Just to give you all a little color behind and what we have already done here to make sure we are compliant with it: UAD is simply the new format that all appraisals have to be done on. Appraisal companies have been updating their software to incorporate this. You will be able to tell if your form is a new one by having the new version date in the bottom of the appraisal, middle of the form.
One of the major changes is how the appraisers now rate condition and quality. They will no longer use Good/Avg/Fair but will use a rating system of 1-6 with 1 being the best, 6 being the worst.
Agency guidelines will call for the property to be a 4 or less in order for it to be eligible for sale. From what I’m told, the majority of the appraisals will be in the 2-4 range. In order for the appraisal to be accepted by the agencies, it must be sent through both Freddie and Fannie’s portal via the web, that will verify the format is correct and if it is not it will tell us and the appraiser will have to fix.
It does not tell us the quality of the appraisal work, just if the formatting is correct. I have successfully signed up with both agencies and will start testing these early next month when we start to get the new format.
We will be developing a process around this as we go through the next few months and will provide written policies once determined. By December, all loans must be on the new formatted appraisal and by March of 2012 all loans sold to the agencies must have been run through and accepted by the portals (both are required, even if we know it’s going to Fannie).
This should have zero impact on valuation, how an appraiser comes to value, etc. I know there has been some chatter out there in the real estate community about the new appraisal changes. From the feedback I’ve received from a number of appraisers, this will actually make it a bit easier for them because it takes some of the guesswork out of what is typically a subject thing (like quality of construction, condition, etc). There are pretty specific guidelines used to determine what number should be assigned to a particular aspect of quality or condition.
This is only required for agency loans on SFR and PUDs at this time.
HUD approved this recently (like today) so you will see implementation of this on FHA loans within the next 6-12 months, with the other various types of properties.
Any questions, let me know