GSEs New Appraisal ProgramsUniform Appraisal Dataset – UAD

Uniform Collateral Data Portal - UCDP

Presented by: Brian Coester and Jeff Jurin

Seminar Overview

Uniform Appraisal Dataset – UAD

• What is it• Examples

• Business processUniform Collateral Data Portal – UCDP

• What is it• Registration

• Players• Business process

In-House or Outsource Solutions• Out Source to AMC

• In-house considerations

Questions and Answers

The “Point” of This Seminar

There is no

“Point”

When is a Period not a Period?

With the new UCDP and UAD screening you are going to have to check EVERY "point" (or punctuation 'period‘) on the appraisal report before the final delivery to Fannie Mae. The UAD does not use the customary 'period' after abbreviations. So the old adage: "you must cross your ‘t’s' and dotting your ’i’s’” is now "cross your ‘t’s’ and drop your periods."

When is a Period not a Period?

That little period is going to get your appraisal rejected and you will not be able to close your loan or deliver the file. Note: That little 'period' comes into play when recording dollar amounts. There is no more 'cents' only whole dollar amounts allowed in “price” fields. Therefore, that little period is going to get your appraisal rejected. To remember this rule, think "It makes 'sense' for ‘NO CENTS’.”

Background

Background

• Fannie Mae and Freddie Mac have traditionally only kept the appraised value and appraisal date on a property profile.

• They wanted to capture “all” the data but realized they had to standardize the way appraisal data is reported to do so.

• The UCDP and UAD is the standardization of appraisal data.

• Similar to DU and Loan Prospector

Changes over the past year

HVCC is abolished and now

Dodd-Frank

Codified Appraisal

Independence with Dodd-

Frank and AIR

Reasonable &

Customary fees

AMC licensing

No BPO on purchases backed by

Government

UCDP And UAD

Key Acronyms• Mortgage Industry Standards Maintenance

OrganizationMISMO• Federal Housing Finance AgencyFHFA• Loan Quality InitiativeLQI• Collateral Data DeliveryCDD• Uniform Mortgage Data PortalUMDP• Uniform Appraisal DatasetUAD• Uniform Collateral Data PortalUCDP• Summary Submission ReportSSR

Key Dates

September 1, 2011

December 1, 2011

March 19, 2012

Key Dates (Cont’d)

• Appraisal report forms for all conventional mortgages delivered to the GSEs on or after March 19, 2012, must be submitted to 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

What is Really Changing

• Forms (similar but slightly different)• PDF Portability (First Generation Required)• Standards in conditions, terms, and “form”

data• Some logistics on how the appraisal is

handled

New Forms and Examples

Forms (*Indicates UAD Forms)

• (Fannie Mae 1004/Freddie Mac Form 70)* Uniform Residential Appraisal Report

• (Fannie Mae 1004C/Freddie Mac Form 70B) Manufactured Home Appraisal Report

• (Fannie Mae 1025/Freddie Mac Form 72) Small Residential Income Property Appraisal Report

• (Fannie Mae 1073/Freddie Mac Form 465)* Individual Condominium Unit Appraisal Report

• (Fannie Mae 1075/Freddie Mac Form 466)* Exterior-Only Individual Condo Unit Appraisal Report

• (Fannie Mae 2055/Freddie Mac Form 2055)* Exterior-Only Inspection Residential Appraisal Report

What Will Change for Underwriters

• Code Review instead of type review, lots of Acronyms to learn.

• Will have to rely on technology to ensure appraisals are “technically” correct.

• What they are comparing to will be different in the past.

• Will be a “Pass” or “Fail” type submission to UCDP based on the Data Set.

Examples

• Site and AreaAreas less than one acre should be designated in whole numbers only and square feet. For an area greater than an acre, it must be measured in acres and up to two decimals. The unit of measure should be indicated as “sf” or “ac”.

Right: 23569 sf, 1.34 ac :: Wrong: 48,560 sf, 4 acres

Examples

• Date Formats: MM/DD/YYYYUnless otherwise stated, date formats should be entered as MM/DD/YYYY. In the case where only a year format is required, like Tax Year, a 4 digit year is required.

Right: 09/01/2011 :: Wrong: 9/1/2011 or 9/1/11

Examples

• Estimation of years: ~ Must proceed the estimationWhen you can’t provide an exact age or year a property was built through the normal course of business, an estimate is acceptable. However, a tilde (~) has to proceed estimates of age or year built.

Right: ~ 1948, ~ 42 :: Wrong: 1948 (estimate), est. 42

Key Abbreviations

Abbreviation Full Name Fields Where Abbreviation May Appear

Ac Acres Area, Site

AdjPrk Adjacent to Park Location

AdjPwr Adjacent to Power Lines

Location

A Adverse Location & View

ArmLth Arms Length Sale Sales of Financing Concessions

ba Bathrooms (s) Basement & Finished Rooms Below Grade

Br Bedroom Basement & Finished Rooms Below Grade

Cash Cash Sales or Financing Concessions

CtySky City View Skyline View View

CtyStr City Street View View

Definitions of Condition

• C1 – The improvements have been very recently constructed and have not previously been occupied. The entire structure and all components are new and the dwelling features no physical depreciation.*

• C2 – The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently completely renovated and are similar in condition to new construction.

• C3 – The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well maintained.

Definitions of Condition

• C4 – The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The dwelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems and cosmetic repairs. All major building components have been adequately maintained and are functionally adequate.

• C5 – The improvements feature obvious deferred maintenance and are in need of some significant repairs. Some building components need repairs, rehabilitation, or updating. The functional utility and overall livability is somewhat diminished due to condition, but the dwelling remains useable and functional as a residence.

• C6 – The improvements have substantial damage or deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements. The improvements are in need of substantial repairs and rehabilitation, including many or most major components.

Traditional Report

New Format

UAD Helper

UAD Helper

UAD Helper

UAD Helper

How it Matches Up

• C1• C2• C3• C4• C5• C6

• New• Renovated• Good• Average• Fair/Poor

UAD Helper

UAD Helper

What Appraisers See

Forms

Forms (Cont’d)

Forms (Cont’d)

Forms (Cont’d)

Forms (Cont’d)

Forms (Cont’d)

Forms (Cont’d)

Delivery of the File

Accessing UCDP

Accessing UCDP

• Either an XML data stream (output from appraisal forms software) with an embedded first-generation PDF file or a first-generation PDF file without the corresponding XML data must be submitted to UCDP

• MISMO 3.0• All XML files must include an

embedded PDF file that includes all appraisal exhibits, addenda, and photographs, including the Fannie Mae Form 1004MC/Freddie Mac Form 71.

Quality Control

• UCDP will go through a series of checks, including a UAD Compliance Check. Appraisals that pass all checks will receive a “Successful” status from UCDP

• All appraisals successfully uploaded to UCDP will receive a Submission Summary Report (SSR) for each GSE submission.

• An appraisal must be submitted to UCDP and receive a “Successful” status on the SSR before the loan is delivered to the GSE.

Cost

• If the appraisal is only available in PDF format, as a convenience to users, a conversion tool will be available in UCDP for a fee (independently offered by Veros Real Estate Solutions – the technology vendor supporting UCDP).

• There will be CLICK fees for submitting a file

Example of PDF and XML Conversion

Turning This….. To that

Turning This….. To that

Accessing UCDP Cont’d

Lender

Lenders Designa

ted Agent

A lender agent is an entity that a lender authorizes to perform functions within UCDP such as uploading appraisals and

evaluating results.

Registration Facts

Please note if your organization delivers loans to both GSEs, the primary lender administrator must be the same individual for both GSEs. The lender administrator is responsible for: • Establishing access to UCDP for the lender, confirming a

relationship to one or both GSEs, setting up their organization’s profile, and adding additional users.

• Initiating the setup of other lender administrators in the organization for the ongoing maintenance of UCDP access.

• Authorizing lender agents to submit appraisals on behalf of their organization to UCDP.

UCDP Email

UCDP Home Page

Accessing UCDP

The 3 Types of UCDP Users:1. Administrator: In order to use the portal, lenders must determine an appropriate administrator. If the lender delivers appraisals to both Freddie and Fannie, then that administrator must be the same for both entities. This person has authority by Freddie Mac and Fannie Mae to manage access of all users as well as submit files, upload corrected files, review reports, and access personal user info.2. Read-Only User: This user is selected by the Admin and focuses on the reporting aspects of the UCDP; ensuring reports are getting through successfully. The Read-Only User has the ability to track the automated reports and access his/her personal profile.3. Lender Agent: The Lender Agent is an entity or user that has been authorized and invited to the UCDP by the Administrator. This is where the appraisal management company (AMC) comes in. If a lender decides to forgo the option to upload the appraisal report themselves, then their Lender Agent (typically their approved AMC) may have direct access to the portal for uploading and re-uploading appraisal reports, as well as evaluating result

Appraisal Submission and Status Updates

Once the Administrator or Lender Agent uploads the appraisal report it will go through a series of checks, including a UAD compliance check as well as an address confirmation review. There are 4 different statuses that can occur after uploading the appraisal file:1. In Progress: Once the document is uploaded, the administrator will receive an

upload confirmation report that will most likely read “In Progress” due to the fact that it may take some time for the UCDP to analyze the data file and render the actual results.

2. Successful: The status will read “Successful” when the UCDP analysis is complete.3. Not Successful: This means the UCDP encountered a fatal error resulting in failure

to process the appraisal data file. The user must override the error, If appropriate, or submit a corrected appraisal data file.

4. Rejected: The most unfortunate of statuses, Rejected means the UCDP cannot nor will it conduct further processing. This can happen for various reasons including the submission of a duplicate file, the file size is too large, or the file format is improper. The user must request and submit the corrected appraisal data file to proceed.

Appraisal Finding Report

Appraisal Failure Report

Fannie Mae, Oct. 18 Update

The UCDP includes a UAD Compliance Check that currently results in warning messages only and does not affect the successful submission of appraisals to the UCDP. Receiving UAD Compliance Check warning messages in connection with a “Successful” status in the UCDP does not automatically render the appraisal report unacceptable

Appraisal Submission and Status Updates

Overrides, From Unsuccessful to SuccessfulWhen “Not Successful” or “Rejected” the status can also be referred to as a Hard Stop. A Hard Stop means that the report is rejected for errors or non-compliance with submission requirements.

There are several options to cure the hard stop, depending on the reason for it as provided by the GSE on the View/Edit page of the UCDP portal. Here are the options:

1) The UCDP automatically approves an override.2) The administrator can manually request an override, if available.3) The Admin obtains and uploads a corrected appraisal data file.

Appraisal Submission and Status Updates

When the override is accepted, the status will change from Not Successful to Successful. If it is denied, then a link will appear

requesting re-submission of the file.In order to confirm delivery acceptance the Administrator must

receive a successful status message including a doc file ID number which comes with the Submission Summary Report (aka SSR).

SSR

SSR - Storage

• SSR will have to be stored in the loan file with the entire package.

• If you ever intend to sell the loan the SSR should be received before closing.

• Some LOS will have the ability to store the file.

• This is the “golden ticket” for the appraisal

Final Thoughts

UAD• Accept the changes they have

already made• The train has left the station

Lenders• Solve the submission process UPFRONT

i.e. receive the appraisal in XML, MISMO format from get go

• Run SSR upfront from get go

Links, Tutorials, Webinars

https://www.efanniemae.com/sf/technology/commitloandel/ucdp/index.jsp– UCDP Overview– UCDP FAQs– Fannie Mae Monthly UMDP Yardstick

Solutions

Our Process

Outsourcing

• Some AMC’s will be ready for the UCDP and UAD Changes, most will not.

• Trust but verify, they can not use a “manual review” for this without charging much more.

• Want to know their “automated” review rules.• If they have their own software you need to know where they

are getting their UCDP software reader from. (not doing it themselves)

• Your going to set them up as a “Lender Agent” • Work out logistics of handling these files with them upfront.• They should handle the UCDP submission and revisions until

the file receives an SSR.• You want a back up just in case they drop the ball or get

overwhelmed by this process.

In-House

• Vero’s - $4.50 per file to convert from PDF to MISMO XML, you would upload the file form their.

• Mercury Network – Has ability to check the appraisers file if the appraiser uses alamode and embed the XML, you would upload from their.

• Will have to rely on appraisers to have a UAD Checker in their software.

• Will have to have underwriters manually check every file to ensure UCDP and UAD Compliance.

• Feedback reports will become your best friend.• Will be a DU or Loan Prospector type function “pre

closing”

ABOUT COESTER

PAST• Founded in 1970 by Timothy

D. Coester.• Was trained and mentored by

industry legends David Lenhoff and Donald Boucher both former President’s of the Appraisal Institute.

• Highly Respected consulting style valuations.

PRESENT• National Service Provider providing

valuation services in US, Puerto Rico and Caribbean.

• Leading Provider of Appraisals, BPO’s, Reviews and Repurchase Rebuttals.

• First to introduce industry smart phone application and salesforce.com cloud based platform

Company History

Overview of Products and Services

• Residential and Commercial Valuations

• Broker Price Opinion’s• Automated Valuation Model

(AVM)• Loan Repurchase Rebuttals

for Credit and Appraisal Related

• Due Diligence on loan pools• REO Valuation’s

• Appraisal Management Service– Compliant with Dodd-

Frank and industry regulations

– Licensed as AMC in applicable states

– UCDP Review and Delivery

• All accounts are managed are assigned to a dedicated account manager.

• Order desk which assigns, collects payment and ensure order is placed with proper appraiser .

• Account Managers the manage the file from receipt to final completion and are dedicated by client.

• Quality Control department handles all QC requests and does reviews, reconsiderations and revisions.

• We have a team of specialist on staff and under contact to at a moment notice can handle almost every issue.

Account Management

Technology

Technology

Full Service and Self Service

Full Service and Self Service

Full Service and Self Service

Quality Control Process

Initial Error Review – Vendor Upload•UAD Error Review and USPAP 1,600 Point Auto Review•Automated Check for Basic Information Errors

Manual Review For Quality – Staff Appraiser•Staff appraiser reviews report line by line to ensure quality.•Focus on comments, adjustments, sales info and lender comments.

Supplemental Info Review – AVM’s, MLS•Reviewer pulls sales, listings, MLS data or runs AVM to verify value.•Detailed notes are taken and submitted with the appraisal report to the client.

Guarantee of Value – Appraisal Inspector•Additional Licensed staff or fee appraiser contacted to review file•Information pulled to confirm then appraisal is conditioned before submission•Not required for every file

Supplemental Review-Reviewers Notes

Supplemental Review-Reviewers Notes

Supplemental Review-Reviewers Notes

Supplemental Review-Reviewers Notes

Supplemental Review-Reviewers Notes

Questions?

Q & A

Thank You

Thank you for attending

Brian C. CoesterBcoester@coesterappraisals.com

Jeff JurinJJurin@coesterappraisals.com

www.coesterappraisals.com