Correction: This article was revised to show Fannie Mae's correct implementation deadline of Aug. 1, 2014.
On April 15, Fannie Mae announced changes to its Selling Guide that affect appraisal policies relating to appraisal updates, required photos and acceptable comparable properties. The changes, which must be implemented no later than Aug. 1, follow a comprehensive review of the Guide’s appraisal requirements chapters.
“As a result of that review, new policies have been developed, current policies have been clarified, and additional guidance has been incorporated,” Fannie Mae noted in its announcement. “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.”
Among the changes, Fannie now requires appraisers who are performing an appraisal update to include a photograph of the front of a subject property so that the exterior inspection can be validated. Appraisal updates must be reported on the Appraisal Update and/or Completion Report (Form 1004D).
Fannie Mae noted 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 also are needed on the impact, if any, on the market value of the subject property.
Fannie Mae clarified that it no longer needs an explanation when using comparable sales that are more than six months old. The lender 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 more recent but dissimilar 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 GSE stated in the announcement.
The complete details about the update are outlined in Fannie Mae’s Selling Guide Announcement SEL-2014-03.