Appraisal policies have been updated at the Federal National Mortgage Association. Impacted areas include required photos, acceptable comparable properties and updated reports.
When an appraisal update is being performed, a photograph of the front of the subject property needs to be included to validate the appraiser’s exterior inspection at the time of the update.
Appraisal updates must be reported on the Appraisal Update and/or Completion Report (Form 1004D), according to the Washington, D.C.-based company.
All the details about the update and other updates were outlined in Selling Guide Announcement SEL-2014-03.
The changes followed a comprehensive review of appraisal requirements chapters of the selling guide.
“As a result of that review, new policies have been developed, current policies have been clarified, and additional guidance has been incorporated,” the announcement said. “Further, significant changes to the organization of both chapters have been made. In some cases, topics and paragraphs have been re-titled and content has been reorganized with the expectation that searching for specific information will be much easier.”
Fannie Mae said that origination appraisals can be utilized for subsequent transactions if there is no change to the property condition impacting the market value and certain requirements are met.
The requirements relate to the transaction type, age of the appraisal, continuity of ownership and the lender.
When identifying an addition that doesn’t have a required permit, the appraiser must comment on the quality and appearance of the work. Comments are also needed on the impact, if any, on the market value of the subject property.
The secondary lender said it no longer needs an explanation when using comparable sales that are more than six months old.
Fannie also added an example in its selling guide that illustrates when it might be appropriate to use older sales with proper time adjustments instead of a dissimilar more recent sale.
“An older sale may be more appropriate in situations when market conditions have impacted the availability of recent sales as long as the appraisal reflects the changing market conditions,” the notice stated.
The changes are immediately effective.
