“More than half of the lenders cited no appraisal findings in their QC reviews on loans where Fannie Mae cited appraisal findings. Fannie Mae found numerous examples of data integrity issues on appraisals with CU scores under 2.5.”

Fannie Mae “Quality Insider” Newsletter

In light of Fannie Mae’s Loan Quality Control (QC) Calibration findings, appraisers play a pivotal role in the real estate finance ecosystem, directly impacting lenders’ compliance and risk mitigation efforts. The calibration process has revealed specific areas requiring attention to detail and accuracy from appraisers. This blog post, derived from Fannie Mae’s recommendations, aims to identify best practices that align with Fannie Mae’s expectations.

Ensuring Data Integrity and Accuracy

Appraisers are urged to prioritize data integrity in their reports, even for appraisals with CU scores under 2.5. Fannie Mae’s analysis underscores the importance of accurate property descriptions across all appraisals, stressing the need for correct condition and quality ratings. It’s crucial for appraisers to recognize that, even in appraisals that don’t come back for revisions and/or earn CU scores that suggest lower risk, overlooked inaccuracies or discrepancies can lead to significant consequences. These consequences might include financial losses for lenders due to revoked representation and warranty relief. Therefore, ensuring that photos and descriptions within the appraisal report are fully aligned is essential, offering a faithful representation of the property’s actual condition.

Adhering to Lender and AMC Guidelines

EVP, in alignment with Fannie Mae’s guidelines, recommends that appraisers:

• Follow Specific Instructions: Carefully adhere to lender-specific requirements and guidelines provided for each appraisal assignment.
• Utilize Recommended Tools: Employ tools like CU for self-assessment, helping identify potential issues before submission.
• Engage in Continuous Learning: Stay informed about industry standards and regulatory updates through ongoing education and training.

Addressing QC Findings and Feedback

When QC reviews identify discrepancies or areas of concern:

• Prompt Response: Address any requests for clarification or correction from the lender or AMC promptly and comprehensively.
• Embrace Constructive Feedback: View lender or AMC feedback as an opportunity for professional growth, enhancing future appraisal accuracy and compliance.

Quality Assurance Practices

Appraisers can adopt several quality assurance practices to mitigate risks of inaccuracies:

• Double-Check Data Sources: Verify all data points from multiple sources to ensure the reliability of property descriptions.
• Review GSE videos that show how the they have interpreted the Quality and Condition ratings.

Collaborating with Lenders and AMCs

Effective communication and collaboration with lenders and AMCs is crucial. Establishing a clear understanding of expectations and requirements for each appraisal assignment can lead to more accurate and compliant reports. AMCs serve as a vital link between appraisers and lenders, offering a platform for streamlined communication and support.

Conclusion

The role of appraisers in the lending process is indispensable, with a significant impact on compliance and risk management. By adhering to Fannie Mae’s guidelines and leveraging partnerships with AMCs such as EVP, appraisers can continue contributing to a more efficient, accurate, and compliant appraisal process. This, in turn, reinforces the trust and reliability that are foundational to the real estate financing industry.