If you are a home appraiser, home buyer or seller, you need to know the changes made by Freddie Mac in its home appraisal policies if you want to obtain a home loan guaranteed by Freddie Mac.
Freddie Mac requires home appraisals to be based on accurate market data and on the condition of the property. It requires that appraisers should follow Freddie Mac?s rules on inspection reports, appraisal reports, the real estate inspection alternative and the Home Valuation Code of Conduct.
Freddie Mac also warns sellers not to hire appraisers who are on Freddie Mac?s exclusionary list, which is updated every month and includes the names and addresses of individual appraisers and appraisal companies excluded from Freddie Mac appraisal work.
Home appraisers must abide by the provisions of the Uniform Standards of Professional Appraisal Practice and must obtain a copy of the sales contract from the seller to check the terms of financing and other requirements made by the seller.
Freddie Mac has also provided explanations on the use of comparable sales in response to complaints about low home appraisals. Freddie Mac reiterates that it is not requiring appraisers to use bank-owned foreclosures or short sales as comparable sales, but it recommends their inclusion in the determination of value if foreclosure and short sales represent the real situation of the market in the area being evaluated.
It advises appraisers to choose as comparable sales the most similar to the property being appraised. However, Freddie Mac has no specific requirements concerning comparable sales that should be used.
Freddie Mac is also advising sellers and servicers to evaluate the validity and accuracy of home appraisals to be able to detect possible fraud. It recommends the use of automated valuation models such as Home Value Explorer, Home Value Calibrator or other tested AVMs and other collateral valuation methods.
Additionally, Freddie Mac has also revised its Form 65, titled Fannie Mae/Freddie Mac Uniform Residential Loan Application to incorporate new loan-level origination requirements implemented by the Federal Housing Finance Agency. Unique identifiers for loan originators will be included in the new loan application form starting January next year.
Other house appraisal requirements by Freddie Mac focus on the qualifications of home appraisers. They must be certified in the state where they conduct appraisals and must be experienced in the local housing market in which the house being appraised is located.
