FHFA To Implement Uniform Standards For Loan and Appraisal Data

Sayingrnit would enhance the uniformity and depth of collateral, borrower, and loanrndata, the Federal Housing Finance Agency (FHFA) is gearing up for a new programrnto improve Freddie Mac and Fannie Mae's data collection standards and processes.rn The Uniform Mortgage Data Program will bernphased in over the next year.

Underrnthe program, the two government sponsored enterprises (GSEs) will develop a commonrnframework designed to increase lender efficiency while enabling the GSEs tornmanage risk more effectively.  A commonrnset of standards will provide uniformity for appraisers, mortgage lenders,rnservicers, and other information providers for the data they are required tornprovide in their submissions to Fannie and Freddie.

FHFArnsaid that the new standards were developed from information independently gatheredrnby each of the GSEs from their constituencies on the need for improved data andrnconsistency. Under the new reporting requirements FHFA is developing:

• ArnUniform Appraisal Dataset: This will standardize appraisal datarndefinitions for a key subset of fields on the uniform residential appraisalrnreports in order to enhance data quality and promote consistency. There willrnnot be significant changes to the forms; the focus will be on developing clearrndefinitions that will produce standardized responses.

• ArnUniform Collateral Data Portal: Lenders will be required to use the portalrnfor the delivery of electronic appraisal data which will be accessed through arnweb-based interface or direct system-to-system integration.

• ArnUniform Loan Delivery Dataset:  The two GSEs are transitioning their singlernfamily file formats to the industry standard MISMO® Version 3.0 model and willrnincrease the number of data elements required at delivery. FHFA said that the GSEs are aligned on thernmajority of the core data elements and their definitions except where there isrnan issue of proprietary business or credit policy. Under the requirements the GSE-specificrnconditionally required fields are minimized and, as much as possible, initiallyrnrequired delivery data is confined to data that lender systems collect today.

Specifications for the new systemrnwill be available in June along with Implementation Guides for Loan DeliveryrnData which will be published separately by Fannie Mae and Freddie Mac.  The portal is expected to be available forrnelectronic delivery of appraisal data by October 1, 2010 and new data standardsrnfor all single-family appraisal forms will be required by January 1, 2011. Lendersrnwill be required to deliver electronic appraisal data for all loans withrnapplications dates after January 1 that are delivered to either Freddie orrnFannie on or after April 1, 2011.  After Septemberrn1, 2011 all loans must be delivered to either GSE using the MISMO v.3.0 datasetrnand the format.

Whilernpress releases and facts sheets on the Uniform Program do not mention HVCC rnenforcement specifically, the new program is apparently what FHFA ActingrnDirector Edward J. DeMarco was signaling in a letter sent last week to New YorkrnAttorney General Andrew Cuomo.  Citingrnthe financial straits of the GSEs, DeMarco said that the GSEs would not be settingrnup and funding an Independent Valuation Protection Institute to enforcernprovisions of the Home Valuation Code of Conduct (HVCC).  The Institute had been part of an agreementrnbetween Cuomo and FHFA to settle a lawsuit the Attorney General had broughtrnagainst Washington Mutual Bank charging mortgage fraud.  In lieu of the Institute, DeMarco said he hadrndirected the Enterprises to provide a targeted complaint process for violationsrnof the Code.  Freddie and Fannie, hernsaid, will use a standardized complaint form and process to facilitaternsubmission of the form through an Internet-based process. 

Freddie Mac Chief Executive Officer Charles E. Haldeman, Jr. said of thernannounced standards, “We applaud FHFA on this important effort to improvernappraisal and loan data quality. The importance of data quality to the mortgagernmarket's long-term success makes this the right call at the right time. Thernadditional loan and appraisal data requirements, standard data definitions, andrna common framework for capturing these new data sets will support the mortgagernindustry's efforts to manage risk, reduce costs, and respond more efficientlyrnto market changes.

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