VMG hosted webinars on January 23rd for residential appraisers, to highlight Fannie Mae’s implementation of Appraisal Messaging Notification, which went into effect Monday, January 28. Several good questions were posed by appraisers in attendance.
One of the questions received was “How does the panel feel the new requirements will impact the appraisal industry as a whole, such as changing the volume of work for the appraisers or lender/clients not needing appraisal assignments as much since they have a large data base for most of the areas in the United States?”
In August 2012, Fannie Mae announced a 2-stage program to provide their specific and proprietary feedback on the quality of appraisals submitted through the Uniform Collateral Dataport (“UCDP”), via reports to lenders. These reports are intended to allow lenders to review and understand appraisal warning messages.
The appraisal warning messages are generated based on market data collected from over 4 million appraisals, since the Uniform Appraisal Dataset (“UAD”) format was required in all appraisals beginning September 1, 2011.
Fannie Mae has taken this database of market data from all across the country and used it to set benchmarks, or tolerance levels, for areas such as data reasonableness, adjustments, comparable sales used, etc., as a test of reasonableness in reviewing appraisal work.
In no way has Fannie Mae hinted that the intent is to “replace” appraisals. Rather, the intent is to review the content of appraisal reports for reasonableness, as compared to work done by appraiser peers in the same market.
The idea, it seems, is to be able to better assess the quality and reasonableness of appraisal reports, and the value conclusion therein, submitted in loan packages to Fannie Mae.
Fannie Mae is not in the valuation business. They are in the business of purchasing loans. In order to purchase a loan, they require that an independent, unbiased appraisal of the property be included in the package.
This is yet another step toward responsible and prudent business decisions of assessing risk when it comes to investing in loans on real property. If they are investing in purchasing a loan, they feel they not only have a right to but need to assess the quality of the work done, which places a current market value on where they are investing money.
They are well-positioned to leverage market data to use as a test of reasonableness, but that is their only expressed intent.
By Ginger Lord, Senior Vice President, Quality Assurance & Training