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The Federal Housing Administration is delaying a plan to put a hard stop on home loan files that lack digitally signed appraisals.
The FHA previously planned to make extensible markup language signatures compatible with its electronic appraisal delivery system a requirement on Aug. 5.
But the government mortgage insurer delayed the move “until further notice,” according to a bulletin issued late Thursday.
The government agency, which is an arm of the Department of Housing and Urban Development, will continue to allow automatic overrides of the XML signature requirement for the time being.
If a “hard stop” had been put in place, any FHA loan file lacking the required electronic signature would not have been able to proceed until the issue was resolved.
FHA Commissioner Brian Montgomery is prioritizing efforts to improve appraisal automation to align it with more advanced technology used in the conventional market, and the FHA is planning to roll out a new platform in 2020.
By design, XML signatures offer a standardized yet flexible way of authenticating data as changes are made, and Montgomery wants the FHA to do a better job of managing appraisal quality and risk.
The FHA is making appraisal data integrity a priority because it insures traditional single-family mortgages with low down payments and reverse mortgages. Low down-payment loans are sensitive to home price fluctuations, and reverse mortgages allow equity withdrawal based on property values.
Most recently, the FHA has been particularly concerned about the integrity of appraisal data in the reverse mortgage market.