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In case you weren’t aware the format of an appraisal report is about to0 change again. Is it for the better or worse? Either way it is going to create a whole bunch of confusion in the beginning and make things a whole lot harder with Appraisal Management Companies that aren’t regulated and have no idea what this is all about. Anyway, I read an interesting article that I thought I would like to share with all my long time customers so I am posting it to my blog. Feel free to comment on it and share your thoughts with me.

UMDP/UAD: Road to Ruin?

By Andy Anderson

The Uniform Mortgage Data Program (UMDP) is mandated by Fannie Mae and Freddie Mac (GSEs) under the direction of their federal regulator, the Federal Housing Finance Agency (FHFA). As every appraiser knows by now, these mandates include new methods and requirements for completing appraisal reports and for the delivery of loan packages and appraisal reports. They take effect September 1, 2011. These new requirements are in the best interests of Fannie Mae and Freddie Mac, not the American taxpayer.

The United States is experiencing financial instability due to the lack of enforcement of lending guidelines and quality control of regulations and review policies that were already in place. The failure of the Government Sponsored Entities (GSEs), lenders and investors to "follow the rules" is at the heart of the economic crisis we now find ourselves in. This is NOT the time for these types of dramatic changes in lending and appraisal quality control and delivery requirements. What is and will continue to be needed are experienced and educated underwriters and review appraisers who can recognize a reliable loan package and a credible appraisal report and make good business decisions regarding them.

Automated Reviews

The new Uniform Mortgage Data Program (UMDP) and the Uniform Appraisal Dataset (UAD are the beginning steps toward the automated review of individual loan packages and appraisal reports. The Uniform Loan Delivery Dataset (ULDD) requirement assures future income and “job security” to MISMO and possibly the GSEs but will generate additional cost and expense to the consumer/tax payer, as the GSEs continue to request more financial assistance from Uncle Sam to fund the changes. When implemented, the faster and easier methods of review will continue to fuel the economic crisis and financial instability of our nation.

The new changes and mandated regulations include:

· UMDP – Uniform Mortgage Data Program, which is a program to standardize appraisals and loan delivery data for mortgages that are purchased by the GSEs.

· UAD – Uniform Appraisal Dataset, which is intended to standardize key appraisal data elements to promote consistency.

· UCDP – Uniform Collateral Data Portal, which is a portal for the collection of loan and appraisal data for loans sold to Fannie Mae or Freddie Mac, which must be used by lenders (sellers).

· ULDD – Uniform Loan Delivery Dataset, which is a standardized format for transmitting loan data (including appraisal data) from the originating lender to the GSEs; this includes implementation of MISMO® Version 3.0.

· MISMO® – Mortgage Industry Standards Maintenance Organization, which is a mortgage industry organization that created a set of technical standards which are being leveraged by the GSEs as part of the UMDP.

MISMO is a wholly owned subsidiary of the Mortgage Bankers Association. Visit the website at http://www.mismo.org and you will find confirmation that this entire effort is to create and promote automated underwriting and service fulfillment through loan administration and investor reporting.

If allowed to be implemented, we will see further devastation of small businesses similar to that experienced by mortgage brokers and independent fee appraisers following the GSE’s implementation of the HVCC (Home valuation Code of Conduct). This time, however, the loss of jobs and income will be felt to a greater degree by other real estate professionals, specifically GSE bank-and-lender-staff loan originators, loan officers, processors and underwriters. Eventually, real estate agents and real estate service providers will be affected as the ability to mine MLS (Multiple Listing Service) data and real estate information from appraisal reports will minimize the need for lenders and investors to participate with real estate associations and pay for MLS services.

Fannie/Freddie Track Record- Um...Not Good
The pursuit of automated evaluations and less than diligent property inspections of collateral have been a Fannie/Freddie benchmark for decades. The attempt to speed up the lending process during the past “bubble” resulted in less-than-reliable loan packages and less-than-credible appraisal reports. The fact that the GSEs have thousands of loan packages and appraisals under review, to force loan originators to “buy back” loans in default, is proof positive that quality control by the banks, lenders and the GSEs was less than acceptable. Where is the accountability?

Local appraisers should be able to continue to complete a report in English with terminology that the local borrower and lender can understand. Especially since the Dodd/Frank Reform Bill requires each borrower to receive a copy prior to the close of escrow. No appraisal client other than the GSEs and lenders want to see “codes” in the reports. Without a substantial addenda with an explanation, the new codes will be misleading to any reader of the report not familiar with the UAD requirements. It is a disappointment that the VA and FHA government agencies have agreed to the GSE mandates. The new requirements appear to have the potential of creating a misleading report to anyone not trained in the new codes and requirements.

It is much more important to have qualified and experienced underwriters and reviewers reading the report for clarity than to streamline the reports and loan files with “fast and easy.” That is what got us into the financial mess we are in. Some uniform standards may be an asset but the appraiser who puts misleading or inaccurate quality, condition, etc. statements in a report will also put misleading and inaccurate codes in the report. A lie is a lie and changing to the mandated format will not change the character of the person who completes the report.

Wasted Money
Any investment into the creation and implementation of these new requirements by the GSEs is nothing less than a misappropriation of taxpayer funds and a further lack of oversight by the FHFA. To repeat, this is NOT the time for dramatic changes in lending and appraisal requirements. To allow the GSEs to mandate the use of these new lending and appraisal requirements is to agree that the GSEs know what is in the best interests of our nation, when in fact, they, along with the investors, banks and lenders are responsible for the current financial crisis.

Take a look at some totals at CNNMoney.com's Bailout Tracker website: http://money.cnn.com/news/storysupplement/economy/bailouttracker. Approximately 1.3 trillion taxpayer dollars have been spent on or are earmarked to save the GSEs. When will it be time to stop supporting the GSEs' demand for unnecessary changes?

It is time for accountability. It is time to educate the consumer and insist our government stop fueling the financial crisis by financially supporting the GSEs, major banks and lenders. It is time to encourage the consumer to use local banks, lenders and credit unions that will use ethical and competent professionals for much needed quality control. It is time for integrity in the real estate professions.

About the Author

Mr. Anderson is a taxpaying American citizen, a Vietnam-era Marine Corps veteran and independent fee appraiser. He is an appraisal education author and instructor and the founder of Integrity~ An Association for Real Estate Professionals, which is a grassroots effort created to promote the public trust through the use of honest, ethical and reliable real estate professionals and sound business practices.

Daylight savings ends soon and it’s time again to move your clocks backward one hour.  You’ve heard that every six months when you "fall backwards", it’s a good time to change the batteries in your smoke or carbon monoxide detectors, flip your mattresses and replace screens with storms windows.  But did you also know that computer experts recommend changing your passwords to critical computer and online areas twice a
year as well?

Changing your passwords to log on to your computer or access critical stored information gets you in the habit of having a different one every so often. At the same time, it reduces the chance that someone else will be able to "break in" to your computer files or online information. Experts caution though that you shouldn’t "sequence" your passwords to make them easier to remember. If someone gets hold of an old password of yours, "green03," and it doesn’t work, it won’t take long for your average computer hacker to guess the new password is "green04" or "green05."

It’s a good idea to have different passwords for different things. This can be hard to do in practice because there are so many things needing passwords. Experts say having a couple different passwords can be helpful. Use one for less important things like your log on to the New York Times online or an Internet message board, and another, more complex one for more important things like your online banking or the place you store sensitive business documents on your hard drive.

Try to vary your passwords by using things that aren’t easy to guess or find out, like your Social Security number, your birthday, or child’s name. Another good idea, experts say, is including both letters and numerals in passwords. A good way to do this is to substitute numbers that look most like the vowels for a, e, i and o. "A" can be "4", "E" can be "3", "I" can be "1" and "O" can be "0". A password for an "agent" might be "4g3nt." These letter/number combinations are harder to guess but also, harder for a hacker to remember if they somehow are able to see them very briefly.

Whatever you do to make it easy for you to remember your passwords but hard for others to guess, consider changing your passwords when you turn off your outside water supply, change your clocks and detector batteries. You may be very glad you did!

If you or any of your associates are in need of our services, please give me a call!

I thought that the artical below would interesting news for all my clients. This artical was writted by Ann O'Rourke, MAI, SRA, MBA from  Appraiser and Publisher of Appraisal Today newsletter.

So please, Until we hear different, Keep those FHA Appraisal Orders Coming.

Important FHA notice for all mortgagees:

Sent by email from FHA. I am on their email list.

Delayed Implementation Date for New Requirements in ML 2009-28

Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010. ML09-28 (originally planned for a January 1, 2010 implementation) has two parts: a) prohibition of mortgage brokers and commission-based lender staff from the appraisal process, and b) appraiser selection in FHA Connection. The effective date for both sections of this guidance will now take effect for all case numbers assigned on or after February 15, 2010. This extension will provide FHA and lenders additional time to adjust systems to accommodate the changes.

Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter. However, lenders should be aware that the requirement for inputting the appraiser ID and the appraisal assignment date in the FHA Connection case number assignment screen will be removed. Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Update Screen once the completed appraisal is received by the lender and prior to closing the loan.

Delayed Implementation Date for ML 2009-51

ML 2009-51, Adoption of the Appraisal Update and/or Completion Report, states an effective date of January 1, 2010. The effective date is being extended and will now apply to all case numbers assigned on or after February 15, 2010. This extension will provide additional time needed by FHA and lenders to adjust their systems to accommodate use of the form.

All FHA Mortgagee Letters can be read online at: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/

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What is the purpose of the HVCC?
Enacted May 1, 2009, the Home Valuation Code of Conduct (HVCC) is a set of rules for the mortgage lending and real estate appraisal industries. The intended purpose of the HVCC is to protect appraiser independence and prevent pressure from being applied to appraisers to produce a desired property value. Ultimately, these safeguards are intended to protect consumers. Even though there has been considerable debate about the unintended consequences of the HVCC, compliance is required for all loans backed by Fannie Mae or Freddie Mac.

What can I expect to change because of the HVCC?
Nothing will change in the actual appraisal reports we produce. We've always focused on ensuring accurate, independent valuations in our appraisal reports. It's the core value of our business. We'll continue to do that going forward and we're ready and qualified to make sure everything we do complies with the HVCC.

The process of ordering appraisals has changed, however. If you're a homeowner in need of an appraisal of your home, an attorney needing a property appraisal, or even if you work for a small community bank or credit union and will continue to communicate directly with appraisers, click here to order an appraisal now.

If you're a mortgage loan officer or a mortgage broker who isn't allowed to order appraisals directly from an individual appraiser and are seeking an HVCC-compliant appraisal ordering system or service, I recommend using the Mercury Network for ordering HVCC-compliant appraisals. I'm already registered on Mercury Network, and it's the fastest, most compliant and effective way to order appraisals from me or any appraiser without overhauling your entire appraisal ordering process.

Because I'm already a Mercury Network member, after you complete your own Mercury Network profile, you can add me to your appraiser panel, if you choose to. Mercury Network's Intelligent Selection System (ISS) enables you to order appraisals "blind", based on pre-set ordering criteria so you can be confident you're ordering appraisals with complete HVCC-compliance. You'll also appreciate Mercury Network's pre-populated status message and text box-driven communications which provide you with an audit trail for each transaction. To order using Mercury Network, click here.

Where did the HVCC come from?
The HVCC was born from an agreement between the New York State Attorney General, OFHEO, Fannie Mae and Freddie Mac. In 2007 New York Attorney General Andrew Cuomo filed suit against First American Corporation and its appraisal management subsidiary, eAppraiseIT, accusing them of enabling Washington Mutual to pressure appraisers to change values, as well as hand-pick which appraisers should be used for WaMu's appraisal reports.

Attorney General Cuomo then subpoenaed Fannie and Freddie in order to learn more about loans purchased from banks like WaMu and the valuation processes they used. One of the results of the investigation was the HVCC, which was agreed upon and approved by Fannie and Freddie. From May 1, 2009 forward, every loan eventually funded by Fannie and Freddie must be in compliance with the HVCC.

What are the specifics of the HVCC?
The HVCC specifically prohibits any party from coercing, suggesting, or influencing appraisers in any way to produce a specific or desired value for a residential property.

Only the lender or a party authorized by the lender can engage the appraiser and order an appraisal that will be backed by Fannie Mae or Freddie Mac. Mortgage brokers and real estate agents, without lender permission, are not allowed to engage appraisers or order appraisals. Also, internal loan production staff members or any other person who is compensated on a commission basis are not allowed to engage the appraiser or have any substantive communications with an appraiser.

A specific exception has been made for institutions which, because of their small size or limited staff, would be unable to establish absolute lines of independence. These smaller institutions are required to clearly demonstrate that they have implemented prudent safeguards to isolate its collateral evaluation process from influence or interference from it s loan production process.

All loans backed by Fannie Mae or Freddie Mac must abide by the HVCC. The code doesn't apply to FHA and VA insured loans, or to appraisals ordered for non-lending purposes.

Lenders are required to ensure that the borrower receives a copy of the appraisal report at least three days before the loan closing. The lender, not the appraiser, must provide the copy to the borrower, at no extra charge. This allows the buyer to read the report and decide whether to go forward with the purchase.

You can read the full HVCC on Freddie Mac's website by clicking here: http://www.freddiemac.com/singlefamily/pdf/122308_valuationcodeofconduct.pdf

Mortgage Brokers and Appraisals
On March 31, Fannie Mae and Freddie Mac released an update of answers to questions frequently asked (FAQ) about the HVCC, including whether or not a mortgage broker is allowed to order an appraisal directly from an appraiser. The answer is clearly "no" and that has not changed. However, within that same HVCC FAQ update, the question of "Web portals" was addressed. Within the context of appraisal management, Mercury Network falls within the Web portal category.

The 16th question and answer located in the Freddie Mac HVCC FAQ states:
Question: May a lender direct a broker to use a Web portal set up either by the lender, or by the lender's authorized agent, through which the broker inputs a request for an appraisal and then triggers the lender's system to order an appraisal?
Answer: Yes. A lender may direct a broker to use a Web portal in this manner.

Freddie Mac FAQ:
http://www.freddiemac.com/singlefamily/hvcc_faq.html#16
Fannie Mae FAQ:
https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/

If you need an FHA Reverse Mortgage real estate appraiser in the New York and Pennsylvania for a refinance, we can help you. Jeffrey Scott Jacobs is a State Certified private residential appraiser and is on the FHA/HUD approved appraiser roster.

Reverse Mortgage Appraisal

The largest increase in mortgage appraisal assignments we are seeing is in the FHA Reverse Mortgage request category.

The amount of baby boomers retiring and turning to their homes to provide them with additional income is increasing dramatically. Having lived in their homes for many years, they usually have a wealth of equity available to them that could help with their life expenses such as household improvements, retirement homes, vacations or even to help out other family members.

With these types of loans the home is required to meet HUD/FHA’s minimum property standards.

When some one has lived in a home for a long period of time there is usually bound to be some items that need some repair or maintenance and it is the FHA appraiser’s duty to disclose noted items. This means that deferred maintenance and health and safety items will have to be remedied in order for the property to qualify for FHA mortgage lending.

Examples of this deferred maintenance is that some that were built before 1978 can not have flaking or peeling painted surfaces due to the possibility that lead based paint hazards may be present, evidence of structural damage or termite infestation would need to be disclosed, as well. Other items in the household like the effective age of the home, necessary repairs such as broken seals on windows or windows them selves, water damage, drainage problems and anything that would effect the livability of the home must be disclosed.

The beauty of the program is that the reverse mortgage allows for any needed repairs to be fixed or corrected as part of the transaction so that the applicant may not incure any immediate out of pocket expense and these expenses can be incorporated into the transaction.

Jeffrey Scott Jacobs is a HUD/FHA appraiser who has many years of experience and has the knowledge to handle this type of appraisal to make your lending transaction go smoothly and as easy as possible to help you get the job done. If you have any comments or questions about the HUD/FHA Appraisal process feel free to shoot me an email or give me a call…

The following is an artical on the alamode website concerning HVCC Laws that will affect all of us and there resolution to some of the changes to come. Please read it and feel free to make comment.

Mercury Network: More important than ever
The mortgage market has seen its share of ups and downs, and collateral value is at the core of lending once again. You need accurate, independent appraisals done in compliance with all of the existing and new regulations, especially with regards to the new HVCC ("Home Valuation Code of Conduct"), which is slated to take effect on January 1st 2009. Of course, with a new regulator of Fannie and Freddie and all the market turmoil surrounding them, nobody even knows if the HVCC will actually take effect. So, you're in a quandary. Do you outsource appraisals to an appraisal management company and take on the risks associated with abandoning appraisers with whom you've had a good working relationship for years? Or do you manage them in-house and risk being accused of influencing values? Is there a way to hedge your bet and get the best of both worlds?

You bet there is. Since 2002, Alamode's Mercury Network website has been used by more than 200,000 mortgage professionals to order and manage tens of millions of appraisals, at full fee to the appraiser. And with Thier new update to Version 3.0, you get all the "double blind" ordering and communications that protect your legal liability, without losing access to your existing appraisers and without alienating them by inserting an appraisal management company in the middle. Veracity Realty Services is already set up on this system and it HVCC compliant.

You use us already and don't even know it
Even if you aren't using the Mercury Network website right now, you're using our appraisers. That's because over 50% of all the appraisers in the country connect to you using our desktop and web products right now. You might order an appraisal by phone, fax, or email, but the report is likely prepared and delivered to you using our Mercury Network technology backbone. Look at the bottom of your delivered appraisals and you'll see "a la mode" there over and over and over.

So sign on today and start using the "other side" of the Mercury backbone. You'll get an easy-to-use website interface (that scales up to full server-side XML integration if you're a bigger originator), better appraisal management, full nationwide coverage, more flexibility in handling appraisal assignments, complete automated rule checking of appraisals, and of course 100% compliance with existing and upcoming regs. There is no larger system, no more robust system, no more flexible system for managing collateral valuation than the Mercury Network.

You can be ordering and managing your first appraisals in minutes.

Compare:  Traditional appraisal management companies
Have you looked at AMC platforms and don't really know where to begin?  Unlike most AMC platforms that are built for large lenders systems that don't interact well with real people, Mercury Network is built so that it's easy to configure and use.  You can setup your account and start placing appraisal orders immediately.  You can build your fee panel based on criteria that matter to you.  In the near future, you'll even be able to import your existing fee panel and configure your custom appraisal review rules and each of these two things will take literally minutes.

Cost and risk management are primary concerns for every lender, but newer, scalable technology for appraiser panel management has become equally important.  Fortunately, the Mercury Network technology that many of the leading AMCs have enjoyed and depended on for years has been expanded and made available directly to lenders.  Our robust web-based technology platform connects lenders directly with their fee appraisers in a secure, firewalled environment. Best of all, all of the tools that today's compliance-driven business demands are here. There's even a seamless connection to the sophisticated review engine that runs on the appraiser's desktop so the quality control checks are run prior to delivery to the lender's in-house staff.  Industry standard XML data is bundled in the original, unaltered report, and in the near future, our new Report Analytics will be bundled with each report providing detailed and custom market analysis which help underwriting teams make smarter decisions. 

How to Prepare for an Appraisal

As you know the appraisal is one of the last necessary factors before a sale or refinance can happen. It allows the property transactions to occur among the buyer, seller, real estate agent and mortgage lender, or is the last step for refinancing.

Before an Appraiser arrives at the subject property, there are a few things you should tell your client. By law, an appraiser must be state licensed to perform appraisals prepared for federally related transactions. Also by law, your client is entitled to receive a copy of the completed appraisal report from you the lender. Since you are my client I cannot release it to them without your expressed written consent. So please let your clients know how they can receive a copy of the appraisal from you.

To facilitate the appraisal process, it's beneficial to have your clients provide these documents to the appraiser at the time of inspection:

• A plot plan or survey of the house and land (if readily available)
• Information on the latest purchase of the property in the last three years
• Written property agreements, such as a maintenance agreement for a shared driveway
• List of personal property to be sold with the home if any
• Title policy that describes encroachments or easements
• Most recent real estate tax bill and or legal description of the property
• Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells
• Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available)
• A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending". ( The appraiser will need the sales contract or purchase agreement prior to the property inspection).
• Information on "Homeowners Associations" or condominium covenants and fees.
• A list of "Proposed" improvements if the property is to be appraised "As Complete".
• A copy of the contract of sale. ( The appraiser will need the sales contract or purchase agreement prior to the property inspection).

Once the appraiser has arrived at the subject property, your clients do not need to accompany him or her along on the entire site inspection, but your client should be available to answer questions about your property and be willing to point out any home improvements.

Here are some other suggestions:

• Accessibility: Make sure that all areas of the home are accessible, especially to the attic and crawl space
• Housekeeping: Appraisers see hundreds of homes a year and will look past most clutter, but they're human beings too! A good impression can translate into a higher home value
• Maintenance: Repair minor things like leaky faucets, missing door handles and trim
• FHA/VA Inspection Items: If your borrower is applying for an FHA/VA loan, be sure to ask your appraiser if there are specific things that should be done before they come. Some items they may recommend might be: Install smoke detectors on all levels (especially near bedrooms); install handrails on all stairways; remove peeling paint and repaint the effected area; provide inspection access to the attic and crawl spaces.

Please note that we all work hard to make sure that the transaction of a sale or refinance goes as smoothly as possible for everyone involved in the transaction. If the property, rooms in the property, or if certain areas of the property can not be accessed this may delay the process and make things more difficult for all. If we all work together, and educate the loan applicant we can make their experience a pleasant one.

Please feel free to comment on this article and state your opinion on how we can make things easier for you..

Thank again for your business,

Jeff.....................