Automation of the Appraisal Review Process

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HUD/FHA has just announced (refer to Mortgagee Letter (ML) 2015-08) that it will be implementing its long-awaited Electronic Appraisal Delivery (EAD) process effective for all FHA case numbers assigned on or after June 27, 2016.

This ML states that the EAD portal will be a web-based platform through which lenders and their third-party service providers will be able to electronically deliver all FHA origination appraisal reports prior to endorsement.

It is important to note that, once an appraisal is uploaded, a review of the report will be performed in order to determine if the appraisal complies with FHA’s Appraisal Report and Data Delivery Guide.  Confirmation of a successful submission will be provided to the lender at the time of the upload.  If there are problems with the report, information regarding required corrections will be provided to the lender so that they can be addressed and the report re-submitted.

The good news is, once an appraisal report is successfully uploaded, many of the current data fields on the FHA Connection’s Appraisal Logging Screen will be automatically populated which will save the lender data entry time and help improve overall processing times as well as reduce data entry errors.

Of course, once the EAD has been up and running for some time – it is rather predictable that HUD/FHA will seek to increase the scope of the appraisal review over time.

A service similar to Fannie Mae’s “Collateral Underwriter” could be offered by FHA in which FHA appraisal rules are run and the subject appraisal’s comparable sales checked against FHA’s database of comp sales from previous EAD submissions for accuracy.  These new electronic appraisal review processes are here to stay!

The free appraisal review services currently being offered by the GSEs, as well as HUD/FHA in the future, can only lead to better quality appraisals and more timely reviews.  For more information on FHA’s Electronic Appraisal Delivery system, visit the EAD Resource Web Page or Mortgagee Letter 2015-08 off of the www.hud.gov website.

The game has changed – you need to play different!

About the Author

Gerry Glavey

Gerard (Gerry) Glavey is Senior Vice President / Chief Credit Officer for LoanLogics. Gerry has decades of experience working in residential mortgage credit and compliance and brings insights that few in the industry can match. In his role, he develops new services and provides support for all post close quality control and quality assurance, pre-close quality control, due diligence services, and document processing services. He spent 37 years with the US Department of Housing and Urban Development, where most recently he was the Director, Processing and Underwriting Division for the Home Ownership Center (HOC) in Philadelphia. In this capacity, Mr. Glavey was responsible for the administration of all HUD/FHA Single Family Loan Origination activities, including underwriting, appraisal and endorsement for the 16 state jurisdiction of this HOC.