FHA rescinds mandatory Catalyst appraisal submission requirement

After outlining a plan that would require appraisal submissions through its Catalyst Electronic Appraisal Delivery (EAD) software last year, the Federal Housing Administration (FHA) announced this week that it has rescinded the submission requirement. The agency is also discontinuing “the onboarding of new mortgagees and all activities related to integrating with FHA Catalyst: EAD Module,” according to an FHA announcement and Mortgagee Letter.

The move marks an about-face from the FHA policy outlined in September of 2021, which announced dates in which mortgagees would be required to transition to the EAD portal for submitting appraisals for single family forward and reverse mortgage endorsements.

According to the letter, the agency will instead focus its resources on tools with proven effectiveness.

“The modernization of FHA’s information technology resources remains a top priority for HUD,” the letter states. “The FHA Catalyst platform has been central to FHA’s efforts to transform its technology tools and capabilities. To date, the Case Binder Submission, Claims, and Single Family Default Monitoring System Reporting Modules, built on the FHA Catalyst platform, have proven to be effective in enhancing the exchange and integration of key information between FHA and its business partners.”

The FHA stated in the letter that it aims to ensure that Catalyst’s tools “best meet the business needs of both Department and industry participants,” noting that the electronic appraisal submission will remain on its Legacy EAD instead.

“After thoroughly evaluating the current structure and capabilities of the FHA Catalyst: EAD Module and its ability to effectively meet the electronic appraisal delivery needs of FHA and its business partners, FHA has determined that the most effective technology solution for electronic appraisal submission is to remain on its Legacy EAD, which maintains an industry-aligned external EAD portal and interfaces with FHA Catalyst: EAD Module for data storage, dissemination, and analysis,” the letter states.

The EAD module will remain available for initial appraisal submissions through March 17, 2023. Resubmissions of appraisals for previously submitted cases can be made through October 14, 2023.

“Mortgagees that have active credentials in the Legacy EAD portal are encouraged to promptly begin sending all new appraisal submissions to this portal,” the letter notes.

The agency initially delayed the transition in February, which was reportedly due to stakeholders expressing concern about the timeline. In September, FHA released an informational notice saying it would “re-assess” the EAD module on FHA Catalyst, citing a need to take a closer look at its development and implementation.

Read ML 2022-19 at HUD.

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