PMC Mortgage Lender's Blog

September 1, 2011 was D-Day for appraisers, or actually UAD-Day.

That is the date the government sponsored entities (GSEs), Freddie Mac and Fannie Mae, will only accept appraisals which conform to the Uniform Appraisal Dataset (UAD) format.

At the direction of their oversight agency, the Federal Housing Finance Agency (FHFA), the goal for implementing the new data format is to improve the quality and consistency of appraisal data on conventional loans delivered to the GSEs.

Appraisers all over the country are now faced with learning and using new data fields with standardized definitions and responses for key subset fields.

“Any appraisal that’s not UAD compliant will be rejected after September 1,” says Michelle Bradley, Pennsylvania Association of Realtors’ chair of Specialized Practice Issues Subcommittee and an appraiser trainer. “I think there’s going to be a huge learning curve to begin using the new, standardized abbreviations.”

Realtors, lenders, underwriters and other industry professionals will need to get accustomed to the new standardized verbiage of UAD-compliant appraisals.

“We’re no longer allowed to use words like ‘fair’ or ‘good’ to rate a property,” explained Bradley, “appraisers will be required to use condition (C1-C6) and quality (Q1-Q6) ratings based on the provided definitions.”

Realtors will need to get up to speed quickly and become familiar with the criteria for the standardized ratings. For example, before UAD “the difference between remodeled and updated, and location and view were often considered synonymous, but they are not,” Bradley stated.

“Now you’ll need to know the criteria for a kitchen or bath remodel, what was done and when it was completed, because that has to be included in the standardized fields in the appraisal form,” she said.

The new normal for appraisers is that every appraisal they complete can be tracked. “If two appraisers both appraise the same property and cite different condition and view ratings, Fannie and Freddie will have the ability to track that information and may question why,” Bradley added.

Additional interior and exterior photos may be required and some lenders may require aerial maps depicting the property and surroundings, according to Bradley.

In spite of attempts by industry organizations such as the Appraisal Standards Board (ASB) as well as from the Association of Appraiser Regulatory Officials (AARO) to delay implementation, the UAD is a go.

On August 22, 2011, the FHA officially adopted the UAD and will implement the standard on January 1, 2012 according to Mortgagee Letter 2011-30.