FHA to re-assess appraisal delivery module of Catalyst software

The announcement comes on the heels of another delay specific to reverse mortgage functionality announced by FHA earlier this year

The Federal Housing Administration (FHA) announced this week that it will “re-assess” the Electronic Appraisal Delivery (EAD) module on its FHA Catalyst software platform, citing a need to take a closer look at the development and implementation of this part of the platform to maximize its operational efficiency. This is according to FHA INFO #2022-81 released on September 15.

“Since the start of its information technology (IT) modernization effort in April 2019, the Federal Housing Administration (FHA) has successfully modernized several key systems and associated processes on the FHA Catalyst technology platform,” the announcement reads. “Today, FHA Catalyst’s Case Binder Submission, Claims, and Single Family Default Monitoring System Reporting Modules are handling the exchange and integration of key information for thousands of FHA transactions each week.”

Work on further refining Catalyst remains a top priority for the agency, and is an important initiative within the larger goal of providing modern technological tools to lenders, servicers and the agency itself. Because of that, the agency has determined that the critical EAD module requires additional refinement.

“To ensure the highest quality technology development, FHA is today announcing that it is reassessing aspects of the development and implementation of the Electronic Appraisal Delivery (EAD) module on the Catalyst platform,” the announcement reads. “As it completes this reassessment, FHA is pausing full completion and integration for the FHA Catalyst: Electronic Appraisal Delivery (EAD) Module.”

As a result of this move, the agency is strongly recommending to affected stakeholders that EAD “onboarding and direct integration activities” cease for the time being, while the agency makes determinations about the further integration of the module.

“[The agency] strongly recommends that industry partners pause EAD onboarding and direct integration activities until final determinations are made regarding the electronic appraisal delivery system for loans originated for FHA insurance endorsement,” the notice reads. “This recommendation is only for the FHA Catalyst: Electronic Appraisal Delivery Module and does not impact integration or onboarding activities for any other FHA Catalyst module.”

Earlier this year, the agency delayed the transition to Catalyst for reverse mortgage appraisal submissions to March 2023, citing stakeholder concerns regarding timelines for compliance.

“FHA stakeholders have expressed concern with the existing timeline for the mandatory use of FHA Catalyst: [Electronic Appraisal Delivery] (EAD),” read Mortgagee Letter (ML) 2021-23. “FHA acknowledges and is receptive to the comments shared by these industry partners. Therefore, FHA is extending the mandatory use date of the FHA Catalyst: EAD Module. During this additional period, Mortgagees and Technology Service Providers are encouraged to continue their integration with and usage of the FHA Catalyst: EAD Module for all forward and HECM Single Family origination electronic appraisal deliveries.”

This added reverse mortgage functionality of Catalyst follows on from a series of updates that the agency made to the software in 2021, including a prior update that allowed mortgagees to more quickly and accurately respond to the agency’s request for case binders on both the forward and reverse sides of the mortgage business.

That summer, the agency also published an update to the Single Family Housing 4000.1 handbook which incorporated policies requiring mortgagees not approved for eCaseBinder (eCB) submission through Connection (FHAC) to use the Catalyst: Case Binder Module to submit both Single Family forward and Home Equity Conversion Mortgage (HECM) case binders that were requested through the Loan Review System (LRS) for post-endorsement technical review.

Further information is expected to be announced at a later date. Read the notice itself at the U.S. Department of Housing and Urban Development (HUD) website.

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