A Valuation Conundrum - Jordan Wilde published article pg4-6

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Mounting Challenges for Today’s Appraisers

There are good reasons to beoptimistic about the hous-

ing industry’s future. First-time homeownership is on the rise, bolstered by low rates and an im-proving economy. The origination landscape has become increasingly diverse, which is good news for consumers. Independent mortgage bankers in particular are growing in strength by placing a strong focus on speed, quality, and cus-tomer service.

Of course, an improving pur-chase market is generally good news for appraisers, too. However, the appraisers of 2016 face a busi-ness climate that is much more demanding than the last time the market was this healthy. Three key issues in particular are hav-ing a direct impact on valuation professionals and how they do business. Yet they also represent opportunities for both appraisers and the industry as a whole to do better, and to help restore public trust in the appraisal process.

Tighter Margins

The majority of appraisers arecommitted to providing the

best service they can. However, the increasing demands placed on them, such as requests for additional client-specific scope

of work, has substantially added to their workload and decreased productivity.

No doubt today’s mortgage lenders are under extraordinary pressure to comply with mul-tiple regulatory requirements and shifting investor guidelines. Yet the increasing level of client requirements far exceeds normal expectations. Many credit and risk professionals are interpret-ing recent mandates that apply to valuations very narrowly. The result has led to extra work for appraisers, which inevitably cre-ates greater expense. And even though the average cost of a residential appraisal is climbing, it has not been rising commensurate with the level of detail expected of appraisers. Many appraisers earn less today after factoring in

the additional time, effort, and ex-pense it takes to meet the unique needs of their clients.

For example, a growing num-ber of lenders require certified appraisers not only to oversee the work of licensed apprais-ers and sign their reports, but also to view subject properties personally. The vast majority of appraisers work independently or in small groups in order to share expenses. As such, it’s not economically feasible for them to send two appraisers out to view the same property.

Another example involves FHA purchase loans. Appraisers on FHA mortgages are required to not only determine a home’s value, but also assess its overall condition, such as the home’s electrical and plumbing systems.

The Valuation Conundrum

As Big Data and new technologies change the face of the housing industry, appraisers are working hard to adapt to greater

demands and shorter timelines.

By William Fall

While appraisers were once a revered source of information in the housing industry, a changing industry alongside Big Data and an influx of new technology, have drastically changed the appraiser’s world. No longer the keeper of covert information,

some even say the appraiser today is at an informational disadvantage compared with his counterparts. At the same time, appraisers face increasing pressure to complete valuations with increased detail and accuracy all the while doing so in the shortest time possible.

The solutions to the vast challenges appraisers face today seem to lie in technology. Appraisers are crying out for technology that pro-vides them greater access to information, streamlines their workflow, helps them keep an eye on compliance, and importantly that has the

ability to change as the industry continues to transform. In this comprehensive valuation update, take a closer look at the chal-

lenges facing the appraisal profession and the resilience of a few seasoned appraisal experts who have a vision for the future of the profession.

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This essentially makes the ap-praiser a de facto home inspec-tor. HUD Handbook 4150.2 has a checklist of health and safety issues that the appraiser must check, but these are often open to interpretation, leading to un-certainty among appraisers. Are they supposed to run the dish-washer? How long should they leave the oven on? All of this adds time as well as ambiguity to the appraisal process.

Turn-Time Pressure

Lenders want the safest loanthey can obtain to mitigate

buyback risk and reduce the potential for noncompliance. Today’s appraiser is expected to do more than ever. As a result, many appraisers try to default to a “safest route possible” when it comes to complicated apprais-als. Appraisers invest more time upfront to avoid possible correc-tion requests or re-inspections of the subject property.

While accuracy is essential, appraisers are also pressured to work quickly. It is extremely common for lenders to use the promise of fast closings as a competitive differentiator, especially in a surging purchase market like we have today. However, the appraisal is often the factor can make or break a lender’s claims. This creates a double-edged sword for apprais-ers. On the one hand, the scope of the appraiser’s work is increas-ing. On the other hand, there is pressure to close quickly.

This double-edge sword is sharpest when issues surface during the appraisal process. For example, an appraiser may find several health and safety items in need of repair, per HUD’s guidelines, or concessions may become an influence to the final value estimate. Such issues become even more complicated if there are additional costs to the buyer. All the while, there is a lot of pressure on appraisers to get the work done quickly, and obviously to get it done right, even though “getting it right” in

such circumstances is sometimes in the eye of the beholder.

Who Will Carry the Torch?

In recent years, there hasbeen a great deal of discus-

sion about whether the housing industry is facing an appraiser shortage. I don’t think there is much of a debate. In fact, the loss of appraisers through attrition is already exceed-ing the number of incoming candidates. While it’s true that many markets seem to have an

adequate number of appraisers to meet current demand, some markets are clearly stressed. Colorado, for instance, has seen little change in the number of appraiser licenses, and lenders in this state are frequently expe-riencing four-week delays in appraisal report deliveries.

There are a number of reasons we have an appraiser shortage. Certainly the previous two is-sues I’ve discussed play a role. But perhaps the biggest culprit is the oppressive barriers to an appraisal career. The current sys-tem is no longer generating the quantity and quality of apprais-ers that the housing industry

needs. Currently, licensed appraisers need to complete a certain number of hours of coursework and on-the-job work experience with a certified ap-praiser. However, as mentioned earlier, many appraisers work independently. Why take on a trainee today who may likely become a competitor tomorrow?

The solution is not to lower training standards, which would only make matters worse and erode confidence in the profes-sion. But there should be more than one way to become an appraiser. There should also be

licensing standards that are based not just on the number of class-room hours, but on actual com-petency. Attorneys, for example, must demonstrate competency before practicing in certain courts of law. It makes sense for apprais-ers to meet similar standards.

For example, an alternative path to becoming a licensed appraiser could include a smaller set of coursework than is currently re-quired, but require the completion of at least 25 property inspections within a 60-day period under the oversight of a certified appraiser. Under such a system, a candidate could become a licensed appraiser within a six- to nine-month period.

To advance to the level of certified appraiser, the requirements could remain similar to what currently exists but should also follow a competency-based system demon-strated by work samples.

An appraiser shortage will only exacerbate the issues appraisers currently face. If our industry cannot find a way to recruit, train, and develop the next gen-eration of appraisers, we may all find ourselves overly dependent on non-appraiser models, which could have far-reaching impacts and damage consumer trust.

Again, these are big chal-lenges for appraisers, but within every challenge lies opportunity. Many appraisers, for example, are taking a much closer look at their business practices and the companies they choose to partner with. By choosing to work more frequently with appraisal manage-ment providers that clearly outline client expectations and are more realistic on turn time demands, appraisers are able to work more productively and efficiently.

A capable appraisal manage-ment provider can also help appraisers enhance and ensure the quality of reports. Quality is always the key ingredient in providing an accurate report, and clients are demanding it in order to avoid re-purchase demands and other post-closing issues. There is also a growing number of technology solutions that can help appraisers man-age appraisal orders and report deliveries while checking for quality and compliance. The bottom line is that lenders want a smooth origination process, so when appraisers need help with their issues, a quality ap-praisal management provider can remove friction from the process for both parties.

As we consider the issues affecting today’s appraisers, we should remember that poorly valued real estate decisions were a major factor behind the failures of hundreds of banks between the years 2008 and 2014. Our industry will remain suscep-tible to future disasters unless

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The current system is no longer generating the quantity and quality of appraisers that the housing industry needs.

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we are aware of the challenges appraisers face and work toward preserving a well-trained, com-petent workforce of professional appraisers in the years ahead.

WILLIAM FALL, MAI, SRA, ASA is Founder and CEO of William Fall Group and its AMC subsidiary, Valuation Partners. A General Certified Appraiser credentialed in five states, Fall has taught real estate valuation courses at the university level and has served as a supervisory appraiser for numerous apprentice/trainees. He can be reached at [email protected].

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Yearning for Big Data and Big Tech

How important is it to havethe right tools for a job?

For example, imagine you are in the process of renovating a bathroom, when you realize the wrenches and pliers you have in your tool belt are plastic toys from your kid’s playset. Will that hamper your ability to complete the work necessary in order to realize the bathroom renovation you had in mind?

What if you were to find yourself in a situation that required an ice axe in order for you to summit a peak, but instead of finding your trusty Grivel Air Tech Evo strapped to your pack, you find a small hob-by hammer that would only be useful if you were endeavoring to complete an arts and crafts project. How successful is your summit attempt likely to be?

The same logic can be ap-plied to the residential ap-praisal profession. Is it possible to meet the needs of today’s lenders and AMCs with the tools currently available to the residential appraiser community? Unfortunately, until appraisers

are provided more advanced tech- and data-centric appraisal production tools—the kinds of offerings that have previously been reserved for investors, lend-ers, and AMCs—the answer is a resounding, “NO.”

The Shifting Information Advantage

Residential appraisers work-ing in the mortgage lend-

ing space are woefully unde-requipped to meet the needs of the client base they serve. In years past, before the advent of “Big Data,” lenders and origina-tors heavily relied on appraisers to inform them on what was occurring in a subject property’s market. An appraiser would source comparable sales from MLS books obtained from the local Realtors’ office, or from his or her own business’ database of previous assignments. In later years, the appraiser would obtain public records data from CDs (remember those things?) purchased monthly from early versions of data aggregators. They would also pull MLS records from DOS-based sys-tems, which at the time was a significant improvement over the MLS books that had been previously used. More recently, the appraiser would leverage his or her local Web-based MLS system, public records, and per-mitting databases to perform his or her job function. In all of the aforementioned scenarios, the appraiser was the conduit by which market data was obtained and disseminated to clients, but times have decidedly changed.

Advancements in technology revolving around data offer-ings made it much easier for an appraiser to come by the information needed for them to complete an assignment, but the digitization of this data opened up the floodgates for analytics companies that envisioned taking this newly-found content and productizing it in a way that

would allow them to sell their offerings directly to the lender or AMC. Today, the appraiser’s client has access to the same re-sources that had previously been reserved for appraisers. Instead of relying on the appraiser to paint a picture of the market in the form of his or her delivered appraisal report, the appraiser’s client relies on third-party data and analytics to refute or qualify the appraiser’s findings. The informational advantage has officially trended away from the appraiser and now leans heavily in the direction of the users of appraisal products and services.

An Inundation of Revision Requests

For appraisers who have beenperforming field work since

the last millennia, the changes that have transpired are palpa-ble. Today, the way an appraiser completes an assignment and assigns a value opinion remains relatively unchanged, but the requirements and complexity of current appraisal requests de-mands greater utilization of data and analytics in order to reduce the percentage of addendum and revision requests emanating from AMCs and lenders.

In decades past, it was un-common for an underwriter to question an appraiser’s findings. When it did happen, it was typi-cally tied to assignments where the nature of the subject prop-erty, or the market in which it was located, increased the overall complexity of the assignment. In this case, the appraiser wouldn’t be caught off guard if/when a client made a request for clarifi-cation or additional information.

Now, if an appraiser submits a completed report on even the most rudimentary assignment, and he or she doesn’t receive an addendum or revision request, it’s considered an outlier. How can that be? Isn’t the appraiser acting as a trusted advisor on behalf of the client that en-gaged them on the assignment? Doesn’t the client implicitly trust

the opinion of the appraiser? If they did, would the AMC or lender continually bombard the appraiser with questions or concerns on the vast majority of appraisals? The reality is, most AMCs and lenders have greater insights into the market—includ-ing visibility into all relevant data—than even the most sophis-ticated residential appraisers.

Recapturing the Information Advantage

I f we as a profession want torecapture the informational

advantage that’s been lost in recent years, we must have tools that are at least commensurate, if not superior, to those being used by the AMCs and lenders we are working for. Until the organiza-tions that provide appraisers with production software are able to deliver applications that mirror the analytics suites being used at a transactional level by an origina-tor, the appraiser will continually suffer through the kind of back-and-forth with their clients that have become standard operating procedure for the typical service provider.

Improving upon the technol-ogy currently being employed by most appraisers will not only prove to minimize the time an appraiser spends on an assign-ment throughout production and post initial delivery, but it will also increase the AMCs’/lenders’ reliance on the appraisal report itself. This alone has the potential to improve the transac-tional economics associated with residential appraisal practice.

An End to Fee Stagnation

During a recent industry con-ference, there was consider-

able focus placed on the fees being paid for a typical appraisal by the majority of appraisers in attendance. Most commented that the fees haven’t increased in a meaningful way in more than

By Jordan Petkovski

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a decade. Some felt the reason their fees hadn’t improved was a result of AMC proliferation post Dodd-Frank. Few, if any, placed the responsibility for fee stagnation on the dilution of the appraiser’s value proposition that had historically been made to the mortgage lending process. This is unequivocally the most underrated contributing factor.

As an example, imagine a world where the appraiser could read the mind of the AMC reviewer or the lenders’ collateral underwriter, thus allowing the appraiser to respond proactively to questions that would oth-erwise have been asked after submitting the completed report. In this case, would the AMC or lender still need to stack the same number of resources up against the review or underwrite function? Would they be able to reduce the capital expenditure on these roles? Would that freed-up capital now find its way into the appraiser’s pocket? Though no one can say definitively what will transpire in this type of future state, it seems far more plausible than if we were to continue with the status quo.

By giving appraisers the means to see the completed report in the same manner as those responsible for reviewing their output, you could reduce, if not eliminate, the tête-à-tête between appraiser, reviewer, and under-writer that continues to plague the process. By improving upon the resources available to ap-praisers and the technology they have at their disposal, you may even get more youthful interest in the profession.

The fact is, until AMCs and lenders feel confident that they no longer need to scrutinize the opinions of the appraisers they’re engaging as a means to miti-gate their exposure to collateral risk, the fee being paid to the originating appraiser isn’t going to realize the kind of vertical elasticity that’s needed to satiate the residential appraiser.

To the tech firms that oper-ate in the appraisal production

arena: Let’s give appraisers the proverbial ice axe they’ll need to summit the peak we call ap-praisal fees.

JORDAN PETKOVSKI is VP and Chief Appraiser at TSI Appraisal. He has worked in senior leadership posi-tions within the residential appraisal industry for more than 15 years. He’s held numerous roles for appraisal and settlement services providers, includ-ing operational and policy-centric positions. He is the current Chairman of the Five Star Institute’s National Appraisal Congress.

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The Top Ten “S”s Needed in Appraisal Technology Solutions

In today’s rapidly changing en-vironment, there is an impera-

tive focus on the quality and accuracy of collateral valuations. Lenders, AMCs, and appraisers face greater accountability at all levels, yet find themselves reli-ant on the antiquated tools and resources of yesteryear. At the same time, a complete paradigm shift in how a valuation is de-veloped is upon us.

We truly need a revolution in our industry’s technology. Technology that delivers a data-centric approach will help valua-tion professionals better aggregate information, analyze markets and value, increase quality, reduce errors and turn-times, and bring context and clarity back to valua-tions and the valuation process.

In light of these evolving needs, it’s time for a well-considered reassessment of how valuation software can better serve us. Recent developments in technology offerings pave the way for 2016 to be a year of innovation—even for an industry that has “always done it this way.”

The following top-10 checklist of “s” words shows the bar valua-tion technology should meet to be defined as true solutions.

If your provider’s valuation platform doesn’t fall in line with this checklist, then maybe it’s time to re-evaluate.

• Standards: First and foremost,does the provider’s platformmeet the wide array of compli-ance and regulatory standards?Does it ensure adherence topolicies, rules, and regulations?If you can’t be confident thatyour valuations are compliant,what is your platform doingfor you? A high-value platformintegrates robust validationof regulations, client-specificrules, and data standards, fromUAD and USPAP to MISMOand inter-agency compliance,for appraisers and reviewers. Itincorporates these needs intothe system design, eliminatingtime-consuming and error-proneback-and-forth between instruc-tion lists and review cycles.What’s more, a platform shouldbe able to flex as organizationsupdate these requirements andgrow with emergent standards.

• Solutions: Does your providerhave to use multiple softwareplatforms to complete thelife cycle of a valuation? Theneeds of the modern valuationindustry have surpassed simpleform-filling portals; modernvaluations call for modernsolutions. Does your platformmanage service coordination,order management, panel man-agement, client relations, anduser management; or is therea bevy of unrelated softwareto manage? A full suite offlexible solutions can improveoverall quality and efficiencyand reduce the time, costs, andfrustration of integration pains.

• Service: Your technology shouldintegrate client relations withtop-notch customer servicetools. From online customeraccess and order transparency,to constant communication

and follow-through, your solution should inform custom-ers and make them a priority throughout the process. Look for solutions that provide order visibility, customizable notifica-tions, integrated communication tools, full order histories, and clear resolution paths.

• Specialization: Are you alender, originator, investor,buyer, or seller? Whether youwork with AVMs, BPOs, evalu-ations, or 1004 appraisals, yourprovider needs the experienceand capability to meet yourspecific needs. Engaging theright provider with the righttechnology is critical to havea successful and profitablealliance. Who developed theirplatform? Do they originatefrom within the valuation in-dustry, or are they an arm of ageneral software conglomerate?The right provider is one thatunderstands your business anddevelops software that directlyaddresses the challenges inher-ent in your industry.

• Support: You might run a smallvaluation shop with limited re-sources or a large organizationwith in-house training and IT.Depending on your businessand the roles of your learners,you’ll need access to responsivetechnical support and trainingoptions that meet your needs.Look for providers that offer avariety of support and train-ing to fit your needs, such asinstant chat help, live tech-sup-port, video library of tutorials,and instructor-led training.

• Security: In this industry, wework with personal informationand sensitive data. Make sureyour provider’s technology haspolicies, processes, and auditingmethodologies that keep datasecure, according to standardssuch as the Sarbanes-Oxley Act,the Gramm-Leach-Bliley Act,and practices compliant withISO 27001. For companies withthe strictest security, such aslenders, providers should be able

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to host solutions in a secure, lo-cal environment. And although cloud-based technology may not seem like an obvious choice, secure data partitioning keeps your data separate and safe from others and can be less expensive to maintain than traditional software. Regardless of where your technology lives, data encryption, fault-tolerant backup systems, security policies, and disaster recovery procedures are imperative for reliable systems. Don’t be afraid to ask your provider about their security protocols and processes that should already be in place.

• Satisfaction: Does your provid-er’s platform adapt to changesin your business processes ornew regulatory guidance as

it is published? Technology should not dictate how you do business, but instead adapt and customize to meet your needs. Current technology is capable of meeting these challenges–without the weeks or months of delay we experience with old-school systems, even for a simple form update. As Kevin Lombardo, President of Centric Technology Solutions, LLC, says, “Bringing new products to market on a platform should be a simple process that can be im-plemented within a short period of time. As lenders and others define new needs, we must be able to develop solutions quickly.” Technology that can respond to regulatory changes overnight sounds like a dream, but it is tangible and real.

• Savings: Managing multiplesoftware programs, manuallyshepherding orders, and coordi-nating vendors creates unneces-sary overhead. Automation isnot a luxury in technology; it’sthe norm and should streamlinethe relationship with your valu-ation providers and customers.Auto-placement of orders, auto-matic data validation and compscoring, customizable productconfiguration, and notificationsare part and parcel of any trulyautomated solution.

• Sustainability: If your provider’splatform is three years old ormore, it’s out of date, whichcan jeopardize the quality andaccuracy of your valuations.Technology moves fast, and sodo changes in regulations, rules,

and customer requirements. Technology should be able to adapt to changes in the indus-try, technology, and business needs. Ask your provider how their solutions manage change in all these areas. They need to be agile, adapt to constant in-novation, and develop systems that improve processes.

• Strategic: Does your solutionoffer the tools and resourcesto expand your business? Yourprovider should be a strategicpartner who understands yourvision and can implementconfigurable processes, customofferings, automated functional-ity, and integration services thatreact to your business processesas you grow. Look for providerswho offer support for multiple

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products, such as appraisals, BPOs, and custom valuations, as well as a variety of report and data delivery options.

As we become aware of the innovations in technology and what is truly possible, we can and should expect our technology to address the main points that are specific to our indus-try, which we all encounter in our day-to-day operations. As technology consumers, it’s time to demand that our software catch up with changes in our industry, new challenges, and the ever-increasing pressure we face to provide fully-compliant, high-quality valuations more efficiently, and with fewer manual interven-tions other than high-touch in quality review.

If your provider isn’t focused on next-gen technology that evolves with the industry and improves on current processes, then it’s time to seek out one that does. Keep the “Top Ten Ss” in mind as you navigate the wild, wonderful world of valuation technol-ogy solutions. And remember this: If the technology doesn’t solve a problem, it’s not a solution.

JORDAN WILDE, VP of Sales and Marketing at First Valuation, has a 13-year tenure in the housing finance and real estate industry during which he has held senior positions in sales, marketing, account management, business development, mortgage origination, underwriting, private lending, title insurance, and REO sales. Throughout his experience in the mortgage banking community, Wilde has gained critical insight and familiarity with collateral valuation, mortgage default servicing, market analysis, and mortgage finance. He is based out of Dallas.

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The FHA Embraces Electronic AppraisalsW

Changes are afoot at the FHA. Sub-mitting paper appraisals to the FHA

is about to become a thing of the past. Starting June 27, 2016, the FHA will require mortgagees to use its new Elec-tronic Appraisal Delivery (EAD) portal for all appraisal and report submissions. Per the FHA, the EAD is a Web-based technology system that enables electronic transmission of appraisal data and reports to the FHA from mortgagees and/or their

designated third-party service providers prior to loan endorsement. Mortgagees can go to ElectronicAppraisalDelivery.com to submit appraisals or via an integration that their valuation management software provider established. After the EAD is implemented, submitting appraisals manu-ally to the FHA will no longer be allowed.

In June 2015, the FHA opened up use of the portal to approved mortgagees to give users the opportunity to begin testing the system and become familiar with the new process. The good news is the way the EAD works is similar to the Uniform Collateral Data Portal (UCDP) that the GSEs require for appraisal submissions. The success that the UCDP has had ended up making it not just for use by the GSEs, but also investors started using it as well, essentially making it the defacto standard in the industry to submit, review, and accept appraisals.

The EAD uses the same Uniform Appraisal Dataset (UAD) that the GSEs use for the UCDP, so appraisers and lenders are already accustomed to working with the UAD format and have integrated the delivery of appraisals electronically into their business processes. Like the UCDP, the EAD provides messaging containing real-time feedback on compliance with the FHA file format and data integrity policies.

The expectation is that the EAD portal will provide an efficient method by which the FHA can accept files and check, collect, and enforce guideline requirements. The por-tal is designed to make appraisal submissions more efficient and facilitate better quality appraisals by flagging potential errors early on. As a result of eliminating paper-based FHA appraisal reviews, the cost to process appraisals will be lower and turn times will be quicker. Loans are also less likely to be kicked back due to errors, missing informa-tion, or other data problems.

Getting Started

A s soon as mortgagees receive accesscredentials from the FHA and validate

that they are ready to use the new technol-ogy, they can began delivering appraisals through the EAD portal. Appraisal reports can be submitted two ways through the EAD. They can either use the system’s in-terface that allows up to 10 appraisal reports to be uploaded at a time, or they can es-tablish a direct system-to-system integration with the EAD portal. Once an appraisal is uploaded, mortgagees will be provided with a confirmation of successful submission, or they will be informed that the appraisal requires correction and resubmission.

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When submitting an appraisal, the EAD portal will either provide confirmation of a successful sub-mission or information regarding required corrections that need to be made before resubmission. Once an appraisal is successfully submitted, data sharing between the new por-tal and FHA Connection (FHAC) will allow for the population of certain data fields on the FHAC Appraisal Logging screen.

The FHA has advised lenders to note the following:

• Appraisals submitted through theEAD portal remain subject to areview for compliance with FHAappraisal requirements.

• Mortgagees remain responsiblefor proper underwriting ofthe appraisal and for ensuringthe property meets the FHA’sminimum property require-ments and standards for servingas security for the FHA-insuredmortgage.

• The appraiser remains ac-countable for appraisal quality,credibility, and compliance withFHA appraisal requirements.

The FHA states that there arethree main EAD portal roles: 1) EAD User, 2) EAD Read-Only User, 3) EAD Administrator. Depending on the role and per-missions the mortgagee has been granted, users can access the portal to submit, search, correct data errors and omissions, and view the appraisal report. Per the FHA, the mortgagee’s appointed EAD Administrator is empowered to add users, manage the user’s access rights, change passwords, change user roles, revoke user access, and establish designated third-party service provider relationships.

Don’t Wait

Vendors and lenders had todevote a lot of time and

resources over the past year to prepare to comply with the new TILA-RESPA Integrated Disclo-sure rule that went into effect October 3, 2015. If not already started, it is important to now

focus on integrating the new FHA appraisal process into your workflow. Figuring out how you are going to submit appraisals to the EAD portal should be a prior-ity. You can submit directly to the portal or by way of a third-party technology provider.

Lenders should make sure their valuation management software provider or AMC is already start-ing to establish an interface with the EAD system. Loan origination system (LOS) vendors should also be working with their valuation software providers to ensure tight integrations are established. Again, this shouldn’t be as involved as when the GSEs mandated use of the UCDP because the systems are so similar and the same technol-ogy vendors will be working with the FHA’s submission platform.

It’s notable that the FHA isn’t stopping at its EAD portal. It will

also start enhancing or adding other technologies, such as when electronic signatures on most loan documents was introduced in 2015. Adoption of e-signed promis-sory notes and the development of an electronic case binder to replace paper-based files are also planned. The FHA’s Computerized Home Underwriting Management System, which has been the FHA’s insurance endorsement system of record for more than 30 years, will also be upgraded in phases. So be prepared for a number of new FHA technology changes in 2016.

EAD adoption rates are expected to be high and system issues to be low. Still, it’s important to start us-ing the portal now. Lenders should begin planning their own timelines to test the system, establishing their own internal processes and proce-dures, assessing staffing needs, train-ing staff, working with investors,

and involving necessary vendors for a smooth launch.

In order to start using the EAD portal now, mortgagees just need to register for and participate in the FHA’s on-boarding process. Registration transpires within FHAC.

VLADIMIR BIEN-AIME is CEO and Co-Founder of Global DMS, the award-winning pioneer of Web-based appraisal process management software and a provider of technologies used across the mortgage process. He is an appraisal compliance expert with specific knowledge of the most current federal, state and local appraisal-related regulations, including the Dodd-Frank Act and new Interagency Guidelines, as well as initiatives such as Uniform Appraisal Dataset and Uniform Collateral Data Portal. For more information, questions, and guidance, lenders can visit GlobalDMS.com/ead-help.

It’s notable that the FHA isn’t stopping at its EAD portal. It will also start enhancing or adding other technologies, such as when electronic signatures on most loan documents was introduced in 2015.