*UMDP Post Mandate: Signals for Current and Projected Industry Change*
**By William E. King**
***The 2008 financial and housing market crash exacerbated the need for greater accountability and transparency in gauging the risk inherent in a property, and cautioned investors not to limit focus to consumer risk alone. As the economy grappled with the ramifications of the crash, there is no doubt that significant change was necessary for the U.S. finance and housing system to effectively recover.
****A major change came in the form of the Uniform Mortgage Data Program (UMDP) and its core initiatives UCDP, UAD and ULDD. UMDP was created by the government-sponsored enterprises Fannie Mae and Freddie Mac (GSEs) under the direction of their regulator, FHFA, to enable the GSEs to capture consistent data, drive improved loan quality and manage risk effectively. It does so by developing and implementing uniform appraisal and loan delivery data standards, and a joint appraisal data delivery system allowing the GSEs to evaluate clear and meaningful data about the property pre-delivery, which had not been previously available.
****This initiative marks the first time in recent history that an effort of this magnitude has been implemented to reform the U.S. housing finance system. The scope of UMDP marks a cornerstone for success in continuing to positively evolve the U.S. finance and housing markets. It calls to mind such noticeable housing system shifts as the creation of the GSEs themselves or the subsequent creation of the mortgage-backed securities market.
****March 19, 2012 marked a significant milestone as UCDP was effectively implemented, requiring all lenders to electronically submit UAD-compliant appraisal reports for conventional mortgages delivered to the GSEs. This effort took just 22 months from introduction to mandate, which equates to moving mountains in the mortgage world in a relatively short timeframe, especially when one considers the vast and fundamental changes which had to first take root. Beginning with the process of information gathering and working with appraisal software providers and educating appraisers and lenders alike, it is clear the change was significant and one can only assume has come with a unique set of challenges.
****The current discussion is centered on how this change, now fully implemented, will evolve within the GSEs and how the lenders and other affected appraiser/appraisal service providers will adapt their business to maximize the benefits intended under UMDP. Questions remain such as, “As the industry moves toward total adoption of XML, will PDFs continue to be relevant;” and “How will the availability of standardized data in such greater quantity impact the way the mortgage industry moves toward recovery”? These questions and others prevailing in the industry all seek to encourage the further understanding of UMDP and its core initiatives as the industry forges ahead. Join us at the 2012 Predictive Methods Conference June 4-6 in Southern California to discuss UMDP’s implementation and projected evolution in greater detail.
William E. King is the director of valuation services at Veros Real Estate Solutions (Veros), headquartered in Santa Ana, Calif. His responsibilities include managing automated quality controls, overseeing appraisal rules and scoring modules, as well as actively monitoring the enhancement of Veros’ proprietary valuation models and risk analytics. In his previous role, King served as owner and chief appraiser of ValueOne Appraisal. He holds both a certified residential appraisal license and a real estate broker’s license. King is a nationally recognized instructor of real estate and appraisal courses, including USPAP. Additionally, he is an active speaker at numerous real estate industry conferences and events.