In a letter to its seller-servicers last week, Fannie Mae updated its appraisal policies to provide specific guidance on when an appraisal is considered deficient. The policy change was prompted by Fannie Mae's post-purchase reviews, which turned up cases where lenders had reduced the opinion of market value in the appraisal report based upon underwriter judgment, automated valuation models or another methodology.
In its letter, Fannie Mae reminded lenders that appraisers must have the "requisite knowledge" to perform a professional-quality appraisal for the specific geographic location and particular property types.
Fannie further noted that it does not allow the same flexibility as the Uniform Standards of Professional Appraisal Practice, which allows an appraiser who does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment.
