Saying it would enhance the uniformity and depth of collateral, borrower, and loan data, the Federal Housing Finance Agency (FHFA) is gearing up for a new program to improve Freddie Mac and Fannie Mae's data collection standards and processes.  The Uniform Mortgage Data Program will be phased in over the next year.

Under the program, the two government sponsored enterprises (GSEs) will develop a common framework designed to increase lender efficiency while enabling the GSEs to manage risk more effectively.  A common set of standards will provide uniformity for appraisers, mortgage lenders, servicers, and other information providers for the data they are required to provide in their submissions to Fannie and Freddie.

FHFA said that the new standards were developed from information independently gathered by each of the GSEs from their constituencies on the need for improved data and consistency. Under the new reporting requirements FHFA is developing:

  • A Uniform Appraisal Dataset: This will standardize appraisal data definitions for a key subset of fields on the uniform residential appraisal reports in order to enhance data quality and promote consistency. There will not be significant changes to the forms; the focus will be on developing clear definitions that will produce standardized responses.
  • A Uniform Collateral Data Portal: Lenders will be required to use the portal for the delivery of electronic appraisal data which will be accessed through a web-based interface or direct system-to-system integration.
  • A Uniform Loan Delivery Dataset:  The two GSEs are transitioning their single family file formats to the industry standard MISMO® Version 3.0 model and will increase the number of data elements required at delivery. FHFA said that the GSEs are aligned on the majority of the core data elements and their definitions except where there is an issue of proprietary business or credit policy. Under the requirements the GSE-specific conditionally required fields are minimized and, as much as possible, initially required delivery data is confined to data that lender systems collect today.

Specifications for the new system will be available in June along with Implementation Guides for Loan Delivery Data which will be published separately by Fannie Mae and Freddie Mac.  The portal is expected to be available for electronic delivery of appraisal data by October 1, 2010 and new data standards for all single-family appraisal forms will be required by January 1, 2011. Lenders will be required to deliver electronic appraisal data for all loans with applications dates after January 1 that are delivered to either Freddie or Fannie on or after April 1, 2011.  After September 1, 2011 all loans must be delivered to either GSE using the MISMO v.3.0 dataset and the format.

While press releases and facts sheets on the Uniform Program do not mention HVCC  enforcement specifically, the new program is apparently what FHFA Acting Director Edward J. DeMarco was signaling in a letter sent last week to New York Attorney General Andrew Cuomo.  Citing the financial straits of the GSEs, DeMarco said that the GSEs would not be setting up and funding an Independent Valuation Protection Institute to enforce provisions of the Home Valuation Code of Conduct (HVCC).  The Institute had been part of an agreement between Cuomo and FHFA to settle a lawsuit the Attorney General had brought against Washington Mutual Bank charging mortgage fraud.  In lieu of the Institute, DeMarco said he had directed the Enterprises to provide a targeted complaint process for violations of the Code.  Freddie and Fannie, he said, will use a standardized complaint form and process to facilitate submission of the form through an Internet-based process. 

Freddie Mac Chief Executive Officer Charles E. Haldeman, Jr. said of the announced standards, "We applaud FHFA on this important effort to improve appraisal and loan data quality. The importance of data quality to the mortgage market's long-term success makes this the right call at the right time. The additional loan and appraisal data requirements, standard data definitions, and a common framework for capturing these new data sets will support the mortgage industry's efforts to manage risk, reduce costs, and respond more efficiently to market changes.