MBA/MISMO Appraisal and Property XML
AppraisalBuzz Interview with Jeff Bradford, REPI Co-Chair

After two years of working with the MISMO REPI group,
what is it like to have finalized an open standard appraisal?

JB. If I can speak for the group, it feels very good to finally have a final version of the standard. This effort is the culmination of a lot of people's efforts. Many people who have moved on to other things are not around to see the fruits of their labor. As you probably know, this is a volunteer organization, so participating organizations contribute where they can and when they can. In the end, we were very fortunate to get a lot of help from First American and Doug Lamb's group in finalizing the structures.

First American was involved in this effort.
Who were some of the other organizations that were involved?

JB. Well, initially, it was an appraisal dominated effort. But competitive pressures kept the appraisal software vendors from working together. Fortunately, as the effort became more defined, other groups became interested and climbed on board to help guide and develop it. We definitely did not do this in a vacuum. I believe there are over 80 members registered in the REPI Workgroup today. In terms of organizations, there was NAR and the REITS effort, ERC and eRelay, FNC and AIReady, AARTT and REIPA, OTX, Fannie and Freddie, even the country recorders' PRIJTF association was involved. And of course, all the other MISMO members who had a vested interest in Property and Valuations. Suffice it to say there are a lot of people who have contributed in one form or another. Overall, I believe there are 143 organizations that make up MBA/MISMO.

So what does all this mean for the appraisal industry?

JB. First of all, this standard is not just for the appraisal industry. The standard is actually for Appraisal and Property. To fully grasp its ramifications, we need to understand what it means to have defined a standard for describing Property for all the members of the MBA. Since Property is generally at the core of most financial transactions, it's a pretty big deal. It means that when appraisers describe property, it will be the same as how county recorders will describe property. With this standard we now have a set of XML elements that are common to appraisal, property, servicing, loan applications, flood, title, credit, tax, and even county recording. Just think of this for a second. For the first time ever, most of the functions in a financial transaction now have a digital commonality where they overlap. Because of this commonality, information can now flow from one place to another much faster and much easier. So it's a big step for the financial community. It brings everyone closer to having an all digital transaction.

As for the appraisal industry, it means there is now an MBA-wide, truly open standard for describing an appraisal, ordering an appraisal and transmitting an appraisal. There is now an alternative to the proprietary standards currently in place. I think it will open the doors to competition and you will see innovative ways of implementing appraisal transactions. I liken it to the telephone business. There are all kinds of phones, some fancy, some simple, but they all connect the same way and all allow everyone to talk to each other. Appraisal and Property XML sets the standard for how to talk to each other. The actual implementation will vary. It will also open up side opportunities. For instance, because of the Property XML standard, accessing property data will become easier as data providers adopt the standard. As I mentioned previously, First American is implementing it for that very purpose. Appraisers with MISMO compliant software will be able to download First American property data right into the report without needing special converter software or retyping any data. The bottom line is that the standard allows information to move easier and faster and incidentally, much cheaper than with proprietary systems.

You mentioned there was a standard for ordering an appraisal.
Can you elaborate more?

JB. Sure. I think this is very important because it means there is a common way to order everything. Within MISMO, there is a standard XML way to issue Requests and Respond to those Requests. It means there is an open standard for ordering an appraisal and responding back to the requestor. It means that the same program used to order a credit report or a flood determination can be used to order an appraisal. It means appraisers and lenders do not need special or proprietary middle-man software to work together as long as they are both MBA/MISMO compliant.

Are all the appraisal forms supported in the MISMO Appraisal XML?

JB. Let me first say that this standard is data centric and not forms centric. This means the standard is not based on forms. So its use is not limited by the number of forms mapped. For instance, AI Ready and Lighthouse are form centric systems. They can only be used to transmit appraisal forms that are supported within their respective systems. If the system does not support a particular form, then you cannot transmit it. These systems rely on data mapping to put information into their own proprietary forms for reproduction at the lenders site. In most cases, this is fine, until you need a form that is not supported. So form centric means limited to the supported forms. Data centric on the other hand allows us to not be limited to a certain set of forms. It works with all appraisal forms. Literally every appraisal form can be used with the Appraisal and Property XML standard.

Let me explain how we did this, because being data centric is at the heart of why the standard is so flexible. First, we made Property the core or the basis of the standard. Next, it was important to divide the factual and analysis parts of property so the factual information could be used by groups just interested in property without cluttering it up with appraisal or inspection analytics. So these two parts became known as Property Characteristics and Property Analysis. Then we wrapped the major parts of an Appraisal around the Property components. This included the valuation methods, inspections and of course the valuation summary. Around that we wrapped the appraisal report, parties involved in the appraisal and its addendums. And finally, around all that, we wrapped the standard MISMO Response structure so that anyone who is MISMO compliant could receive the appraisal in a standard way. By doing it this way, we allowed people to use as little or as much of the standard as they need to get the job done. For instance, if you just wanted to send a PDF of the report using the MISMO standard you could.

You mentioned the core is Property Characteristics.
Why is that the core?

JB. Well, if you think about it, Property Characteristics is what appraisers, inspectors, data providers, realtors, the MLS, and everyone else who is involved in property deals with today. It's the factual information about a property. Our challenge was to create a standard way of describing property. This effort produced Property XML which is the MBA's stake in the ground for defining property. We went to a lot of effort to make sure we could describe all kinds of properties. You can describe everything from a single family residence to agricultural and rural properties with multiple structures back down to to the common mobile home. It's quite robust. Incidentally, as we talk, the REITS group at NAR is doing a gap analysis to see what the differences are between our Property standard and theirs. Maybe in the future getting data from the local MLS will be much easier if we can all use the same standard.

Data providers are important to appraisers.  Are there any national data providers who are adopting the Property XML standard?

JB. Yes. I can tell you about one who is adopting it in a big way. That would be First American. They are a very diverse company and they see open standards as a way to help them become more efficient and compete at a higher level. They were instrumental in defining the Appraisal and Property XML standard.

Let's talk about PDFs.  You mentioned them earlier.
What role do they play in the Appraisal XML standard?

JB. Today, a PDF is the Internet standard for representing and transmitting documents in a generic way. So we built a PDF component into the Appraisal and Property XML standard. It allows you transmit a PDF document embedded in the XML structure. This means you do not need special packing software to transmit the XML data and PDF to the requestor. Incidentally, embedding PDFs into the XML data is quite common when requesting Credit and Title information using the MISMO XML standards. It's being done all the time today using the MISMO standard.

Most importantly, the embedded PDF capability allows the appraiser to transmit their complete appraisal with all its nuances just as they created it without leaving anything out or violating USPAP regulations. In turn, this allows the recipient to get the full report along with the pertinent data in XML format. It's the best of both worlds and does not require special software or any additional expense on either party.

As a provider of appraisal software, can you talk about what your company will be doing with the Appraisal and Property XML standard?

JB. I can tell you that Bradford Technologies as a company will be implementing XML and in particular MISMO XML in a big way. It's a great way to move information. Concerning our software, the Appraiser's ToolBox, there again we will be implementing the full standard. Using our software appraisers will be able receive orders, produce an Appraisal XML document of any appraisal report and transmit the results to the requesting party.

Additionally, as Co-Chair of the MISMO/REPI effort, we will probably develop some sample programs for requesting appraisals and responding using the MISMO standard. I imagine the source code will be available and we will distribute the programs as free ware. We'd like to see as many people as possible implement the standard, so we will be doing whatever we can to make that a reality.

If someone wanted to learn more about the Appraisal and Property XML standard, what can they do or who should they contact?

JB. I would encourage them to go to the MISMO website (www.mismo.org) and register to be on the REPI and other list servers. If they want to implement these standards, I would encourage them to attend the MISMO meetings. If they want additional information about XML they can check out our website (www.bradfordsoftware.com). We have all the XML Data Dictionaries (DTD's) necessary to get them started. Lastly, they can contact me directly at jeff@bradfordsoftware.com if they have any questions on using the MISMO Appraisal and Property XML standard.