The slow death of the appraisal .pdf

The government-sponsored enterprises’ Uniform Mortgage Data Program is coming into force by Sept. 1. After that time, the GSEs will require seller-servicers to submit full appraisal reports in electronic data format prior to loan delivery to the secondary markets. It creates a single means for submitting the 17 pages or so that make up a typical appraisal. In this case, the GSEs would prefer appraisals submitted in the Mortgage Industry Standards Maintenance Organization XML format. MISMO, of course, is a subsidiary of the Mortgage Bankers Association, so it makes sense for appraisers to use the soon-to-be industry standard. The deal by CoreLogic [stock CLGX][/stock] to use Mercury Network is proof the new system is already being widely adopted. Of course, lenders can still submit the appraisals via an Adobe .pdf form. But, there is only one firm that will externally translate that doc in XML format: Veros Real Estate Solutions. “The industry is moving towards fully electronic submissions of appraisals in MISMO open-source XML formats. GSE programs such as the UCDP are accelerating this long overdue adoption,” said Darius Bozorgi president and CEO of Veros Real Estate Solutions. Lenders remain free to do their own .pdf extractions to submit to the portal and are under no requirement to go to Veros. “Nevertheless, .pdfs are still one of the major formats for the transmission of appraisals, and arguably the predominant format. As a result, the .pdf extraction service will play a significant role over the next several years,” Bozorgi adds. “We anticipate a high volume of .pdf submissions that will gradually decline as the industry more fully adopts MISMO property valuation data standards.” The lender or the appraisal management company is responsible for the fees — though no one is suggesting it isn’t worth the costs Veros incurs to do this work. But appraisers may ultimately be hit up for the added cost as lenders and AMCs look for ways to recoup those fees. Veros’ servicing fees for extracting the First Generation PDF into a supported version of XML for submission to UCDP were being circulated at the recent REO Expo conference in Fort Worth, Texas. Before showing it to me, one source described the fees as “jaw dropping.” For me, I interpret the new fees as a sign that it is time to stop using .pdfs for appraisals altogether (not that I want to take business away from Veros). There are three levels of .pdf extraction, with escalating fees. Keep in mind that electronic data extraction from .pdfs often lead to textual errors — perhaps the reason it no longer suits the appraisal industry. So there is the first level of charges, a $3.50 fee per successful appraisal data extraction. Veros anticipates the vast majority of .pdf extractions will fall into this first bucket. If it doesn’t pull clean, the appraiser can always resubmit. If the appraiser wants additional extraction attempts, it could begin to get costly. The second level of extraction is $18 per appraisal. Therefore, 100 appraisals would cost $1,800. In this case, Veros staffers will offer a more detailed extraction, and clear data inconsistency. For appraisers using nonsupported appraisal forms, however, Veros will need to manually rekey the entire document to ensure accuracy. This is $12 per page, so 100 appraisals would cost roughly $20,400. That’s more than $20k to switch a hefty batch of appraisals into a XML format — a clear killer to whomever is not on board with the slow death to the appraisal .pdf. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.