What Is Electronic Appraisal Delivery (EAD)?
Electronic appraisal delivery (EAD) is a more efficient way to transmit appraisal reports to the Federal Housing Administration (FHA) using a web-based portal. Mortgagees and third-party loan servicers can use the EAD portal to submit appraisal reports, search previous appraisals, view reports, and check compliance regulations in real-time.
The FHA updated its EAD system, called FHA Catalyst, to mirror traditional lending processes and meet changing expectations for digital lending experiences. As of March 14, 2023, FHA applicants will be required to use the EAD system.
- Electronic appraisal delivery (EAD) is an online system for mortgagees to apply for FHA endorsements and loan approval.
- Mortgagees, third-party loan servicers, and other authorized users can submit, review, and change appraisal submissions via the EAD portal.
- The FHA is responsible for insuring nearly one-fifth of home purchase loans.
How Electronic Appraisal Delivery Works
The process of submitting an appraisal through the EAD portal was designed to be similar to other lending appraisal systems to streamline the appraisal submission process. Digital tools and processes have transformed the real estate and financial industries. Although FHA lenders have been slow to adopt innovative technologies, electronic appraisal delivery benefits all those involved.
The FHA is responsible for insuring about 17% of all purchase loans, which means thousands upon thousands of appraisal submissions must be reviewed each year. Mortgagees and third-party servicers benefit from the speed of the appraisal approval process, while FHA lenders benefit from more accurate reporting and reduced paperwork.
Instead of submitting paper appraisals by mail or in person, EAD offers the convenience of submitting appraisals at any time from anywhere. Once an account administrator has been assigned, they will be able to submit, search, and update appraisals through the electronic appraisal delivery portal. This offers a modern way to manage financial reports for homeowners. Mortgagees simply log in to the electronic appraisal delivery portal to send in or update appraisal submissions for up to 90 days after the submission.
Key Features and Benefits of EAD
According to the FHA’s Office of Single-Family Housing, there are four key features and benefits that the EAD portal makes available to users and lenders.
1. Provides system messages with real-time feedback
When a user submits an appraisal through the EAD portal, it is automatically checked against FHA appraisal data and requirements. If anything is incomplete or non-compliant, an error message or warning will be displayed instantly with specific notifications for mortgagees to review and revise. Since compliance issues are quickly identified upfront, mortgagees can save time by correcting issues prior to endorsement.
2. Leverages industry data standards and processes
The EAD portal was built using the standards outlined by the Mortgage Industry Standards Maintenance Organization (MISMO). By mirroring the electronic appraisal technology that many mortgage organizations use, it is easier for lenders and administrators to understand the appraisal submission process. The EAD portal supports efficiency and consistency while simultaneously minimizing challenges.
3. Shares data between FHA systems
The electronic nature of the EAD portal also creates efficiencies across the FHA and lending ecosystem. When data is transmitted to the FHA via the electronic appraisal delivery portal, it is automatically secured to auto-populate other FHA screens that mortgagees experience throughout the process. Information such as FHA case numbers, lender loan numbers, validation statuses, and property-specific appraisal data is all shared among FHA systems to enhance the user experience and reduce input errors.
4. Allows access to submitted appraisal data and reports
Once submitted, appraisal data can be accessed through the EAD portal for 90 days. This helps minimize processing time, allows for simplified corrections, and permits mortgagees to have a transparent view of the FHA endorsement status.
The Federal Housing Administration pushed back the original mandatory use date for its EAD portal from March 14, 2022, to March 14, 2023.
How To Get Started With the EAD Portal
Once the mandatory transition dates are effective, mortgagees who are newly approved for an FHA housing loan must go through the electronic appraisal delivery portal to complete the steps required to get an FHA endorsement on a mortgage.
EAD onboarding and activating an account within the portal requires several steps. These steps will involve mortgagees, an FHA Connection (FHAC) application coordinator, and the mortgagee’s designated EAD lender administrator.
FHAC application coordinators are responsible for assigning administrative roles within the EAD portal and will work closely with mortgagees throughout the lending application and approval process. For each active FHA lender ID, mortgagees must assign a lender administrator.
Once an admin has been assigned, the EAD administrator must generate an "appraisal portal one-time key" to complete the onboarding process. This key will be important at the end of portal registration.
After retrieving the appraisal portal one-time key, the administrator will receive an email within a few days from the EAD portal. Inside, there is a link that administrators will need to follow to continue onboarding.
When an admin clicks on the link, they will be directed to set up an administrator profile in the EAD portal. Then admins will be able to make submissions and receive real-time status updates and compliance suggestions throughout the FHA loan approval process.
EAD Portal User Roles
Only a few user roles have permission to view, submit, and make changes to appraisal submissions via the electronic appraisal delivery portal.
The EAD administrator is responsible for managing and assigning both the individual user and third-party loan servicer access rights. This role is typically handled by someone from the mortgagee’s lending organization.
An EAD user is anyone who has access to the portal as assigned by the EAD administrator. Users can submit appraisal data and reports to the FHA via the EAD portal.
A designated third-party service provider can be an appraisal management company, appraisal fulfillment provider, or anyone that the mortgagee allows to submit appraisal data and report to the FHA on their behalf.
How Can I Upload an Appraisal to the EAD Portal?
Mortgagees using the electronic appraisal delivery portal can use the EAD portal’s secure website, which allows mortgagees to submit multiple appraisals.
How Long Does It Take for an FHA Appraisal to Come Back?
After the initial property visit (which usually takes a few hours), an authorized user can upload appraisal submissions immediately. Any compliance issues will be reported in real-time to address them promptly. Then, mortgagees must wait for the final approval. In most cases, appraisals submitted to the FHA via the EAD portal will come back within a few days or less, but there are exceptions.
How Do I Log a Second Appraisal on an FHA Loan?
There are many reasons why a second appraisal may be required when it comes to the FHA’s minimum property standards. If the original appraisal expires or there is a closing delay, for example, a second appraisal might be required.
To log a second appraisal for a single property, authorized users can sign into the FHA Connection and follow the steps outlined by the U.S. Department of Housing and Urban Development (HUD):
- Sign into FHAC and access the Appraisal Logging page.
- Enter the case number assigned to the mortgage in the FHA case number field and click "send."
- Review the original appraisal submission by clicking the View Electronic Appraisal link at the top of the page.
- Review the messages displayed on the Appraisal Logging Update page and take any necessary action to fix errors and be compliant.
- Enter any additional required information.
- Click on the Appraisal Logging Update page to process the page and save the electronic appraisal information.
What Will Fail an FHA Appraisal?
Error messages that lead to a hard stop are built into the EAD portal to improve successful appraisal submissions. When an error message is received, users can resolve the submission immediately. In addition to checking the home’s value, appraisers are also keeping an eye out for anything that could affect the health and safety of those living in the home.
Here are some examples of what will fail an FHA appraisal:
- Hazardous materials
- Toxic substances
- Damaged or defective asbestos
- Problems with insulation
- Radon gas
When it comes to error messages within the EAD portal, follow the instructions and ensure that all appropriate fields are filled out.
The Bottom Line
The FHA will require all appraisal submissions to be transmitted via its online EAD portal starting on March 14, 2023. This is beneficial for the government agency and mortgagees interested in becoming approved for FHA endorsements. The simple interface allows mortgagees and third parties to upload appraisal submissions, receive real-time compliance updates, and get approval within days instead of weeks.