Fannie Mae is updating its appraisal requirements and plans to provide sellers with a list of appraisers whose reports will require extra scrutiny or won’t be accepted.
Since 2011, the Washington, D.C.-based secondary lender has collected data on millions of appraisals through the Uniform Collateral Data Portal.
Fannie has been able to identify reports completed by appraisers with suspended licenses or certifications through a weekly check with the National Registry that is maintained by the Appraisal Subcommittee of the Federal Financial Institutions Examination Council. Lenders are warned when such an occurrence is identified and required to verify whether the appraiser’s credentials are current as of the appraisal date.
Fannie discussed the requirements in Lender Letter LL-2013-10.
“Fannie Mae reminds lenders that failure to comply with appraiser licensing requirements will result in a repurchase request,” the letter stated.
Because of the UCDP system, Fannie is able to identify inaccuracies and inconsistencies between multiple reports during appraisal reviews.
The Washington, D.C.-based company cited an example of one report where the square footage and sales price of a comparable sale was different than on 10 other appraisals.
Another example showed how the same appraiser indicated that the condition of the one property different on multiple reports.
Fannie said it is developing multiple processes that will provide information to lenders and appraisers about the quality of UCDP-submitted appraisals.
Appraisers with reports that exhibit a pattern of minor inconsistencies, inaccuracies or data anomalies will be provided information directly by Fannie. The procedure is designed to improve training and education while giving appraisers an opportunity to improve their work.
When appraisal reports exhibit more egregious issues, the lender and appraiser will be advised that 100 percent of that appraiser’s work will be reviewed after purchase.
In some cases, no further reports will be accepted from the appraiser.
An Appraiser Quality Monitoring list which includes all appraisers whose work is subject to 100 percent review or have been blackballed will be made available to all approved sellers by Jan. 6, 2014.
“The new processes described in this letter may not identify all issues that could lead to an appraisal-related repurchase request,” the lender letter stated. “The presence or absence of communications between Fannie Mae and an appraiser, or Fannie Mae and a lender, concerning the quality of appraisals submitted through the UCDP does not imply that a lender has met its responsibilities under the guide regarding appraisals or that a lender will not be required to repurchase a loan for reasons related to the appraisal or the performance of the appraiser.”
Fannie is implementing today UCDP messages to advise lenders about appraiser actions, including whether their appraisals will be reviewed or won’t be accepted.
