The beauty of the Ritz-Carlton's west coast beach in Dana Point, Calif., overcame the overcast sunrise as the invigorating sea breeze slipped into the main ballroom of the 2012 Predictive Methods Conference (PMC). The room was energized as Darius Bozorgi, President and chief executive officer of Veros Real Estate Solutions took the stage to kick off the conference. A fitting scene for the appraisal industry that has been under a cloud of uncertainty, but the tide is shifting. Technology is advancing the industry and you can hear the hope of opportunity in the voices of the presenters.

That’s not to say that everything is sun, fun and sandy beaches. It’s going to take hard work to get the industry back on track, but the developing technology driven by the Uniform Collateral Data Portal (UCDP) is going to be the key to continued success in the appraisal space for lenders, appraisal management companies (AMCs) and appraisers alike. The big question is, who will be the ones to leverage the technology and who will be left behind?

“We have gone through fundamental paradigm shifts in the market,” said Bozorgi to PMC’s full main ballroom on Monday, June 4. As he gave an overview of the PMC themes that run through the agenda, he took a moment to explain the “information asymmetry” that will take center stage in one of the keynote addresses. “That’s the disconnection between people who have information, the people who don’t and the risks associated with information asymmetry. What better example of information asymmetry than the mortgage market?”

The rhetorical question doesn’t fall on deaf ears in the appraisal industry. Or, more accurately, it falls on some deaf ears. Some appraisers have taken to leveraging new valuation products. They have taken the time to be trained in the new wave of appraisal arts. And the government-sponsored enterprise (GSE), lender and government sides of the industry have pushed them into the new millennium with the implementation of the Uniform Mortgage Data Program (UMDP). And this is only the beginning of the appraisal technological revolution.

Risk management is going to be a huge part of the appraisal process as the data is standardized through its UMDP implementation.

“One of the things that was done in the UMDP was to standardize the appraisal form,” said Marianne Sullivan, senior vice president of Credit Portfolio Strategy Underwriting and Pricing for Fannie Mae. “This was really important. In 2009 we had historical appraisals in XML format to see if we could make heads or tails of the data. It was a bunch of gunk. It was hard to analyze and understand because there weren’t standard ways for appraisers to put the information down on paper. There were around 220 different ways that the subject property condition was described.”

“There are about 77 standardized elements that will make it easy to analyze and interpret the information … [The standardization] will enable us to have greater transparency about what exactly we’re underwriting and securitizing, and enable new and innovative ways to [quality control] efficiently across a very large body of data,” she said.

Sullivan reported that more than 1 million appraisals have been accepted through the UCDP, and that UAD compliance rates have exceeded 98 percent. Clearly, the UCDP has been a success for the GSEs so far. And if rumors and off-the-record talk is any indication — automated appraisal review is going to be an exploding trend very soon. Discussion of appraisal review scores is common in the halls and sessions of PMC 2012.

So what’s on the horizon? Uniform Loan Delivery Dataset (ULDD) phase 2, a Uniform Mortgage Servicing Dataset and a leveraging of standardized data to better analyze appraisals. What does this mean for the appraiser? UAD is here to stay and it’s only going to grow. It’s clear that compliance is king and quality is close behind. Automated appraisal review could soon be the next wave of innovation — time to grab an appraisal surf board and get to work.

(For more on PMC 2012, check out http://www.pmc2012.com. And be sure to follow @ValuationReview on twitter with the hash tag #PMC12 for live updates from the conference.)

(Full disclosure: Valuation Review was a sponsor of the PMC 2012 Welcome and Keynote address.)