Why the New UAD is DOA

[Zoe]

Think about this. If Federal govt owns the gses, the federal government will have IRS data on commercial and residential real property to feed AI.

 

[Zoe]

People are not crying about intellectual property rights now, but that cry may come eventually with AI. Appraisers have been crying about it forever to deaf ears.

Look at big picture relative to what AI can do. Look at meat and bones vs taking over your profession.

Anti trust law is in the picture too. My girlfriend Joan knows that. AI knows that. The gses know that anti trust law is involved.

AMCs know antitrust law is in picture. AI may be an angel before said and done.

 

[alebrewer]

Let alone the lenders. Not a single one of my clients have said they are ready and most don't expect to be until mid year at the best

I think this is a piece that often gets overlooked. Not only will: (1) the software providers have to have a viable product, but: (2) appraisers will have to be competent to report using the new 3.6, (3) reviewers/automated review products will have to be competent to review the new 3.6, (4) underwriters will have to be competent to underwrite the collateral reported on 3.6, (5) closers will have to be prepared to deliver the new 3.6 along with the loan file to the investor/GSE, and (6) funders will have to be competent to know how to package the new 3.6 into the loan file.

Can't speak for any other entity than mine, but I seriously doubt many lenders are prepared for this - I know mine isn't.

 

[J Grant]

This is such a fustercluck- if the GSEs should abandon the format for appraials, it would take a very short time for the software companies to incorporate the additional data fields and rework them into existing forms.

There is an undisclosed reason imo for the "dynamic format" drop down menus, which can be cloud-based, the way BPOs are filled out in real time - perhaps with an eye on non-appraisers being able to fill it out , with a mouse-type disclosure on their product version that it is not an appraisal or they only did clerical .

 

[alebrewer]

Any software could be 'cloud based' - the providers have just been too lazy and greedy to bring that to the market until forced to do so.

 

[Essexfenwick]

This is such a fustercluck- if the GSEs should abandon the format for appraials, it would take a very short time for the software companies to incorporate the additional data fields and rework them into existing forms.

There is an undisclosed reason imo for the "dynamic format" drop down menus, which can be cloud-based, the way BPOs are filled out in real time - perhaps with an eye on non-appraisers being able to fill it out , with a mouse-type disclosure on their product version that it is not an appraisal or they only did clerical .

There is no doubt that the goal is the elimination or vast reduction of human appraisers. Appraisal might be the best example of a job the massive national investment in data centers / AI will do, especially on a macro economic scale. It doesn't matter if it's way off on one appraisal as long as regarding the whole market and every appraisal in existence it's within a reasonable range. The goal is obviously data collection .. the goal going forward will be speed and cost reduction of data collection. There will still be some appraisers left. Most likely MAIs and SRAs to do unusual and or legal situations.

 

[Non Sequitur]

Not a broad release but enough to get if rolling and by end of 2026 it will be fully operational that's what the majors are saying. Everyone seems very confident except the appraisers. The the new software's ready and Beta Tested now it's just a 6 to 8 months dripping it out and doing it in stages.

Define everyone. If you mean the cheerleaders in the echo chamber, what do you expect from them? It's like they watched to much Opra and are trying to speak 3.6 into existence. Every bank dept manager/reviewer, UW, LO, etc. I've spoken to has zero idea other than they heard something is brewing.

The talking heads are paid to cheerlead, but in the end if this threatens to hold up production it will get postponed. Production always wins.

 

[Bobby Bucks]

Let alone the lenders. Not a single one of my clients have said they are ready and most don't expect to be until mid year at the best

Several small to medium sized lenders have emailed me with questions about the new UAD and in "professional language" they have politely asked, "What the hell is going on with that new UAD form? Is anyone doing them yet? are you ready for it, is your software ready for it and are any other clients ordering them yet"? It's both pathetic and comical when you think about it. Obviously they don't believe ANYTHING they're being told from GSE royalty.

 

[RCA]

The fundamental problem with the use of AI in writing a report is that as professionals we have an obligation to understand how our tools work and what they have done to generate the results we are using in our analysis and because AI is a black box you cannot do that and thus you fail your ethical obligations when you use it.

It appears you are conflating different things here. If you ask the statistical package Random Forests to generate a model predicting house prices, it will NOT be able to tell you why the model is what it is, because the computations are too complex for anyone to make sense of. And, importantly, we do not expect Random Forests to attempt to explain why it constructed the statistical model the way it did. So, people say it is a "Black Box."

On the other hand, if the AI you are talking about is something like ChatGPT, then a very important part of its job is to explain with verifiable facts and verifiable logic (which humans should understand) how it arrived at its conclusions. And if you don't understand or agree with the response, you can raise objections and ask more questions to your heart's content. So ChatGPT is, compared to other people, whose heads are truly black boxes, rather open. And that is a nice advantage. It HAS to answer your question. Other people can just shut you off or lie to you.

Your typical appraiser who CAN just create adjustments out of thin air with no other explanation than "based on my experience" is truly a Black Box.

And that is why we are getting brainwashed with this bias and discrimination nonsense. The Appraisal Leadership can't solve the problem otherwise. They are not up to the task.

 

[alebrewer]

Bottom line: drop the Random Forest and step away.