Jul 7, 2015 - Breaking Down the FHA's New Electronic Appraisal Delivery (EAD) Portal ... similar and the same technology
Breaking Down the FHA’s
New Electronic Appraisal Delivery (EAD) Portal July 2015
Global DMS, 1555 Bustard Road, Suite 300, Lansdale, PA 19446 © 2015, All Rights Reserved.
Breaking Down the FHA’s New Electronic Appraisal Delivery (EAD) Portal The FHA and GSEs now have a technology in common: the way appraisals are submitted for review and purchase. The U.S. Department of Housing and Urban Development announced via a Mortgagee Letter on March 26, 2015 that provides an overview the FHA’s new Electronic Appraisal Delivery (EAD) portal for FHA loans. The EAD portal allows mortgagees, their authorized users and/or their designated third party service providers to electronically deliver all FHA origination appraisal reports prior to endorsement.
Intent of the EAD Portal The EAD portal will provide a highly effective way for the FHA to accept files, check, collect and enforce requirements. Manual appraisal submissions will be virtually eliminated (some minor exceptions will remain, at least for now). The portal is designed to make appraisal submission more efficient and promote higher quality appraisals by flagging potential errors upfront. Costs are expected to be lower and because most paper-based FHA appraisal reviews will be eliminated, turn times are expected to be quicker. And like with UCDP acceptance of electronic appraisals, loans are less likely to be kicked back due to errors, missing information, or other data issues. According to the FHA, the EAD portal will make it easier to do business with the administration by offering process technology efficiencies that streamline appraisal data transmission, promote quality up-front appraisal data, and reduce post endorsement appraisal data corrections. The new portal will only allow transmissions of appraisals that fully comply with the FHA’s Single Family Housing Appraisal Report and Data Delivery Guide. In short, the EAD portal will allow FHA appraisals to be reviewed and processed quicker, more efficiently, with better quality, and with a cost savings.
How the FHA’s EAD Portal Works The EAD portal is already available for lending organizations to test and become familiar with, but will not be required to use until next year when all appraisals must be submitted using the portal. As soon as mortgagees receive access credentials from the FHA and validate that they are ready to use the new technology, 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 interface that allows up to 10 appraisal reports to be uploaded at a time or they can establish a direct system-to-system integration with the EAD portal to enable large batch uploads. 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. 1
When submitting an appraisal, the EAD portal will either provide confirmation of a successful submission or information regarding required corrections that need to be made before resubmission. Once an appraisal is successfully submitted, data sharing between the new portal and FHA Connection (FHAC) will allow for the population of certain data fields on the FHAC Appraisal Logging screen. In its announcement, the FHA advised lenders to note the following:
• Appraisals submitted through the EAD portal remain subject to a review for compliance with FHA appraisal requirements.
• Mortgagees remain responsible for proper underwriting of the appraisal and for ensuring the
property meets the FHA’s minimum property requirements and standards for serving as security for the FHA-insured mortgage.
• The appraiser remains accountable for appraisal quality, credibility, and compliance with FHA appraisal requirements.
EAD Technology Figuring out how you are going to submit appraisals to the EAD portal next year is crucial. You can submit direct to the portal or by way of a third party technology provider that integrates with the portal. Lenders should make sure their valuation management software provider or AMC is already starting 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 technology vendors will be working with the FHA’s submission platform. Notable is that the FHA isn’t stopping at its EAD portal. It will also start enhancing or adding other technologies such as introducing electronic signatures on most loan documents earlier this year. Adoption of e-signed promissory 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 (CHUMS), 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 technology changes with the FHA coming in 2016.
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Don’t Wait, Start EAD Prep Work Now The FHA is essentially doing the same thing that the GSEs did a couple years ago with the development of the Uniform Collateral Data Portal® (UCDP®), training lenders on how to use it, rolling it out, and addressing any concerns or issues. The UCDP has been quite successful and is now the defacto standard for submitting appraisals --- not just to the GSEs but investors have come to rely on the UCDP as well. The FHA has been able to learn from and leverage the GSE’s process to successfully accept and handle electronic appraisals as a result of the heavy lifting that Fannie and Freddie have already done. The EAD utilizes the exact Uniform Appraisal Dataset (UCD) that the GSEs do. Appraisers are already used to working the UAD format, and lenders and AMCs have implemented electronic appraisal delivery into their business process. The similarities of each system will help lenders more easily adopt the new electronic appraisal report submission process. Adoption rates are expected to be high and system issues to be low. Still, it’s important to start using the portal well in advance of next year’s June requirement. Vendors are preparing now and lenders need to plan to start testing their systems and processes so they are ready for the June 2016 deadline. Lenders should began planning their own timelines to test the system, establishing their own internal processes and procedures, assessing staffing needs, training staff, working with investors, involving necessary vendors, etc. More Information Use of the EAD portal will be required with all FHA case numbers assigned on and after June 27, 2016. The FHA created an EAD portal resources page to assist mortgagees with the transition, which can be found here. To view the Mortgagee Letter 2015-08, click here. Contact Global DMS to learn more about the EAD portal, valuation management technology will work with the portal, and general questions about the FHA’s new process.
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