Blogging

Last November Fannie Mae announced changes in their appraisal requirements. Some of of these became effective on January 1^st, 2009 and others will become effective on April 1^st 2009.

As of January 1^st 2009 some of the major changes were.

• Supervisory appraisers must inspect all properties of trainee appraisers.
• Lenders or their representatives must provide copies of the purchase and sales agreement.
• Seller concessions for comparables must be disclosed, and verification requirements of the appraiser are increased.
• Appraisers are no longer allowed to appraise portions of sites.
• Time adjustments are required and support be given in markets where home values are increasing or decreasing.
• Effective ages indicated by the appraiser must be given support and justification.

As of April 1^st 2009 the “1004 MC” or Marketing Condition Addendum will be required. This form is very comprehensive, requiring the appraiser to extract MLS data, to an excel spread sheet and then taking this information and developing trend lines, absorption rates, sales to list price ratios, days on market, as well as explanation of submarkets and the overall effect of submarkets.

This form is intended to increase the transparency of the appraiser’s conclusions in the report.

From a pragmatic perspective, it will mean more work for the appraiser to explain his or her conclusions, especially in light of that most underwriters that have no or little understanding of appraising theories and/or tools.

Our scope of work is increasing. And with that increase in workload, is an increase in appraisal fees. So as of March 17, 2009, I will include the 1004MC on all appraisal reports and increase my residential fee to $500.00. There will be no additional charge for FHA since all appraisals will be made for FHA standards.

In most cases my appraisal report will include a cost analysis to better support the indicated effective age, and include additional comments regarding the verification of comparables and condition of sale adjustments. Reports will include graphs that will support or give weight to the basis of time adjustments, or lack of one, and in many cases an AVM/Multiple Linear Regression report to support the conclusions made.

Don’t forget that as of October 2009, FHA will require all appraisers to be certified, so expect a reduction in qualified appraisers starting in October 2009

I recommend several links to understand what is going on in the market.

Fannie Mae Announcement November 14, 2008

www.appraiserscope.com Which has comments and solutions from both mortgage representatives and appraisers.

The appraisers water cooler – 1004 MC