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A Look at the Uniform Collateral Data Portal – Countdown to the Mandate

Feb 02, 2012

Featuring Darius Bozorgi Veros' president and chief executive officer

February, 2012 Podcast Transcript - Duration: 9 minutes

Emily: Welcome to Veros Real Estate Solutions monthly Podcast. In this session Darius Bozorgi, our president and Chief Executive Officer will provide an update and futuristic look at UCDP.

Darius: Thanks Emily. I am very excited to be here to talk about UCDP and how it fits into the overall UMDP program. The GSEs and their regulator have really led the industry in terms of the implementation of solutions to improve loan quality and US housing markets. Veros is very excited to be a part of this transformation.

Emily: In general terms can you provide a brief overview of UCDP and the purpose of the initiative?

Darius: Sure. I guess first I’d like to back up a little bit and state at least from my point of view the needs and problems for which UCDP arose or attempted to solve are not, in my opinion GSE issues. They’re not limited to the GSEs, it’s not an agency verses non agency issue. These are really secondary market issues. We had an environment where we had no transparency into loans that were being acquired by investors across the board. We had no transparency into the loans that are the underlying basis of the securities in which investors throughout the world were investing in these fixed income securities.

UCDP is an attempt to solve part of that problem through accepting standardized loan level data in an electronic format for analyses.

Emily: Specifically what happens on March 19th how is it different from what we have seen since UCDP went live on June first in 2011?

Darius: Well first I direct folks to the guidance and information that has come out from both FHFA on their web site as well as just really a wealth of information on both of the GSE’s web sites. FreddieMac.com and EFannieMay.com, and just in their search forms put in UMDP or UCDP you’ll find those areas on their web sites. But March 19th is the mandate on which any loan sold to or delivered to the GSEs on or after March 19th the appraisal, the UAD compliant appraisal must first have been submitted through UCDP and this is the key. For loans where the application date was on or after 12 one 2011 so that is key.

Now there’s been some confusion regarding the resent announcement relative to ULDD and that getting pushed back to July 2012 for a requirement date.  They have some optional early adoption dates I believe in April, but the key thing to remember there is that, that does not relate to UCDP at all. So the March 19th date has been there in place for a long time. FHFA was I believe very clear in stating that that date was unaffected with anything having to do with new dates with ULDD. So that is something that lenders and their vendor partners need to be ready for because as far as I’m concerned March 19th is tomorrow and you need to be ready to go.

Emily: Great there have been a number of questions and certainly some speculation as to how the GSEs will use the data collected in UCDP. Can you provide some prospective on that?

Darius: Well first I would say that how the enterprises choose to use the data is certainly up to them. I have no say in that but I can make some general comments about it. First of all UCDP certainly does check the appraisal submission for compliance against the standard and the standard I’m referring to obviously is the UAD standard. Now, we have seen some confusion in this regard, so a, I think a lot of folks out there believe that if the appraisal is not UAD compliant that UCDP will reject that appraisal. That is not true. There certainly are fatal edits that are a subset and include some UAD failures that if triggered would result in the rejection of the appraisal.

But there are other UAD noncompliance issues where that appraisal still is accepted within UCDP. Now that, this is the difference between how electronic enforcement of the standard and whatever policies the GSEs may put out relative to their expectation of UAD compliance based on their agreement between themselves and their customers. But I think there’s a lot of folks out there that have incorrectly assumed that if the appraisal is accepted by UCDP they are 100 percent across the board cleared on UAD compliance issues, that is not the case. UCDP will message back to the submitter the UAD related errors or issues that should be addressed by that lender but it has still accepted that into the system.

Absent the fatal edits that I referred to earlier which would result in a rejection. It’s a subtle distinction but it is a very important distinction that a lot of folks get or unclear on.

Emily: Good we have just a little bit of time left, is there anything else you would like to add?

Darius: Well I guess I would close by saying that this is the first time that an effort like this has been undertaken and again I really applaud both the enterprises and the regulator for taking a leadership role in this regard because I don’t think it, as I said earlier is limited to their business model. It’s a truly industry wide initiative for the entire housing finance system. When all is said and done and we look back at this, I believe UCDP and UAD, the entire UMDP program will be a model for standardization and increase transparency and accountability in the US housing finance markets.

And whatever your view of housing finance 2.0 is or what you think it should be as that debate is certainly front and center in the media right now. But whatever those thoughts are, access to loan level data in a standardized electronic format is the corner stone for success in any of those models.

Emily: Great, Darius. Thanks so much for you time today, we really appreciate it. For access to more information on UCDP please visit Veros.com also be sure to follow Veros on Twitter @VerosRES for more news.


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