New Appraisal Guidelines from Fannie Mae

Submitted by Connect Realty co-founder Jim Canion

Coming to a town near you… effective October 1, 2010: new Fannie Mae appraisal guidelines. At last!

Formerly, Fannie passed several absurd rules governing the appraisal process and the relationship between mortgage brokers, lenders, and appraisers in an attempt to curb perceived abuses in the appraisal arena. Recently, Fannie announced that as a result of “identified issues with appraisals,” they are finally going to respond to outcries from most everyone forced to deal with the old rules.

This new set of rules seems to help change some of the unintended consequences caused by the original guidelines. The main problem areas covered in these new guidelines are:

1. Lenders’ ability to change the values determined by the appraiser.
2. Using appraisers not familiar with the local market where the property is located
3. Using appraisers without access to adequate data to make a fair assessment of value
4. Using foreclosures and short sales as comparable without giving consideration to the condition of those properties
5. The inability of the realtor or the mortgage representative to communicate with the appraiser

The new rules seem to be as rational and relevant as much as the previous rules were just the opposite. To see a complete discussion of these changes, check out this article on Realty Times.