Fannie Mae has issued several new underwriting guidelines and revised some existing policies that will dramatically affect real estate appraisers. Fannie Mae, which is now under the control and direction of the newly created Federal Housing Finance Agency (FHFA), promulgated the new policies in its November 14, 2008 Announcement.
In reaction to the nation’s worsening economic crisis and uncertain real estate market, Fannie Mae will require real estate appraisers to provide data and analysis of market conditions on a new Market Conditions Addendum form which is to be included in every appraisal completed after April 1, 2009. The new form will require trend analysis to be completed in each appraisal with inventory analysis, absorption rates, and average sales prices shown for the prior seven to 12 months, prior four to six months, and current three-month periods.
The additional documentation will ensure that the appraiser is able to provide market-based data to support his or her conclusions regarding market trends that may affect the value of the subject property. Currently, neither FMLS or GAMLS provides access to all of the specific information required by the new guidelines. AREA has contacted both organizations and is waiting to hear if the groups intend to provide the required data to its appraiser customers.
The announcement appears to change the role of the “supervisory appraiser.” In an ambiguous statement, Fannie Mae's updated policy now requires "that if a supervisory appraiser signs the appraisal report as the appraiser, the supervisory appraiser must have performed the inspection of the property." Some appraisers are interpreting that to mean if the supervising appraiser signs on the left as the appraiser, he or she must have inspected the property (many appraisers would not see that as a "change" in policy). Other appraisers view the statement as a poorly worded requirement that the supervising appraising must now inspect all properties being appraised - that would be a change for many appraisers. Expect Fannie Mae to issue a clearer statement on the new requirement before April 1, 2009.
Updated guidelines alter a number of other appraisal practice for mortgage loan appraisals including a repair escrow for existing construction, new research and reporting requirements for current and prior listings of the subject property, a requirement to appraise the entire parcel for houses with excess land, and changes in time adjustments, verification of sales, neighborhood descriptions, and reporting the effective age. The recent announcement can be found at https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0830.pdf
. Also, you will want to review the FAQs
associated with the new rules.