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Fannie Mae has announced new changes to their appraisal policies, and reminders of existing policies, effective for all appraisals on or after January 1, 2009. • Lenders must provide the appraiser with the sales contract and all addenda, therefore ensuring that the appraiser has been given the opportunity to consider the financing and sales concessions and their effect on value, for all purchase transactions. • If an appraiser utilizes comparable sales outside the subject’s neighborhood when closer comparable sales appear to be available, Fannie Mae is adding a requirement that the appraiser provide an explanation as to why they used the specific comparable sales in the appraisal report.
Fannie Mae has announced new changes to their appraisal policies, and reminders of existing policies, effective for all appraisals on or after January 1, 2009.
• Lenders must provide the appraiser with the sales contract and all addenda, therefore ensuring that the appraiser has
been given the opportunity to consider the financing and sales concessions and their effect on value, for all purchase transactions.
transactions.
•
If an appraiser utilizes comparable sales outside the subject’s neighborhood when closer comparable sales appear to be available, Fannie Mae is adding a requirement that the appraiser provide an explanation as to why they used the specific comparable sales in the appraisal report.
be available, Fannie Mae is adding a requirement that the appraiser provide an explanation as to why they used the
specific comparable sales in the appraisal report.
Selection of comparable sales – Although is it preferable for the appraiser to provide comparable sales from the subject’s neighborhood, Fannie Mae does allow for the use of comparable sales that are located in competing neighborhoods as these may simply be the best comparable sales available. If this situation arises, the appraiser must not expand the neighborhood boundaries just to encompass the comparables selected. The appraiser must indicate the comparables are from a competing neighborhood and address any differences that exist.
subject’s neighborhood, Fannie Mae does allow for the use of comparable sales that are located in competing
neighborhoods as these may simply be the best comparable sales available. If this situation arises, the appraiser must
not expand the neighborhood boundaries just to encompass the comparables selected. The appraiser must indicate
the comparables are from a competing neighborhood and address any differences that exist.
Sources of comparable market data – When appraising new construction, the appraiser may need to rely solely on the builder of the property they are appraising to provide comparable sales data, as this data may not yet be available through typical public sources. In this scenario, it is acceptable for the appraiser to verify the transaction of the comparable sale by viewing a copy of the HUD-1 Settlement Statement from the builder’s file.
builder of the property they are appraising to provide comparable sales data, as this data may not yet be available
through typical public sources. In this scenario, it is acceptable for the appraiser to verify the transaction of the
comparable sale by viewing a copy of the HUD-1 Settlement Statement from the builder’s file.
Date of sale/time adjustment – If in the analysis and completion of the sale comparison approach the appraiser determines that time adjustments are required, the adjustments may be either positive or negative. The adjustments, however, must reflect the difference in market conditions between the date of sale of the comparable and the effective date of appraisal for the subject property.
determines that time adjustments are required, the adjustments may be either positive or negative. The adjustments,
however, must reflect the difference in market conditions between the date of sale of the comparable and the effective
date of appraisal for the subject property.
Appraising the entire site of a property – Fannie Mae is clarifying that the appraisal must include the actual size of the site and not a hypothetical portion of the site when determining the appraised value. The appraisal must include the actual and entire size of the parcel site The appraisal may not be based upon a hypothetical potion of the site when determining appraised value. The sales comparables chosen must have similar size parcels, thereby demonstrating the marketability of the site size.
site and not a hypothetical portion of the site when determining the appraised value.
The appraisal must include the actual and entire size of the parcel site
The appraisal may not be based upon a hypothetical potion of the site when determining appraised value.
The sales comparables chosen must have similar size parcels, thereby demonstrating the marketability of the
site size.
Effective age of the subject property – Fannie Mae is clarifying that when adjustments are made to the appraisal for the effective age, the appraiser must provide an explanation for the adjustments and the condition of the property.
the effective age, the appraiser must provide an explanation for the adjustments and the condition of the property.
Fannie Mae requires the appraiser to research and comment on whether the property is currently for sale or if it has been listed for sale within 12 months prior to the date of the appraisal. To clarify, the appraiser must report on
been listed for sale within 12 months prior to the date of the appraisal. To clarify, the appraiser must report on
each occurrence or listing and provide the data source(s), offering prices, and date(s). For example, if the subject property is currently listed for sale and was previously listed 8 months ago, the appraiser must report on both offerings.
is currently listed for sale and was previously listed 8 months ago, the appraiser must report on both offerings.
Interesting, nothing addressing AMC issued appraisals?
great info, thanks Dean
I hope those are the only changes...
Thank you for posting this. Great info, well presented. Helped me to understand the appraisal process, especially in this uncertain mortgage environment.
Do these changes also require appraiser to report in the subject's listing history any price changes and dates?
Todd Thacker
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