Fannie Mae Issues New Appraiser Guidelines

Fannie Mae has set new guidelines for choosing appraisers and comparable properties that appraisers uses. This should bring some much needed relief from The Home Valuation Code of Conduct. In order to comply with the HVCC, many lenders were using appraisal management companies to hire appraisers.  Many of the appraisals that were hired out by appraisal management companies were falling short of the contracted sales price. The appraisal management companies often employ appraisers with little experience in the markets in which they are asked to provide valuations. These new guidelines should insure that a qualified appraiser will be doing the report using the correct comparable properties.

Fannie May has given notice to lenders that they can now only use appraisers who have the ability to access records on recent sales, and are knowledgeable about the area in which they are appraising properties in. If issues arise with the original appraisal, lenders can order a review or a new appraisal from another appraiser.

Fannie Mae has also set guidelines for choosing comparable sales. If an appraiser uses a short sale or a foreclosure as a comp, they will be required to identify and consider the condition of the home and weather any stigma has been associated with it.  Appraisers will still be required to use at least three comparable sales, and can use more than three.

Hopefully the new guidelines set by Fannie Mae will ensure that more transactions appraise at the contracted sales price and end up closing escrow!