HUD, alias FHA, issued a notice today that they will not be requiring UAD until January 1, 2012, thus setting back 4 months the requirement of Frannie Mae and Freddie Mac which does still take effect on September 1, 2011.
One hope voiced by those opposed to UAD is that the other two agencies will rescind the requirement. UAD does not improve appraisals but only attempts to make them more uniform in terminology and property ratings. In essense, it is an effort to remove the appraiser from the lending process by automating the valuation process. Like AVMs (Automated Value Modules), the theory is good but the application has flaws and results in distorted values. However, in the best case where UAD would be scuttled, how will appraisers, who have spent their summer updating software at great expense and taking classes to learn the new UAD terminology, be compensated for the loss of time?
Simply put, UAD is another hijacking of the appraisal process by the lending industry just as the updated 1004 in 2005 took the standard single family appraisal form and conformed it to lending purposes only; whereas the previous 1004 could be used for private appraisals or estates or any number of purposes other than lending.
For now, big changes will take effect in appraisals on September 1. Appraisers are ready, but will the underwriters understand the new standarized terminology or will it only add to the obstacles of the loan process. It should also be noted that Real Estate Offices would be well served to have seminars to familiarize themselves with the UAD terminology. Presently, Realtors fight bad appraisals by defining flaws within the reports. Without understanding UAD, defining flaws will be impossible.
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