, that properties can have the same rating or description and still require an adjustment. For example, all water views may not be equal. In this instance, an adjustment should be made and explained in the comments section of the form or an addendum.

StreetLinks recognizes that there may still be some subjectivity in assigning quality and condition ratings, particularly when the appraiser believes that a property shares characteristics of more than one rating standard. However, as clarified by these updated Fannie Mae documents, there should always be consistency when the same appraiser is assigning the rating for a particular comparable transaction according to their own interpretation of the criteria involved.

StreetLinks would recommend utilizing the Comparable Database or Comparable Archiving function available in most appraisal forms software packages in order to keep a catalogue of all of the comparable properties that the appraiser has analyzed (along with their assigned ratings), so that they can reasonably verify that the property is being reported consistently between appraisal reports. This is particularly helpful for those situations when a comparable property may exhibit characteristics of more than one rating standard resulting in a "judgment call" on the part of the appraiser.

The UAD Update can be found at the UAD page on Fannie Mae's website at www.efanniemae.com/sf/lqi/umdp/uad/index.jsp by clicking on the UAD Update April 2012 (.pdf) link.

In order to strengthen your quality metrics with StreetLinks, please incorporate these clarifications within your UAD compliant appraisal reports on an immediate basis.

Source: StreetLinks

GSE's Update Uniform Appraisal Dataset (UAD)

Since the implementation of the Uniform Appraisal Dataset (UAD) in September 2011, Fannie Mae and Freddie Mac (the GSEs) have been monitoring the use of the UAD and working with lenders and appraisers to support the successful adoption of the new appraisal dataset.

To continue to aid lender staff and appraisers working with the UAD, and support the successful submission of the UAD appraisal report in the Uniform Collateral Data Portal® (UCDP®), today we are providing updates, clarifications, and reminders regarding the UAD.

The GSEs will provide future updates as needed. In support of the use of the UAD and successful submissions to the Uniform Collateral Data Portal® (UCDP®), the GSEs are providing this additional guidance for using the UAD

• New Uniform Appraisal Dataset Update resource document provides you with updates, clarifications, and reminders regarding the UAD and successful submission of the UAD appraisal reports to the UCDP.
• Updated UAD Specification Appendix D, Field-Specific Standardization Requirements includes additional information relating to the selection of Condition and Quality ratings, as well as additional information with respect to each condition rating.

Both of these documents, in addition to other UAD business resources, are available for you and your staff on FreddieMac.com.

FannieMae Communication: Important UAD Appraisal Instructions

This communication was sent to Direct FannieMae Vendors (REO Appraisal Vendors) and covers a number of important instructions required for properly submitting REO appraisals. Please read it carefully and retain it for your reference.

DOM / CDOM / Subdivision Name

The new UAD format does not provide fields for Days On Market and Cumulative Days On Market (DOM/CDOM) nor the name of the Subdivision, which we request for comparables.

Effective immediately, enter DOM/CDOM and Subdivision Name on two of the blank rows near the bottom of the comp grid:

Days On Market is the number of days since the last price change. Cumulative Days On Market is the number of days since the property was listed. When entering this information, use whole numbers separated by a slash, using no spaces. (As if you were typing a fraction.)

Examples:

30/100 = OK vs. 30-100 = Rejected (did not use slash)

30/180 = OK vs. 30 / 180 = Rejected (inserted spaces)

On the next line, write "Subdivision Name" and enter the name of the subdivision, if applicable.

Effective Age (Yrs) and Actual Age UAD instructs that if the age of the property is not known, then you are to estimate the age and use the tilde character (~), typically located left of the number 1 key, to show the date is approximate. This may cause a "Draft Not Acceptable" error within AppraisalPort. Please alert us via AppraisalPort if this error occurs, and we will accept the case.

For both Effective Age (Yrs) and Actual Age, enter a whole number (no decimal places) representing number of years.

Examples:

20 = OK vs. 19.5 = Rejected

~20 = OK vs. Approx 20 = Rejected

Remodeling and Renovations

Only include remodeling and renovation costs when there is extensive damage that will require many repairs where making these improvements in the process makes sense. Otherwise, Do NOT include these costs in your repair estimates which should include repairs needed to bring the property up to a typical condition for the neighborhood.

Additional Photos

Positive and negative external influences around the property may impact the estimate of value. To ensure all external influences are accurately documented, our new order letter will now require the following additional pictures:

• Picture of what is behind the subject and directly across the street
• A street scene view both directions and for a corner lot all 4 directions
• Aerial view of the subject and the surrounding structures for a few streets either direction

Any external influences and any positive or negative impact on value should be addressed in the appraisal.

UAD Photos

Include enough pictures to support the subject property condition rating with a special focus on bathrooms, kitchen and other improvements.

New Order Letter

We will soon be implementing a new Order Letter. The new letter is more streamlined, and intended to provide you with the key points and tips to complete your assignment according to Fannie Mae process and format.

Source: FannieMae

Fannie Mae Selling Guide Update SEL-2011-11: UAD and Uniform Collateral Data Portal Requirements

The affected topics (and specific paragraphs) are noted for each policy change. Lenders should review each topic to gain a full understanding of the policy changes. The updated topics are dated October 25, 2011.

Uniform Appraisal Dataset and Uniform Collateral Data Portal Requirements

On July 26, 2011, Fannie Mae issued Announcement SEL-2011-06, Selling Guide Updates, which contained information concerning the Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP®). The UCDP is the joint portal through which lenders will be required to submit electronic appraisal reports to Fannie Mae and Freddie Mac. The UCDP was made available on June 27, 2011, for customers and their designated agents to begin to submit selected appraisal data files.

With this update of the Selling Guide SEL-2011-11 (10/25/2011), Fannie Mae is clarifying the following requirements:

• Lenders must ensure all applicable appraisals have been completed in compliance with Appendix D of the Fannie Mae and Freddie Mac Uniform Appraisal Dataset Specification (“UAD Specification”). (Previously, the Selling Guide referred to the entire UAD Specification.) Appendix D lists the requirements for the data that must be included in specific forms and how the data must be communicated on the appraisal report.
• In addition to submitting the required Fannie Mae appraisal reports forms to the UCDP, lenders must also receive a “Successful” status from UCDP before the delivery date of the mortgage loan to Fannie Mae.

Updated Selling Guide Topic

B4-1.2-05, Requirements for the Appraisal Report

Effective Dates

As a reminder, the following effective dates are applicable:

• The four UAD appraisal report forms with effective dates on or after September 1, 2011, must be completed utilizing Appendix D of the UAD Specification when reporting the results of an appraisal for a conventional mortgage loan.
• For all conventional mortgage loans for which an appraisal report form is required and with an application date on or after December 1, 2011, and a delivery date on or after March 19, 2012, selected appraisal report forms, including all exhibits, addenda, and photographs, must be submitted to the UCDP and receive a “Successful” status from UCDP before the delivery date of the mortgage loan to Fannie Mae.

In addition, the Selling Guide has been updated as follows:

• A2-5.1-03, Electronic Records, Signature, and Transactions (Uniform Collateral Data Portal™(UCDP™)): Information concerning the UCDP has been added to this topic.
• B4-1.4-12, Appraisal Report Review: Actual and Effective Ages of the Improvements: This topic has been changed to clarify that whenever adjustments are made to an appraisal for the year the dwelling was built, the appraiser must provide an explanation for the adjustments.
• B4-1.4-18, Appraisal Report Review: Lender Review of the Adjustment Grid (Proximity to Subject Property and Location, Date of Sale and Time Adjustments): The description of the proximity of the comparable sales to the subject property must now be reflected in “miles” and include the applicable directional indicator. This topic also requires the lender to provide the month and year of the sales contract and settlement or closing for comparable sales.

Effective Date

These changes are effective immediately.

Source: https://www.efanniemae.com/sf/guides/ssg/2011annlenltr.jsp

VA Adopts Uniform Appraisal Dataset (UAD) - Effective Immediately!*

Veterans Benefits Administration Circular 26-11-14
 Department of Veterans Affairs September 26, 2011
 Washington, DC 20420

Download 26_11_14
 
UNIFORM APPRAISAL DATASET (UAD)
 
1. Purpose. The purpose of this circular is to announce the adoption of Uniform Appraisal  Dataset (UAD) compliant appraisal reports for Department of Veterans Affairs (VA) Loan Guaranty Program purposes.
 
2. Effective Date. * Effective immediately, VA fee appraisers may, as an option, use UAD compliant versions of the forms. Effective January 1, 2012, VA appraisal reports utilizing Fannie Mae Forms 1004, 1073, 1075 or 2055 must be UAD-compliant.
 
3. Background
 
a. To improve the quality and consistency of appraisal data on loans delivered to the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency (FHFA), have developed the UAD. The UAD defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and response options for a key subset of data fields. The UAD will apply to the following most commonly used residential appraisal report forms (Fannie Mae / Freddie Mac form numbers listed below), which are also approved for VA appraisal use:
 
(1) Uniform Residential Appraisal Report – 1004/70
 (2) Individual Condominium Unit Appraisal Report – 1073/465
 (3) Exterior-Only Inspection Individual Condominium Appraisal Report – 1075/466
 (4) Exterior-Only Inspection Residential Appraisal Report – 2055/2055
 
b. Appraisal software vendors have incorporated the UAD requirements into their form software that is currently available on an industry-wide basis. Although only appraisal reports for conventional mortgage loans sold to Fannie Mae or Freddie Mac are required to be completed in compliance with the UAD at this time, it appears that UAD will become an industry standard, since UAD has been adopted by FHA.
 
c. To prepare for the adoption of UAD by VA, Fee Appraisers should become familiar with the modified appraisal forms, including the UAD field specific requirements detailed in Appendix D of the Uniform Mortgage Data Program, and which is posted on the web sites of Fannie Mae and Freddie Mac at https://www.efanniemae.com/sf/lqi/umdp/uad/index.jsp.
 
(LOCAL REPRODUCTION AUTHORIZED)
 
4. Details. VA is moving to require UAD-compliant appraisal reports to remain in step with changes in appraisal reporting, to support consistency in appraisal reports, and to ensure the acceptability of VA appraisal reports within the industry. Most aspects of this change to UAD require only clarification of existing policy or procedure; however, there are three actual changes to standing policy or procedures that must be noted. Reference Section 6 of this Circular for those changes to policy and procedure.
 
5. Points of clarification on VA appraisals in relation to UAD requirements
 
a. VA Fee Appraisers will continue to complete VA appraisal reports in accordance with the requirements of the VA Lender’s Handbook (VA Pamphlet 26-7, Revised) and instruction and guidelines from VA. Fee Appraisers are reminded that completion of the data fields of the appraisal report does not relieve them of the duty to provide adequate explanations in the addendum to provide clarity and justification.
 
b. Appraisal reports will continue to be quality-reviewed for compliance with VA requirements.
 
c. While the UAD may allow for the use of unsettled sales in the sales comparison grid, VA requires that only settled sales be used.
 
d. UAD requires appraisers to provide specific information regarding remodeling in the past 15 years; VA expects Fee Appraisers to recognize and describe remodeling or updating and to make appropriate adjustments. On VA appraisals, Fee Appraisers should also report UAD information concerning the remodeling if it is available in the “normal course of business” within VA timeliness requirements for completion of the appraisal.
 
6. Changes to VA policy and procedures for VA appraisals in relation to UAD requirements. To allow for acceptance of appraisal reports in compliance with UAD, VA policy regarding entries in appraisal report data fields which appear to conflict with UAD are changed as follows:
 
a. The requirement that only the “Department of Veterans Affairs” be entered in the Lender/Client field of the appraisal form is rescinded. Instead, the lender’s name will be entered in this field, as well as the “Department of Veterans Affairs” as the Client of this field.
 
b. The requirement that “Intended User: Any VA Approved Lender” be entered in the Address field for the lender is rescinded. Instead, the address of the lender will now be entered in this field.
 
c. The requirement that “Any Qualified Veteran” be entered in the Borrower field of the appraisal report is rescinded. The name of the Veteran purchaser will be entered as the borrower
 in this field.
 
7. Rescission: This circular is rescinded October 1, 2014. By Direction of the Under Secretary for Benefits
 
Michael J. Frueh
 Acting Director
 Loan Guaranty Service

Will the new UAD appraisal standards result in lower mortgage rates?

According to Peter G. Miller's 9/6/2011 HSH Blog article, "New appraisal standards to impact mortgage rates", the answer is YES!

Mr. Miller says, "They may allow us to unearth faked, falsified and incompetent appraisals and thus prevent loan fraud, illegal flipping and bad mortgage investing. And such improvements in the valuation process might actually lead to lower mortgage rates by removing excess risk from the marketplace."

 

He feels that illegal flipping and "faked appraisals" were key factors in the mortage meltdown and that, "Tighter appraisal standards [will] make it easier to catch cheats and, also, to drive bad appraisers and lenders out of business."

He concludes that "the new appraisal standards will allow lenders and government officials to quickly review past appraisals to see if they conform to national standards. If yes, fine. If not, lenders are likely to provide less business (or no business) to the appraiser with the bad rep."

Fewer cheats ------> Reduced lender risk  -----> Lower mortage rates?

What do YOU think? 

• Do you think that appraisers and flipping were the cause of the mess that we're in? 
• Will the UAD actually prevent bad mortgage investing? 
• Will improvements in the valuation process really lower mortgage rate?  

Source:  http://www.blog.hsh.com - article   [Thanks to Bill Cobb for posting this article to his FB page Real Estate Appraiser Tips]

PR: DartAppraisal.com Offers Checklist for Uniform Appraisal Dataset (UAD) Compliance

PR: TROY, MI--(Marketwire - Sep 7, 2011) - Residential appraisers seeking to fulfill requirements of the new Uniform Appraisal Dataset (UAD) will find the new UAD checklist available from DartAppraisal.com to be a helpful tool in compliance.

Download Dart UAD Appraiser Checklist

 

The UAD checklist, also available at www.dartappraisal.com/media/appraiser_checklist.pdf, contains a quick reference of information required for UAD-complaint appraisals, including 38 specific line instructions and nearly 50 common abbreviations. Checklist categories include Timeframes, Location Factors, View Factors, Sale Type, Financing Type and more.

DartAppraisal.com recently announced its full coordination of efforts in compliance of the UAD to properly manage appraisals (1004 URAR, 1073 Condo, 2055, and 1075 reports with an effective date of 9/1/11 or later). Comprehensive infrastructure updates were required, and specific enhancements made to DartAppraisal.com's exclusive technology and data structure guarantee that appraisal reports adhere to UAD regulations.

DartAppraisal.com is a leading independent provider of nationwide residential real estate valuations. The Troy, Michigan-based company provides appraisal management services, automated valuation models (AVM's), and other custom valuation solutions for hundreds of clients. www.DartAppraisal.com.

New GSE Appraisal Database to Tighten Scrutiny on Mortgage Lenders (Appraisers)

According to the source post: HousingWire.com "New GSE appraisal database to tighten scrutiny on mortgage lenders" -

Appraisers began submitting electronic property data for mortgages sold to Fannie Mae and Freddie Mac under new guidelines that took effect Thursday (9/1/11).

As a result, the government-sponsored enterprises will be building a massive database of every appraisal backing every mortgage sold to them. But the firms, which — combined with the Federal Housing Administration — guarantee or insure 95% of the entire mortgage market, have been silent on what they plan to do with the data.

This Uniform Appraisal Dataset defines the new ways appraisals will be submitted. The GSEs are also developing a Uniform Collateral Data Portal, where the appraisers can make the submission. The UCDP went into voluntary effect June 27 and the use of it will be a requirement starting March 19, 2012.

Rich Andreano, a partner at the financial law firm Patton Boggs told HousingWire those in the industry are wary of this new vault of appraisal information.

"Once you standardize it and automate it, it makes it easier to study a group of loans. Someone can conduct the analysis and say, 'Hey, you know we took a look at all the data and we noticed a trend that is troubling," Andreano said. "They can look at where appraisals are coming, if they're coming from certain areas, which appraisers are getting work, and they can raise questions that suggest further due diligence is needed."

Lenders know that with access to this kind of data, the GSEs will have an easier time enforcing repurchase and warranty claims. The lender can be made aware of a possible appraisal problem before the loan is even closed. If the lender goes ahead and sells the mortgage to Fannie or Freddie anyway, the risk of having to repurchase that mortgage if it slips into nonperforming status skyrockets.

Click here to read the complete article by Jon Prior.  Follow him on Twitter @JonPrior

Video: Field by Field Video Tutorial - Uniform Appraisal Dataset (UAD) in a URAR Residential Appraisal

Have you waited until the last minute to get up to speed on the Uniform Appraisal Dataset requirements that go into effect today (9/1/2011)?   This video will help you get from 0-60 in about 42 minutes!

This video walks you through ALL of the UAD-impacted fields of the URAR.

All of the appraisal software developers have done there best to implement the new UAD requirments, but there are still confusing parts of the GSE rules. In fact, according to Joel Baker of a la mode, inc. "Most of the questions we get have little, if anything, to do with the software." This video helps bring clarity to those confusing parts.

NAA Update Letter: Fannie/Freddie UAD Effective Start Date Unchanged

 

1. Below is a complete copy of an email from Bob Murphy at Fannie Mae. It is provided as an urgent matter.

2. Fannie/Freddie have recently updated their UAD instructions, primarily to add in most sections that the appraiser may/should add comments/clarifications when necessary. The report doesn't change except for the standardization. The UAD does not substitute for text comments in either the comments section or addenda. https://www.efanniemae.com/is/appraisers/index.jsp?from=hp  

From: Murphy, Robert Sent: Friday, August 26, 2011 9:47 AM

Subject: UAD

We are reaching out to you to help us reinforce the GSE's September 1, effective date for Uniform Appraisal Dataset (UAD) forms.

Yesterday, several news outlets published articles incorrectly reporting that the UAD effective date was pushed back to January 2012. The GSEs (Freddie Mac and Fannie Mae) have NOT changed their UAD effective date of September 1, 2011. The January 1, 2012, effective date is the adoption date for FHA, which recently announced it will adopt the UAD and two of the UAD compliant appraisal reporting forms. More information on FHA's adoption of the UAD is available in their Mortgagee Letter 2011-30.

If you should receive any inquiries regarding the press coverage, we would appreciate your help in sharing the following key message:

• The GSEs have not changed their UAD effective date. September 1, 2011 remains the effective date for appraisal reports to be completed in compliance with the UAD for conventional mortgages sold to the GSEs.
• The January 2012 date is the effective date for the use of the UAD for FHA. More information on FHA's adoption of the UAD is available in their Mortgagee Letter 2011-30.

Additionally, we are posting reminders on our Websites about the September 1 effective date - and wanted to ask you to help us and do the same (if you have not already). A suggestion is below. "Reminder: September Uniform Appraisal Dataset Effective Date is Approaching - Fannie Mae and Freddie Mac are requiring UAD forms for all appraisal report forms with effective dates of September 1, 2011 or later."

Thank you again for your support in helping to prepare the industry for these changes.

The Joint GSE UAD Team

Fannie Mae / Freddie Mac

Robert T. Murphy, Mark Simpson, Lisa Dorsey, Tim Dick

Source: George R. Harrison, MAA, NAA President